Don Draper and the Value of Free Days

NEW YORK DAILY NEWS ARCHIVE/NY DAILY NEWS VIA AMC

From the very first episode I was hooked on Mad Men. I loved the clothes, the sense of style, and the great story lines. Being a Kellogg School of Management alumnus, I definitely have a soft spot for anything regarding marketing. So this show, which revolved around the drama of a marketing agency, was perfect for me in so many ways.

I have been traveling a lot lately and thankfully due to the invention of the DVR, I never have to miss my favorite shows. I was filled with great anticipation and sadness when I sat down during Memorial Day weekend to watch this beloved series wrap up and come to an end. I had planned to watch the last 4 episodes back to back and host my very own Mad Men marathon. 

I was not surprised to discover that once again, Don Draper was dropping out. It wasn’t his first time during this series, so I was anxious to see where it would lead this time. The thing about when Don goes MIA he really goes MIA.

Today with technology it is much harder to really truly disconnect from work. It really struck me watching these last few episodes of Mad Men how different our lives are now with the amount of instant access we have twenty four hours a day through all the technology that surrounds us on a daily basis.

As a long time student of the Strategic Coach™ program,  I have learned since our very first session the importance of “Free Days™”. The goal of a Free Day is that for a period of twenty four hours you truly and completely disconnect from your work life. Now saying this, understanding this, and putting it into practice are very different things. I have to admit I love my smartphone. I do probably 75% of my job now on my Samsung Galaxy Note 3. I love that thing and I would be lost without it, but the belief is that Free Days are in fact a necessary precondition for periods of high achievement. When you take quality time away from your business, you come back with a new perspective. You find that you’re incredibly creative, and full of fresh ideas and innovations. You quickly find solutions to long-standing problems, realize more efficient ways to run your business, and innovate new client solutions. When you’re tired, you stop creating, taking risks, communicating, and delegating. Taking regular Free Days helps to keep you constantly refreshed, creative, and energized. Smart thinkers are well-rested—they have the brain power to think differently. Free Days make sure the “best you” shows up every day. Most of the time when Don went MIA he spent the first few days sleeping. He would become well rested and then an experience or a conversation would  lead to insights that created "ah ha" moments.

I have found that there is another strategic byproduct of taking free days, it helps to grow your team. When I am not around for them to ask for help, it forces them to rely on their best judgement and skill sets.  They are forced to have to figure things out and make decisions without me. I normally find that the group has come up with a better and more creative solution than if I had been involved.

I realized in watching the last few episode how great Don was at taking free days throughout the whole series. Obviously it would have been better if he had actually taken them on a more regular basis, but at least he had the self-awareness to know when he really just had to disconnect and get away. What I really envied was that he did it with no regrets, no guilt, and no worries for the agency. 

I can honestly say, I took a page out of Don Drapers book as I enjoyed my recent summer vacation in Maui. My goal was to truly disconnect and fully enjoy my free days. Although, I didn't fully disconnect, I got recharged and enjoyed several good books. (Oh how I enjoy reading!) I knew that time away was important to allow my team to develop and I returned with ideas that will grow my company and myself. It may be less exciting than teaching the world to sing in perfect harmony, but it’s enough for me.

How do you plan to spend your free days this summer?

California’s Secret Sauce—What’s the Recipe?

In addition to being chairman of the California Manufacturing and Technology Association Executive Committee, I have the honor of serving on the National Association of Manufacturers board of directors. During the spring board meetings of both organizations, there was a general sense of optimism for the state of manufacturing in our country and California. Nationally, the manufacturing base has grown by 7.5 percent. Economic activity in the manufacturing sector expanded in February for the 26th consecutive month, and the overall economy grew for the 69th consecutive month, according to the nation’s supply executives in the latest Manufacturing ISM® Report On Business.

Twelve of the 18 manufacturing industries reported growth in February in the following order: paper products; printing and related support activities; furniture and related products; primary metals; nonmetallic mineral products; food, beverage and tobacco products; miscellaneous manufacturing; fabricated metal products; machinery; transportation equipment; electrical equipment; appliances and components; and chemical products. The three industries reporting contraction in February are: textile mills; apparel, leather and allied products; and computer and electronic products.

