February 5, 2012

American Entrepreneurship

Filed under: Articles + Blogs — smeyer @ 6:38 pm

In my travels, I continue to find people hard at work doing something that has never been done before.  With the hope of making a profit while doing it.  Just such a situation came up recently when I met with the owner and founder of Transcon Steel.

Among the mainstays of an industrial economy is construction, housing and commercial in particular.  While these industries are incredibly competitive, there is always room for innovation.  Precisely because it is a mature, competitive industry, really ground breaking solutions are sometime hard to find.

Transcon Steel is a small startup company in Georgetown Texas that makes structural steel building systems.  The innovation comes from the fact that Transcon roll forms flat sheet metal into structural shapes that are highly optimized to reduce weight and increase strength.  The steel structural shapes are formed into large panels with compressed foam which results in structures that are super light weight and extremely high strength.

The new structural panels permit construction of buildings in a variety of applications.  So called “temporary housing” for oilfield crews in remote area can be built in hours instead of days.  Heating and cooling costs are a fraction of conventional structures.  All of which leads to increased opportunities to serve unique construction applications with better solutions.

Transcon’s big challenge will be to create the manufacturing resources needed to produce the structural panels in very large numbers.  The enabling technology of the manufacturing processes?  Mechatronics. The roll forming of sheet metal is a classic application requiring high performance drives to de-reel the strip steel rolls and servo actuators to follow the roll throughout the various forming process that take place to make the final product.

The compressed foam requires unique tooling to form large rectangular panels that can be filled with foam, compressed with hydraulic actuators and cured with heat and pressure to form the final super dense structures.  Amazingly, the cores are made from material that is similar to the conventional styrofoam cups we use for coffee, yet, when the basic material is processed correctly, it becomes strong enough to withstand blows from a sledgehammer.  When it is bonded to an already strong steel frame, you have a complete building system that has incredible structural strength and insulation value.

Transon is negotiating enough new business that it will need a new facility 4 times the size of it’s present location and will hire CAD designers and plant personnel to support it’s manufacturing needs.  If they are successful at marketing the technology in other countries, it will be more of the same.  Lots of it.

And that is how job creation is done.  Someone with an idea, willing to work hard, taking risks, finding people to come alongside and help, to deliver a solution.  Making lives better by employing people, and by delivering a product that provides shelter at a lower cost than the traditional products in the building market.

American Entrepreneurship.

January 15, 2012

The Next Industrial Revolution

Filed under: Articles + Blogs — smeyer @ 9:53 pm

Modern manufacturing is largely the result of Henry Ford’s innovation, assembly line mass production.  The goal of which was primarily to make cars available to large numbers of people due to significantly lowered costs.   No other single innovation has contributed as much to increase the quality of living conditions throughout the world.  Mass production has made more goods available to more people in more places than any other system in the history of mankind.

The electric light, for example, which was coveted 100 years ago as the great solution to night time darkness, making obsolete the candle or gas lamp.  Mass production has made the light bulb an inexpensive  commodity on the verge of extinction at about 25 cents per bulb.  The desire to reduce energy consumption is ushering in the age of the light emitting diode (LED) as the replacement technology for electric light.  Every effort is under way to reduce LED costs by any means possible so that illumination will be available that is even cheaper than incandescent lighting when the energy cost over ten years is factored into the new technology.

Even generating and delivering electricity is the result of applying the principles of mass production.  Large generating facilities are able to generate power cost effectively through economy of scale, selling the power profitably at 4.5 cents per kilowatt hour.  Wire, cable, switching systems and other infrastructure are generally costed in at an additional 2 cents per kilowatt hour to deliver the power to your door.  This is an incredible deal, trillion of dollars of resources at your disposal for pennies.

But mass production is not the answer for every aspect of modern society.  Lowering the cost of mass-produced goods implies that there is a requirement for the sufficient numbers of a product to warrant the investment in the necessary processes and tooling to accomplish the task.

Enter 3D printing technology.  Also known as “Maker bots”, this new class of tools is making fabrication a  new American pastime at incredibly low cost.  Where 3D printing equipment has recently been the domain of well-funded large corporations , selling at $10,000 to $20,000 each, 3D printer kits are available at less than $1000.  And lest you think that these are only toys for boys, the additive manufacturing paradigm has taken hold in the metals industry producing high quality parts in various steel alloys and even in titanium.

Why does it matter?  Because anything that lowers the barrier to market entry for new products creates the opportunity for people to enter a market that was previously inaccessible.  The hidden relationship is financial, it is the cost of amortizing the manufacturing resources across a given number of products that makes startup of a new product impractical.  So barriers to entry in new product development are primarily the result of amortization costs.

What happens when a new technology introduces a significant reduction in the amortization cost?  You get the opportunity to experiment with things because the cost of iterating the design is low.  New products can be test marketed and improvements made because there is no major investment in tooling that would have to be modified in order to change the design.  You don’t have to get it right the first time.

And that means that anything is possible.

October 15, 2011

The Aristocracy of Government

Filed under: Articles + Blogs — smeyer @ 3:33 pm

For many years I have criticized the excesses of government spending in the United States.  What may have begun as a means of honoring those who serve the public interest, salaries and benefits, has led to a group that sets it’s own pay scale far beyond the average pay of its constituents and a work schedule that amounts to a vacation schedule punctuated with occaisional work.   We have created an Aristocracy of Government.  Government officials who believe they may legislate the rules for others, but who are beyond the rules and laws they create.

One recent example is the First Lady’s recent trip to Spain.  Largely ignored by the mainstream media in the US, it made the papers in the UK, one commentator comparing the First Lady to Marie Antoinette.   The trip included hotel accomodations at a Ritz Carlton property and chartered air transportation to and from the King and Queen of Spain’s palace on the island of Majorca.  Nice.  If you’re royalty.  Which our government leaders apparently think they are.

