The Best of Manufacturing
BY ANDREA LAHOUZE
Each year, Enterprise Minnesota highlights exceptional businesses, programs, products and people in a list we call “The Best of Manufacturing.” Read on to see how Minnesotans in manufacturing are muscling through a tough economy, inspiring the industry’s next generation and making our world more convenient, more green and more fun.
Futuristic Innovation: Stratasys, Inc.’s Direct Digital Manufacturing Systems
These days, customers want things faster and cheaper than ever before. For businesses in need of low-volume manufacturing, Stratasys, Inc. in Eden Prairie delivers. The company’s technology systems can create end-use production parts 67 percent faster than conventional processes— at roughly half the price.
Through a process called direct digital manufacturing (DDM), Stratasys creates parts from 3-D CAD data. Because it uses a layer-by-layer process, the need for any machining, molding or casting is eliminated, which makes production both faster and more cost efficient. “When you start talking hundreds of parts or less, it’s a lot cheaper than going the conventional route of using hard tooling to make things with actual hard metal tools,” says Jeff DeGrange, vice president of new business development for Stratasys’ DDM division. “In this process, you go right from a computer file to the machine to your part, and you don’t have to make that investment in the tools.”
Customers can purchase entire systems or place online orders for parts 24 hours a day through the company’s virtually unattended, and aptly named, RedEye production facility. DeGrange says sales of upper-end systems have increased by 40 percent within the last year. Stratasys’ star-studded customer list includes BMW, Ducati, Diebold, Oreck, Medtronic and Polaris. Its high-end Fortus system is a staple in Jay Leno’s garage. Leno uses it to create replacement parts for his collection of classic cars.
In the future, DeGrange expects DDM will become a big player in the medical and aerospace industries. To that end, the company plans to pursue ISO and AS9100 certifications in January 2010. “With the onset of bio-compatible materials, we will be able to … generate implants that are unique to a patient’s body, custom made based on CAT scan data. It’s mass customization,” DeGrange says. “We’re looking at applying it to make quick response tools and spare parts on demand for airplanes that are broken and in need of repairs.”
Inventory Management Solution: Phitch OC 9.0
Until recently, inventory management had remained largely a guessing game involving spreadsheets, theories and formulas. Accurately predicting the need for certain parts at certain times seemed nearly impossible. Lucky for manufacturers, inventor John Krech had a solution—no spreadsheet or mathematics required.
Krech’s invention is Phitch OC 9.0, a new software suite sold through his Minneapolis-based company, ePhiphony Incorporated. Phitch is an add-on for QuickBooks and the first and only software to optimize inventory management. He says it saves business owners time and frees up cash that may have otherwise been tied up in surplus inventory.
“The thought of inventory optimization makes most people want to sleep,” Krech says. “That’s why we’ve built Phitch to make it easy. We do everything in the background … [so] you can focus on important things, like running your business.” Derived from the economic order quantity (EOQ) developed in 1913, Phitch uses an economic profit investment metric to determine when, what and how much to order, thereby increasing a company’s available cash. The program’s ease of use and financial benefit is making it increasingly popular among manufacturers. Sales of the software have doubled every month since the first sale in May.
“Phitch is really about defining the rhythm of an organization,” Krech says. “An organization’s inventories go up and down depending on orders and sales. Phitch determines that rhythm. Almost 30 percent of businesses order monthly, just because it’s easy to do. Phitch determines the right point to order from a financial perspective, and it does it automatically.”
To ensure users maintain the optimum amount of inventory, Phitch’s color-coded inventory alerts denote which items are in surplus, in good quantity or in need of reordering. It also specifies reorder quantities for each item, which users can request through Phitch at the click of a mouse.
Inspiration for Manufacturing Entrepreneurs: IDEA Competition
Northwest Minnesota’s regional stimulus plan is back for round two. The Ingenuity Drives Entrepreneur Acceleration (IDEA) Competition was the brainchild of Ingenuity Frontier, a collaboration of local and state agencies. Now in its second year, the annual business competition serves as a launching pad to turn the area’s best and brightest entrepreneurial ideas into realities.
The competition offers up to five awards of $10,000 in cash and $10,000 in specialized technical assistance to advance winners’ business ideas. To ensure that each idea benefits the local economy, entrants agree to place their business ventures within the 12-county region of northwest Minnesota.
