Secrets of Manufacturing and Industrial Businesses

Jun 5, 2014 at 16:00 o\clock

2014 Food and Beverage Industry Outlook

by: nkzagreus   Keywords: Food, and, Beverage, Industries

Here we are at the cusp of another year. The overall food and beverage industry appears to have enjoyed 2013, as financial reports through the first three quarters of the year were stellar at most public companies. But how will 2014 play out?

Success often depends on dealing well with difficult issues and following the trends or, better still, being ahead of the next one. There's no telling how 2014 will unfold, but at this point in time, a handful of issues seem apparent to us – some trends, some challenges, all opportunities.

We scanned all the new year predictions that came our way via press releases in the waning days of 2013 and surveyed our Editorial Advisory Board, regular contributors and others we trust. The following thoughts are the consensus we came up with. We'll see how they hold up as the year progresses.

It's a small globe after all

We've highlighted international opportunities in the past, and that was much of our motivation for choosing Heinz as our 2011 Processor of the Year – "the most global U.S. food company," as our headline put it.

The subject never goes away, but some 2013 events really seemed to stoke that fire. Mondelez International came into its own after its late-2012 spinoff from Kraft Foods. The new name holds many familiar snack brands, Nabisco among them, but there also are many unfamiliar ones: Barni, Bel Vita, Lacta, Lu, Milka, Tuc. This American-based processor and marketer made and sold 80 percent of its products outside the U.S. and Canada.

Our news section carried such headlines as Hershey pays $600M for Shanghai confectioner. And a big, nationally debated news story last year was the purchase of Smithfield Foods, the world's biggest pork company and No. 8 on our Top 100 list, to Chinese meat firm Shuanghui International.

It's not just about companies changing ownership and citizenship status. Finished goods are moving from one country’s port to another’s at an accelerating pace, and a lot of those shipments are stamped Made in the U.S.A.

Through the first 10 months of 2013, $63.3 billion worth of domestically produced food and beverage products went off shore, 26.6 percent more than four years earlier, according to data collected by the Foreign Trade Div. of the U.S. Census Bureau. They were worth about $12 billion more than the food & beverage products imported into the U.S., and the trend is toward even greater contributions from processed foods to the balance of trade.

Imported beer apparently is prized the world over, and in some places that means imported American brews. Beer exports from this country were only $448 million behind imports, compared to a $2 billion beer trade deficit in 2009, primarily because exports more than doubled. And what is likely a first, the value of processed foods exported exceeded the value of agricultural exports.

The growing popularity of American-made food can be found in many categories. Take dairy products, for example. Based on shipments through October 2013, the U.S. Dairy Export Council projected the value of 2013 exports would top an unprecedented $6.6 billion, 30 percent higher than they were in 2012. In terms of total solids -- the 12 percent of raw milk that isn’t water -- 16.3 percent of October’s U.S. production was exported. Put another way, the output of one out of six cows went offshore.

And it wasn’t all dry products. People in Asia, the Middle East and South of the border have developed a taste for American cheese. Shipments topped 25,000 tons for eight consecutive months, beginning in March, with October’s 27,074 tons representing a 42 percent increase over October 2012. Exports of butterfat tripled between June and October, reaching 71,640 tons for the first 10 months. Most of the increased demand came from Saudi Arabia and Iran (No extra charge for the GMO feed, ayatollah). The absence of melamine in American dairy products apparently is attractive to the Chinese, who doubled their purchases in October compared to the year-earlier period.

Shipments of packaged foods also are surging. Kellogg Co., which buys grain by the metric ton and sells it by the ounce, generates a third of its sales in Europe, Latin America and Asia Pacific, and growth in those markets is offsetting declining snack and cereal sales domestically. The boxes of corn flakes sold in Ireland and Istanbul are produced in places like Battle Creek, Mich., and Memphis, with value added by American machines and men (and women).

Trading in another country requires adapting business practices to local sensibilities. Globalization becomes an exercise in best practices, with U.S. food companies often bringing higher standards for food safety and worker protection along with production know-how when they set up shop in a foreign land. It works the other way, as well. Corporate social responsibility (CSR) was a hot button in Europe before it was on the American radar, and virtually all the U.S. multinationals have responded with CSR reports that extol their efforts to reduce waste and the consumption of energy and water in production.

American companies step gingerly around the sustainability issue, careful not to offend climate-change deniers or invite a carbon tax on emissions. Not so their European counterparts: Unilever’s CSR unabashedly acknowledges the scientific rationale for lower emissions and waste. As a consequence, the company will attain supply chain efficiencies that U.S. firms will have to match to avoid a competitive disadvantage. The price of crude oil, after all, quadrupled in the past decade.