All the data is good, but why am I optimistic about being a manufacturer, especially one located in California? I travel a lot, so people in foreign countries tend to ask where I’m from. If I tell them the United States, I tend to get a nod—maybe a smile. Usually they ask further, “Where in the US?” When I respond “California,” their face lights up and they’re excited to speak with me. In some ways, the response I get makes me feel a bit like someone famous. There is a worldwide awe about my state.

I say “my state” because I am a rarity: a California native. My father’s grandmother traveled in a wagon to California from Missouri in 1853, got here in 1854 and settled in Healdsburg. I love my state. I am passionate about all that is good about my state. It is truly the land of golden opportunities. But why? What elements make up our state’s “secret sauce?”

1. Resources
California is large and holds vast natural resources. A jaw-dropping coast line, forests, water, sun, wind, fertile ground, agriculture, minerals, oil and on and on.

2. Environment
We have great weather. Need I say more? A temperate climate spurs productivity and prosperity.

3. Education
We are blessed to be a state with so many world-renowned public and private colleges and universities. We also have a great supportive network of community colleges. There is an incredible depth of knowledge we are cultivating and inspiring within our state.

4. Innovation
Our state has been leading the country and the world with innovative ideas since the beginning. Silicon Valley and all it has generated is just the latest manifestation of that trend.

5. Technology
We are a state of early adopters. A fertile ground for fostering the acceptance and exploitation of technological advances. This is especially true in the manufacturing sector. I can’t wait to see how the internet of things and big data will change the face of manufacturing. I know California will be leading the way.

6. Glamour
Hollywood. We are home to creating dreams, be it on the big screen or TV. We have Disneyland, the original home of making dreams come true for children and adults.

7. Money
California as a state has the eighth largest GDP in the world. We are effectively a country unto ourselves. Money attracts money and we have a lot of it here. We are also home to some of the biggest VC and angel funds out there.

8. Diversity
Our state is a melting pot of people. The rich diversity of people who come to California to make their dreams come true continues to fuel our state toward prosperity.

9. Spirit
It is a state of pioneers. As with my family, many who have come to this state took great risk to do so. They came on the belief of a better life, of the belief this state was a place they could make they dreams come true.

So maybe that is what I am seeing in the faces of those I meet. Is that we are a place where dreams can and do come true. What do you think? Did I identify all the ingredients? What did I miss? I’d love to hear from you.

We’re a Lean, Green Manufacturing Machine!

Several years ago I wrote about being Lean and Green. I asked the question – “Is it hard to be 'green' or is it really just more the discipline of looking at how to run your business in a more efficient way?” One that improves your bottom line as well as reduces your impact on the environment; not regulated by government, but regulated by common sense to use the least amount of resources (lower costs) to produce your product.

So with the 45^th Anniversary of Earth Day I felt it was timely to go back and think about this topic once again. Now let me just say I am not talking about “green” to the level like my state of California is mandating with AB32 or the Green Chemistry Initiatives.

Bishop-Wisecarver Green Infographic

I am talking about common sense, how do I run my company to the best of its ability and make my product for a profit and impact the environment as little as possible? I understand that there are some companies that won’t make changes unless mandated, but let me just live in a world, for a few minutes, where people are responsible for their actions and feel a responsibility to run their companies for the good of the bottom line, as well as the environment.

At Bishop-Wisecarver, we realize the best way to appreciate our planet is by doing something to help every day and we have implemented “lean manufacturing” practices throughout the company that reduce waste of all kinds.  Whether it’s time, material or talent, lean manufacturing aims to maximize efficiency in numerous ways such as smartly allocating resources, maximizing space, recycling old material and applying employees to job’s best suited to their skills.

This sounds admirable, but what does it mean in reality for our customers and planet?  For one customer, it meant better utilizing their current space and not having to purchase, or build, an additional site. Our engineers provided product solutions that saved them space and kept them fully productive in their current location.