Last year’s competition took 61 participants through four rounds of elimination, each progressive round requiring more detailed information regarding business plans, technical logistics and estimated profitability. Finalists presented their business plans before a 12-judge panel before winners were selected.
Michelle Landsverk, project coordinator for the competition, says the IDEA Competition helps guide all participants through the steps of starting a business. “Sometimes an entrepreneur might not even know all of the questions that need to be answered. We’re kind of instructing them along the way, saying ‘These are the things you have to address,’” she says.
The winning ideas were as diverse as they were innovative. Eric Thorsgard of Bemidji invented two new keyboard instruments for his business venture, the forte Keyboard Company. David and Bonnie Ekstrom invented the StartStick, a rechargeable and recyclable energy pack that helps pilots start small airplane engines ranging from four to eight cylinders. In Bagley, Todd Hamm launched IceHogger Industries to market a product called the Ice Auger Shroud System, which prevents ice chips and slush from falling into a freshly drilled icefishing hole. East Grand Forks natives Don and Adam Zejdlik, who are father and son, developed the Missing Link, a snowboard component that improves control, allowing riders to reach speeds that would be impossible on a typical snowboard.
Landsverk expects the competition to be the catalyst for a new period of regional growth in northwest Minnesota. Her goal is to assist in the launch of 10 innovations within three years. With the four winners chosen from last year’s competition, and the second annual competition heating up, she is well on her way. The IDEA Competition will award another handful of entrepreneurial ideas in early May.
Emerging Business: Xtreme DnA
One IDEA Competition winner is already becoming a reality. East Grand Forks natives Don and Adam Zejdlik were named winners for their invention, a snowboard component called the Missing Link. Designed tofit on a small snowboard, the Missing Link is a universally compatible add-on component that gives boarders more control, allowing them to navigate runs at speeds impossible on a typical snowboard.
Don and Adam, who are father and son, agree that turning their invention into a business has been hard work. Finding time has proven the biggest challenge. Both have full-time jobs, and Adam has a part-time job as well, so work on Xtreme DnA has been restricted to nights and weekends. But the prospect of owning their own business—and the support generated from the IDEA Competition—has kept them motivated.
Adam says the IDEA Competition was especially helpful as they looked to define their intended market. “When a person is making their own product, a lot of things are one-sided and you can only see what you want to see,” he says. “Going through the competition and … getting different viewpoints from different people, we were able to better look at our market and look at markets that we never thought of.”
Now, they are getting ready to open up shop—virtually, that is. The father and son duo plan to sell their product exclusively online beginning next fall. Xtreme DnA will market the Missing Link to active snowboarders between the ages of 18 and 35, and people living in mountainous states such as California, Colorado and Montana.
The Zejdliks hope the component’s small size and simple design will make it a big hit with active snowboarders. “We’re going with a simple design because we learned that simple is better as far as how a product holds up,” Adam says. If sales skyrocket, they may try to sell the product through retail stores as well.
Product for a Greener World: Silent Power, Inc.’s Integrated Inverter/Charger System
As the world’s coal, oil and natural gas resources continue to be depleted, Silent Power, Inc. is making renewable energy more accessible than ever. The Baxter company’s integrated inverter/charger system is able to convert green energy from solar panels and wind turbines into electricity to power homes and offices.
Founder and chief technology officer Doug Hamilton says the product provides what he calls “picture perfect” power, without having to rely on a power grid or deal with the typical surges in generators and traditional grid power sources. “We take a perfect mathematical sine wave and then force the electronics to follow the sine wave,” he says. “As a result, the output of our inverter/ charger is actually better power than you would get from your outlet. It’s cleaner, it’s more precise, and it doesn’t have the variance that the output does in your outlets.”
Silent Power’s inverter/charger can be used to create electricity from any renewable power source, ranging from wind turbines and solar panels that are available today to new energy sources in the future. Whereas competitors require power boards with separate locations for each system component—including inverters, circuit breakers, batteries and generators—the Silent Power system is integrated into a single container, making it easier to install.