Unilever’s Sustainable Living Plan calls for 40 percent reductions in water use and CO2 emissions per unit of production by 2020, and the company’s manufacturing facilities are on target to achieve them. Unilever’s U.S. facilities have cut water use 26 percent in four years, with the Covington, Ky., ice cream facility setting the pace with a 75 percent cut in water use via process improvements. That’s either a testament to American ingenuity or evidence of previously profligate use.


May 28, 2014 at 12:14 o\clock

America Needs a Manufacturing Renaissance

In times past, farmers and local townspeople would bring their livestock to the commons—a local pasture that everyone could use. The commons was a critical community resource because it nourished the livestock that provided a foundation for the local agricultural economy. If the commons fell into disrepair—either through overuse or neglect—everyone suffered. Although taking care of the commons was no individual's responsibility, it was in everyone's interest to do so because all benefited from a healthy commons.

Modern industries have commons as well, although they are infinitely more complex than the simple town greens of centuries past. Today's industrial commons consist of webs of technological knowhow, operational capabilities, and specialized skills that are embedded in the workforce, competitors, suppliers, customers, cooperative R&D ventures, and universities and often support multiple industrial sectors. Although industrial commons are largely supported by private for-profit entities, the knowledge produced by these entities flows across businesses through movements of people from one company to another, supplier-customer collaborations, formal and informal technology sharing, and outright imitation of competitors.

Although there is much talk these days about the world being "flat," in fact, know-how and capabilities are often highly local. This means that industrial commons can have a local character as well. As a result, companies located in some places have advantages over others by virtue of their access to the appropriate set of workers, engineers, managerial talent, suppliers, and universities. The solar PV industry discussed earlier is an example. Throughout this book, we will document how the presence of an industrial commons can exert a powerful gravitational pull on the location of industries and innovation (and conversely, how the absence of an appropriate commons creates a chasm).

View a table of industrial capabilities that are gone or at risk in the US.

The rough and tumble of international competition means we should expect industries to come and go. Even if this is sometimes painful, it is, in fact, a healthy process by which resources flow to their most productive uses. When a commons erodes, however, it represents a deeper and more systematic problem. It means the foundation upon which future innovative sectors can be built is crumbling. When the semiconductor production business moved to Asia in the 1980s, it brought with it a whole host of capabilities—electronic-materials processing, deposition and coating, and sophisticated test and assembly capabilities—that formed an industrial commons needed to produce a whole host of advanced, high-valued-added electronic products such as flat-panel displays, solid-state lighting, and solar PV. In this book, we will examine the dynamics that underlie both the rise and decline of commons, and the consequence of those declines. Our argument is built around three core themes.

Theme 1: When a Country Loses the Capability to Manufacture, It Loses the Ability to Innovate
Innovation and manufacturing are often viewed as residing at the opposite ends of the economic spectrum—innovation being all about the brain (knowledge work) and manufacturing all about brawn (physical work). Innovation requires highly skilled, highly paid workers, and manufacturing requires low-skilled, low-paid workers; innovation is a high-valued-added specialty, and manufacturing is a low-value-added commodity; innovation is creative and clean, and manufacturing is dull and dirty.


Such a view of manufacturing is a myth and is based on a profound misunderstanding of how the process of innovation works and the link between R&D and manufacturing. R&D is a critical part of the innovation process, but it is not the whole thing. Innovation is about moving the idea from concept to the customer's hands. For some highly complex products (flat-panel displays, PV cells, and biotechnology drugs, to name a few) the transfer from R&D into production is a messy affair, requiring extremely tight coordination and the transfer of learning between those who design and those who manufacture. If you do not understand the production environment, you have a harder time designing the product. In these settings, there are strong reasons to co-locate R&D and production. It is a lot easier for an engineer to walk across the street to the plant or drive down the road than to fly halfway around the world to troubleshoot a problem. This helps to explain why the American company Applied Materials, a leading maker of equipment for manufacturing semiconductors and solar panels, moved its chief technical officer from the United States to China. Because most of its large customers are now in China, Taiwan, and South Korea, it makes sense for the company to do its research close to the factories that use its equipment. Applied Materials is now moving much of its manufacturing operations to Asia as well. In chapter 4, we will offer a framework for determining when it matters whether R&D and manufacturing are located near each and when it does not.