Across a dozen postings on the web, the reported “facts” of the trip vary significantly depending on whose account you read.  That is always a disturbing sign.  I will ignore the inconsistencies of the reports to focus on what I think is really relevant, the true economic impact of government spending.

The UK writer sets the cost to US taxpayers for the trip around $375,000.  That’s a lot of money for a weekend trip anywhere.  I’m lucky if I can spend $375. on a weekend trip near home.  The trip includes round trip air transportation on a military 757 with Secret Service and a number of White House Staff members.  Head count varies, again, depending on who you read.

Now $375,000 would be the equivalent of paying for 10 jobs at $37,500 a year.  But since this is taxpayer money, the only way you create those jobs is if you hire more people to work for the US government.  Which is what the federal government did with reckless abandon during the current administration’s first 18 months.

What is really surprising is that using the lowest IRS tax rate, 26%, it would require $1,442,308. in wages paid by employers to raise $375,000 in Federal taxes to pay for this trip.  That means it takes 38 private sector employees producing something useful and working for a full year at $37,500 in gross income, to raise the tax revenues needed for the President’s wife to spend a weekend in Spain.

Aristocracy as a form of government is defined as “government by a priveleged minority…”. Hallmarks of aristocratic government is the belief that the “ruling class” is entitled to their positions. Another is a certain inability to make connections with those ruled.  Such as the fact that it is in the “government’s” interest to have high employment because people need to be employed in order to generate taxes.

I don’t think this is the kind of change anyone signed up for.

October 9, 2011

Trouble in the Green Economy

Filed under: Articles + Blogs — smeyer @ 3:43 pm

I have posted that the solar power industry has some serious problems and isn’t going to save the US economy.  Certainly the Solyndra failure should be evidence of that.  The solar industry is built on Federal incentive programs that are scheduled to end this year.  The Federal subsidies are unlikely to continue given the current budget crisis and the wider reporting of the poor performance of “Green Energy” that is now showing up in the mainstream press.

This should come as no surprise.  As an example of how it works, or actually how it doesn’t work, the industrial trade press has recently made a big deal about the new $6.25 million dollar solar installation at Groupe Schneider in Smyrna Tennessee.

Let’s see if I get this right, the folks at Groupe Schneider get 30% Federal rebate applied to this year’s taxes.  That’ s roughly $2 million of money paid by you and me to the Federal government was given to Schneider in the form of a discount off their tax bill this year. That money is gone from the private economy where you and I make choices about what we will do with our money.  $2 million in the private sector is the equivalent of 66 jobs paying a gross of $33,000  year.  Instead of doing that, it was taken and transferred to a for-profit company.  Then the electric utility company in Tennessee, that is probably owned by the citizens of  Tennessee, is required to purchase power from the solar farm and pay a rate to Groupe Schneider that is above the going rate for electricity.  So taxpayers in Tennessee get a second chance to put money into Groupe Schneider and get nothing back.

The solar project will reduce the cost of electricity to Groupe Schneider/Square D.   While Square D and Groupe Schneider employee a lot of people in the US, and hopefully the money they save will allow them to continue to do that, any profits from the solar project will be going to the French parent company.

I am fairly certain this isn’t what Americans signed up for in the Green Economy.

December 27, 2010

Change the World

Filed under: Articles + Blogs — smeyer @ 8:53 am

As we approach the end of the year and contemplate the coming year, it is a natural point in time to reflect on our accomplishments and consider our goals for the future.  So forgive me if I wax philosophical.  But I would like to offer the opinion that engineering is about changing the world. If it isn’t, it should be.  Change the world, make things better than you found them.

Engineers Without Borders has completed a project in Lashaine Village Tanzania that will increase their ability to harvest rainwater, treat and store local water supply up to 120,000 liters, and add 1080 Watts of solar panels that will power an upcoming computer lab.  This project literally impacts hundreds of families by creating improved water quality and availability.  It also creates an electrical infrastructure that will enable the Middle School students to run computers and radically improve their educational opportunities.  This is a part time, volunteer organization that raises funds for projects and sends out teams all over the world to provide improved conditions in the lives of people who have a need and couldn’t get it done without outside help.

At a fundamental level all engineering should be about leaving things better than we found them.  Every project I have been involved in represented incremental improvements that provided more benefit to the business than the investment cost.  And we should consider context carefully.  For the employer who delivers a product or service, being competitive and producing quality are what keep the company in business.  So as engineers we are frequently engaged in the development of technology that enables our employers to be more successful, by way of improved product quality, increased throughput, decreased part costs, or any of a number of parameters by which the company you work for may measure success.

And that may not always “feel” like we are getting something done that Changes the World.  But it can make the difference between being open for business and having to close.  It can make the difference between having steady employment, and adding new jobs because of expanding sales. It’s not always as direct as going to a remote part of the world and helping people to have water to drink, wash and grow crops with.

The creative drive to develop something new and useful shows up in all new products.  Certainly the new “tablet” computers and hand help “Pad” computers are marvels of technology.  Does this product feed a starving person in a foreign land?  No.  But it creates real value that people are willing to pay for, to the tune of an estimated $5 Billion in new product revenue for Apple with much more to come.   And this will enable Apple to employ more people, some of whom will either give from their income, or be able to participate directly in their spare time, in projects like those of Engineers Without Borders.

My encouragement to each person out there is to think about your role in the context of what interests you, what skill and training you have been given, and where you can apply those skills to leave things better than you found them.  For yourself and for others.

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