On tap for Silent Power next year is a partnership with power companies across the nation to help create a “smart grid.” Power companies will likely help homeowners purchase the Silent Power system, which will store less expensive, off-peak energy in homes for use during peak energy use hours. Using cheaper, off-peak energy will reduce homeowners’ energy bills, while storing power in individual homes will help eliminate the need for new power plant construction. This makes the energy grid smarter, not larger.
Green Work Environment: Quality Bicycle Products
Bloomington’s Quality Bicycle Products (QBP) is the largest bike parts distributor in the country. Its environmental initiatives may also make it the greenest. Water conservation efforts save an annual 50,000 gallons of water, while rooftop photovoltaic panels and other energy initiatives help save nearly $20,000 per year in energy costs. QBP’s distribution center is made from 70 percent recycled materials and has received Leadership in Energy and Environmental Design (LEED) Gold Certification from the U.S. Green Building Council. Last year, the company was also presented with the Governor’s Award for environmental practices.
Kim Brown, director of distribution, says QBP employees have embraced green as both a company culture and a personal lifestyle, starting with bikes.
“We are truly passionate about what we do,” Brown says. “We walk the talk. About 125 of our [400] employees are commuting by biking to work … [and] it’s not unusual for people to commute up to 20 miles each way.” Once employees park their bikes at QBP’s indoor racks, they can hit the showers and locker room, where each bike commuter has a reserved locker. The League of American Bicyclists has recognized QBP as a Bicycle Friendly Business for two years running. This year, QBP also was one of four companies in the nation to receive the Platinum level of the award.
QBP also issues “credits” to people who walk, bike or drive a carpool to work. Credits can be used to purchase company products or free lunches from local restaurants. To encourage environmentally friendly transportation during the workday, non-bicycle commuters can even check out a company bike for a bit of afternoon exercise or a greener way to grab lunch offsite.
At work, employees in the distribution center benefit from natural light thanks to floor-to-ceiling windows, while office workers sit in cubicles made from 100 percent recyclable materials.
“When we consider the environment in our building and our processes, it helps our company’s culture by creating a healthier environment [in terms of] indoor air quality, noise levels and day lighting for our employees,” Brown says.
Program for Small Manufacturers: Growth Acceleration Program
As Minnesota manufacturers ride out the economic downturn, one program is helping small companies thrive. The Growth Acceleration Program, known as GAP, provides annual grants of as much as $25,000 for companies with fewer than 100 employees, allowing them to pursue projects related to the overall growth of their businesses. The program is administered by Enterprise Minnesota and has now helped more than 100 companies realize a $15-to-$1 or better return on investment.
“Clearly this is a program that works,” says Bob Kill, president and CEO of Enterprise Minnesota. “The outcome of this action will be job security at a time when Minnesotans need it. GAP is a tremendous resource for the Minnesota communities and employees who depend on the economic security that these manufacturers provide.”
GAP began in 2007 as a one-time, $750,000 grant funded through the Minnesota Department of Employment and Economic Development (DEED). This year, when the program’s importance grabbed the attention of legislators across the state, Gov. Tim Pawlenty approved an appropriation of $1 million to keep GAP going.
State Sen. Kathy Saltzman is impressed with GAP’s results. “At a time when the state has limited resources, we have to focus investments in programs that have demonstrated they can create jobs,” she says. “GAP is an excellent example of where what seems like a small investment produces huge results.”
State Sen. Linda Scheid agrees, adding that GAP helps prepare manufacturers for economic recovery. “We know that jobs will come back, and companies have to position themselves for that,” she says. “[GAP] is important to help those companies.”
Investment in People During a Recession: V-TEK Incorporated
For V-TEK Incorporated president Denny Siemer, a well-trained work force reaches the core of a good business philosophy. “Training cannot be looked at as a short-term fill-in to be done only when it’s convenient,” he says. “It needs to be embedded in the overall business plan and in the career plans of every employee.” When the economy took a nosedive, Siemer found the silver lining. As production hours dwindled at his company—which manufactures electronic component packaging solutions—he decided to find a way to send workers with reduced hours back to school.
“With the last downturn we had, we weren’t as prepared as we could have been. So I used that experience and figured there’s got to be a better way of dealing with this,” Siemer says. V-TEK helped secure grant money for a pilot program that has allowed some workers with reduced hours to participate in a mechatronics training program at South Central College, a Minnesota Community and Technical College near the company’s Mankato headquarters.