Theme 2: The Industrial Commons Is a Platform for Growth
The industrial commons perspective suggests that a decline of competitiveness of firms in one sector can have implications for the competitiveness of firms in another. Industries and the suppliers of capabilities to the industries need each other. Kill a critical industry, and the suppliers probably will not survive for long; other industries in the region that depend on those suppliers will then be jeopardized. When the auto industry declines, it causes an atrophy of capabilities (such as casting and precision machining) that are also used in industries such as heavy equipment, scientific instruments, and advanced materials.

The unraveling of a commons is a vicious circle. As capabilities erode, it is harder for companies that require access to stay in business. They are forced to move their operations or their supplier base to the new commons. As they move, it is harder for existing suppliers to sustain themselves. Ultimately, they must either close shop or move their operations.

Even worse, the loss of a commons may cut off future opportunities for the emergence of new innovative sectors if they require close access to the same capabilities. Four decades ago, when US consumer electronics companies decided to move production of these "mature" products to Asia, who would have guessed that this decision would influence where the most important component for tomorrow's electric vehicles—the batteries—would be produced? But that is what happened. The offshoring of consumer electronics production (often contracted to then-little-known Japanese companies such as Sony and Matsushita) led to the migration of R&D in consumer electronics to Japan (and later to South Korea and Taiwan). As consumers demanded ever-smaller, lighter, and more powerful (and power hungry!) mobile computers and cell phones, electronics companies were pushed to innovate in batteries. In the process, Asia became the hub for innovation in the design and manufacturing of compact, high-capacity, rechargeable, lithium ion batteries, a technology that was invented in America. This explains why Asian suppliers have become the dominant source of the lithium ion battery cells used in electric vehicles.

Theme 3: There Is Nothing "Natural" About Erosion of the Industrial Commons—Management and Policy Matter
The erosion of the industrial commons in the United States is the result not of the "invisible hand" of markets but rather the "visible hand" of managers and policy makers. The skills, know-how, and capabilities underpinning an industrial commons accumulate over time. Both government policies and the investment decisions of private enterprises determine what capabilities are fostered where. Decisions by US companies to outsource a growing array of increasingly complex processes (including product R&D) and to reallocate resources away from long-term research have played a central role in the erosion of the US industrial commons.

As we shall discuss, each of these individual decisions, when viewed in isolation, may look like it makes perfect sense. Cumulatively and collectively, however, they have serious consequences for both a country and individual companies.

Consider outsourcing. For many companies, it was simply far too attractive to shutter their production in the United States and have Asian suppliers make the products. Many companies have even decided to buy their R&D from suppliers in Asia as well. (For instance, most laptop computers are designed and manufactured by a small handful of Taiwanese companies.) In the short term, such outsourcing could dramatically lower the costs of goods and supercharge earnings, which is tough logic to combat. Yet, as each company makes such a decision, it becomes increasingly difficult for existing suppliers to stay in business. Investing in new technologies or training workers becomes less economically feasible. This lack of investment in technological and human resources leads to further erosion in competitive performance, which makes it even more attractive for other companies to move their supply base overseas. The process looks like a natural reaction to market forces, but, in fact, it was driven by some very specific management decisions.

Government policy, too, plays a huge role, even in highly market-oriented economies like America's. There was nothing natural about the creation of the United States' strength in science-based industries. Government policy played a critical role. After World War II, the US government began to implement a policy of massive support for basic scientific research through newly created agencies such as the National Science Foundation (NSF) and the National Institutes of Health (NIH), and through existing agencies such as the Department of Defense and Department of Energy. Cumulatively, these investments established the basic sciences that laid the institutional foundations for innovations in semiconductors, high-speed computers, computer graphics, broadband communications, mobile telephony, the Internet, and modern genomics-based methods of drug discovery. Reversing the decline of the US industrial commons will require both effective management and government policy.


May 2, 2014 at 15:53 o\clock

Top 10 tips for starting a food business

by: nkzagreus   Keywords: starting, food, business

The continuing popularity of Australia's reality television cooking shows highlights the dream of many to work in the food business.


But there's more to it than just being a good cook. It's what you put in place before any food reaches the customer that will determine your success.


Sarah Hancox is founder of Adelaide-based corporate food company Vite! gourmet to go. When she returned to Australia after a lengthy period in England running an Australian-themed restaurant with her brother, she didn't think she would return to the food industry but found she couldn't stay away.


She opened a cafe in a conference centre and soon customers were asking if she would deliver to their offices. Before long her business morphed into offering outside catering services. Three months after that, she started Vite! and moved into a space with her own kitchen.