Mechatronics is the combination of mechanical and electronic engineering. Because it’s used wherever mechanical systems are controlled with electronic devices—in everything from factory automation to anti-lock brake systems—it proves useful across many manufacturing industries. The pilot program instructed workers from V-TEK, as well as others from the automotive and food product manufacturing industries.
If South Central College continues the program, it will become a permanent training option for V-TEK workers. “Our business depends on employees with a lot of experience in the industry,” Siemer says. “If we lay them off, it’s likely that we won’t be able to get them back … so all that accumulated experience is lost. I think the mechatronics training will be a great benefit to V-TEK long term.”
Recession Success: Timothy Tulloch, European Roasterie
Cafés around the country may be feeling the recession’s sting, but European Roasterie has kept sales strong.
In Le Center, European Roasterie buys and roasts specialty coffee, then sells it to companies looking to build their own private label brands. Despite its rural locale, it is the largest independent coffee roaster in the United States, offering coffees from 35 different origins worldwide and selling some 5 million pounds of coffee every year.
For Timothy Tulloch, European Roasterie’s founder, owner and roast master, the business is a passion. Tulloch’s niche is “the 1 percent of the market that wants good coffee.” To that end, he travels the world three times a year to locate the world’s best coffees, then purchases only the specialty coffee beans. He helped ignite the specialty coffee craze in the United States, and also introduced coffee shops to Torani flavored syrups and chai tea, which are now staples in cafés across the country.
Specialty coffee is the top 2 percent in quality of a coffee crop, sorted from the rest of the beans by hand. Lunds & Byerly’s carries a private label line from the company, as do Deli Express, Berry Coffee Company and about 2,000 other brands across the country. One of its larger customers, an online brand called The Coffee Fool, has a following that is eight times larger than Starbucks, according to Tulloch.
Tulloch believes his product’s quality and comforting nature has ensured the continued success of his business, even in the current recession. “As people cut down on conspicuous consumption, they go more for things that make them feel good, such as having a cup of coffee that wakes them up. People get depressed because they’ve lost so much money in the stock market. What do they do? They drink coffee. So our sales are perfect, they’re recession-proof because it’s a comfort food.”
The coffee connoisseur is now pursuing another passion as well. Tulloch recently started a vineyard on a five-acre plot of land near European Roasterie. There, he tends to 2,500 vines, which he estimates will produce an annual 60,000 pounds of grapes. Tulloch is quiet about future plans for the vineyard. “Growing grapes is complex enough. One thing at a time,” he says. His work ethic, however, will ensure a successful outcome.
Cultivation of the Next Generation: STEM Program at Stillwater Area Public Schools
To start grooming tomorrow’s manufacturers today, Stillwater Area Public Schools began including manufacturing-related projects and lesson plans into its curriculums—starting in kindergarten. Its Science, Technology, Engineering and Mathematics (STEM) program integrates subjects such as math and science into classes and extracurricular activities from kindergarten through grade 12, then applies them to real-world settings and hands-on projects. The hope is to pique students’ interest.
Doris Karls, the district’s director of community education and community relations, says the program helps students develop a continuous improvement mindset from an early age. “We are equipping our students to think like engineers, who are always striving to make a difference and improve processes,” she says. “We make STEM a part of what we do, we make it a relevant and interactive part of our curriculum, and we keep our students engaged.”
A growing interest in engineering among Stillwater students has even prompted the district to add a new engineering design course at the high school this year, using a curriculum developed by the Museum of Science, Boston.
Derek Olson, a sixth grade teacher at Afton-Lakeland Elementary, says his students can’t get enough of the STEM curriculum activities. “It’s been an awesome experience,” he says. “The students are learning so much about the things that we need to be teaching in a way that integrates them all together. They are so excited that they ask to stay in for recess.”
Karls believes STEM is mutually beneficial for students and local manufacturers. More than 20 companies have opened their doors for tours to give students and teachers a firsthand look at the opportunities in modern manufacturing. “We really have shared goals,” Karls says. “[Manufacturers] need skilled workers, and we really want to prepare our students for 21st-century careers.”