“I didn't want to go down the path of working out of my house,” Hancox says. “I think it improves the integrity of the product to be outside your home and it's nice to have a space that's just for food.”


It was a leap of faith for Hancox, who says the venture has proven to be expensive.


“I largely provide to corporate clients, but occasionally if a client asks me to cater for an in-house party such as a 50th then I'll do that,” she says. “I know my strengths; I don't chase the wedding market, for example, as there are plenty of companies around that do that very well already.”


She says being in the food industry is difficult.


“You need a lot of flexibility, cash and staying power,” she says. “The hardest thing to understand is that your success is largely based on cash flow. There are a lot of big bills coming in but you may not get paid in one hit to deal with them.”

Hancox now offers consultancy services to small hospitality businesses.


“I learnt from my mistakes and want to help others,” she says. “When it comes to food, people put so much love into their business, but I've seen many people make the same mistakes over and over and it upsets me when their business goes under.”


She offers advice on anything to do with starting a business, including operations, menu planning and staffing. Below are her top 10 tips for starting a food business.


1. Know your trade. These days you need to know your strengths, whether it is cooking or in other parts of the business. If it's not cooking, take a back seat and let your chef do it but be able to fill in for them if for any reason they can't.


2. Understand your target market. Know who they are, how to reach them and what they want.


3. Know your key performance indicators. You need to understand your KPIs very well, especially your food and labour costs. This will help you understand your cash flow and what's happening in your business, including whether someone is stealing from you.


4. Quality products almost always produce a quality dish. People are very educated about food these days - many through watching cooking reality shows - so don't scrimp on quality.


5. Focus on customer service. Too many in this industry forget about the customer and instead think they are the stars of the show. If no one is buying your product because they are not getting the right service then the venture is pointless.


6. Value your staff. Not only should you reward good work but you should not be afraid to get rid of poorly performing staff. By looking after staff you get low turnover and consistency of product.


7. Plan your menu well. Stick to your skill set and remember who is going to be eating your food as well as where and how.


8. Be organised. There's a lot that goes into cooking including organising storage and understanding products throughout. When you run a food business you have to wear many hats.


9. Get a good accountant. You need someone who is proactive; they don't have to understand your industry but they need to be able to make suggestions. You should also outsource anything that you don't have skills in, especially marketing.


10. Use social media. How successful you are with social media will often depend on the customers you are marketing to. Find out where you are getting responses and capitalise on them through targeted marketing.


May 1, 2014 at 15:50 o\clock

Manufacturing Industry

Manufacturing industry refers to those industries which involve in the manufacturing and processing of items and indulge in either creation of new commodities or in value addition. The manufacturing industry accounts for a significant share of the industrial sector in developed countries. The final products can either serve as a finished good for sale to customers or as intermediate goods used in the production process.

Evolution of the manufacturing industry:

Manufacturing industries came into being with the occurrence of technological and socio-economic transformations in the Western countries in the 18th-19th century. This was widely known as industrial revolution. It began in Britain and replaced the labor intensive textile production with mechanization and use of fuels.

Working of manufacturing industry:

Manufacturing industries are the chief wealth producing sectors of an economy. These industries use various technologies and methods widely known as manufacturing process management. Manufacturing industries are broadly categorized into engineering industries, construction industries, electronics industries, chemical industries, energy industries, textile industries, food and beverage industries, metalworking industries, plastic industries, transport and telecommunication industries.

Manufacturing industries are important for an economy as they employ a huge share of the labor force and produce materials required by sectors of strategic importance such as national infrastructure and defense. However, not all manufacturing industries are beneficial to the nation as some of them generate negative externalities with huge social costs. The cost of letting such industries flourish may even exceed the benefits generated by them.

Owing to the emerging technologies world wide, the world manufacturing industry has geared up and has incorporated several new technologies within it's purview. Economists consider theWorld manufacturing industry as a sector which generates a lot of wealth. Generating employment, introducing latest techniques, real earnings from shipments etc., have put the world manufacturing industry in a favorable position.

World manufacturing industry With the implementation of the concept of eco friendly environment, world manufacturing industry has taken several measures to ensure that the manufacturing industries worldwide abide by the eco friendly norms. World manufacturing industry also plays an important role in the defense of a country. By manufacturing aircrafts which play a vital role in the country's defense, the aerospace manufacturing industry acts as a shield. Other industries in the manufacturing sector manufactures products which are indispensable in our daily lives. With regard to the GDP or gross domestic product, world manufacturing industry contributes to the global economy as well as the global GDP.

World manufacturing industry and type of economy:

Capitalist economy:

Manufacturing industry in a capitalist economy indulge in mass production and make them available to the customers by earning profits.

Collectivist economy:

Manufacturing industry in a collectivist economy is guided by a state run agency for making available the manufactured goods depending on the requirement.

Modern economy:

Manufacturing industry in a modern economy operates under regulations framed by the Government.


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Apr 29, 2014 at 04:16 o\clock

How to Start a Solar Cell Manufacturing Company


Solar cells, which are also called solar panels or photovoltaics, transform natural sunlight into usable energy. Considering the volatile future -- and affordability -- of fossil fuels and other conventional energy sources, manufacturing solar cells for home or industrial use could prove to be a lucrative business opportunity. Manufacturing solar cells can be a time-consuming process, so initially focus your production on a specific market for solar cells, such as the home, a farm or an industrial setting. Beyond the day-to-day operations and planning of the business, knowledge of how solar cells work and how to most efficiently assemble them in large quantities will also help ensure the future success of your business.

Starting the Business

Step 1

Draft a business plan that defines the target market for your business as well as a description of the style, size and pricing structure of the solar panels you will manufacture. The U.S. Small Business Administration identifies nine sections a business plan must include, such as an executive summary, a market analysis, the company's organization and management and a plan to make the company profitable. Planning your solar-cell manufacturing business allows you to define your goals while realizing the company's parameters, such as who will buy the solar panels and how many you can afford to make.

Step 2

Incorporate your business as a limited liability company -- or LLC, which will limit your personal financial liability and will also save money on your taxes. Structuring as an LLC is beneficial to smaller companies because it allows you and any business partners to claim the business' revenue as income and thereby avoid double-taxation. The Internal Revenue Service also limits your personal financial liability in the company to only the amount you have invested in it, which protects your personal assets should the company be sued or face other financial or legal difficulties.

Step 3

Enroll in a training, certification or licensure program and, if you have employees, require them to do so as well. Many of those in the solar-power manufacturing industry have a Bachelor of Science degree in engineering and a professional-engineering license, according to the U. S. Bureau of Labor Statistics. Many also seek advanced-engineering degrees or credentials specific to generating solar energy, such as certification as a solar installer, builder and technician or a technical-sales expert. Many community and technical colleges offer certification and associate-degree programs for solar manufacturing and service jobs, according to the BLS, though independent-certification agencies such as the North American Board of Certified Energy Practitioners offer independent solar-energy certification and training programs.

Step 4

Rent, lease or buy an industrial space that is zoned for manufacturing and has enough space to accommodate your machinery and workers who will weld and solder the more-intricate components of the panels. Many commercial-scale manufacturers use computer numerically controlled -- or CNC -- machines to expedite production, according to the BLS; these machines range in size from 3 to 4 square feet to more than 7 square feet and are controlled by a computer technician. Before you commit to a facility, hire a building inspector to certify that the prospective facility's electrical infrastructure is able to safely power the machinery you intend to use.

Producing Solar Cells

Step 1

Purchase the tools, machinery and supplies you will need to begin manufacturing solar panels, which will vary based on the volume and size of the solar panels you will build. CNC machines can produce frames, mounts and other components that support the photovoltaic cells, though you need soldering irons to connect the photovoltaic cells, the cells themselves and diodes to ensure the electricity flows in only one direction, as well as 20-gauge electrical wire to carry the electricity generated by the panels. Consider hiring engineers and technicians who are trained and certified in a specific segment of the manufacturing process, such as CNC machining, welding or soldering solar panels.

Step 2

Build solar cells for the markets in which you plan to compete, such as panels for automobiles, for supplementing traditional energy sources and even for completely powering a home or business. Network with other solar-energy professionals and potential customers by joining professional organizations, such as the American Solar Energy Society. Increase potential customers' interest, and help secure orders, by scheduling demonstrations and information sessions.

Step 3

Define your competitive advantage -- the factors that make your manufacturing company more appealing than a customer's other choices -- then use it to market your solar panels. Your competitive advantage might include offering customers custom-designed panels, a volume discount for bulk purchases or even a performance warranty. As your business expands, revise your business plan to guide its growth. 

Things Needed

  • Business plan
  • Business license
  • Articles of incorporation
  • Solar-power certification
  • CNC machinery
  • Photovoltaic cells
  • Soldering irons
  • Electrical wire
  • Marketing plan


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