For another customer, it meant implementing our DualVee® wheels and racked track into their machinery.  It saved at least 10 hours per week that had been spent shutting down production to wipe down rails and belts. And you know those employees who had to wipe down the rails are happy to be doing something else with their time! Bishop-Wisecarver also provided special parts machining for a customer so they didn’t have to purchase equipment or space to manufacture it themselves. It also allowed the customer to order only as needed, thus reducing extra inventory storage costs or concerns.

Lean manufacturing is a solid, cost effective business philosophy, but we want it to be more than that – we use it to innovate and design smarter solutions for our customers.  And, in doing so, we are helping conserve, and best utilize, our planet’s resources. We think that’s the best way to truly celebrate Earth Day – everyday. What do you think?

Pi Day 2015 – Combining Math & Food for a Celebration of the Century

Pamela Kan, President
Photo: Melsha Nicole Photography

Full disclosure, math is not my best subject, in fact it ruined my chances at becoming a pharmacist, but when 3.14.15 comes around only once in a century, we need to celebrate!  While I may not be stellar at math I love STEM and making sure our kids are getting a great STEM based experience in school. So we combined two of our favorite subjects – math and food – and built the first ever Bishop-Wisecarver Pie Making Machine in honor of Pi Day 2015.  You won’t find it added to our sales catalog just yet, but you can check out what products we used to build it in a list I’ve included below.

Who says manufacturing, math and technology can’t be fun?  We made pies, had a pie eating contest and then threw, smashed and “gently placed” pies in the faces of our colleagues.  No matter what method was used, the pie made its mark. You can’t fake this kind of fun and you can check out the results in this short video.

We had fun with this historic event and made a big deal of this at our California headquarters – specially designed bright blue Pi shirts worn by all, towels filled with whip cream from wiping faces and lots of laugher echoing on the plant floor. I think I had red icing in my eyebrows for a day! Sounds like a kindergarten class, but that’s what I love about our company – we know how to work hard and play hard together.   

Our Pi Day 2015 event highlights two of the many reasons I love leading the Bishop-Wisecarver team. First, we enjoy what we do and the people we get to work with on a daily basis.  We spend a lot of hours, days, months and years with some colleagues and these relationships help us get better personally and professionally, as individuals and as a company.  When I look at our silly video, I see the smiling faces, but I also see the “stories” of each of the people represented. I know when they started working at Bishop-Wisecarver, the projects they’ve helped make successful and the extra hours they’ve put in to helping a customer realize success.  We don’t think it’s old-fashioned to say we are like a family here – that connection makes a positive difference in everything we do.  And, it’s why we can smear a pie in someone’s face and then go enjoy a beer or a round of golf together.

The Bishop-Wisecarver Family
Photo: Melsha Nicole Photography

Brian Burke, Product Manager
Photo: Melsha Nicole Photography

Secondly, this event is just one of the many ways we try to show students that subjects like math and science, and industries like manufacturing, don’t equate to a boring career.  Learning how to build a pie making machine wasn’t part of my high school curriculum, but when I tell students about our machine, or they see the video, it will open up possibilities and ideas they hadn’t considered.  Helping students understand the opportunities in our manufacturing world is one of our top priorities at Bishop-Wisecarver. We talk in classrooms, welcome tours of students, mentor in a variety of programs and sponsor local science and engineering events as well as several FIRST Robotics teams locally. We are very proud to also sponsor FIRST robotics at the national level.  We do all of this as a way of serving and educating the students of today who will be the employees and inventors of tomorrow. And tomorrow is coming faster and faster all the time! So we made pies, made a mess and celebrated our love of food and math.  Pi Day 2015 was truly a celebration for the century!

Pamela Kan, President
Scott McClintock, VP of Marketing & Technology
Photo: Melsha Nicole Photography

The automated pie making machine is based upon a LoPro® Linear Actuator. The primary linear axis is a lead-screw driven LoPro with a rotary axis made of HEPCO Motion PRT2 360-degree ring. Both axes are driven by servo motors via LabVIEW development software. The machine also has independent mechanisms for applying whip cream and frosting. 

Tell Me What You Want

I am honored to be serving my state and the manufacturing community with two recent appointments — CMTA Chairman and Workforce Investment Board Member. In an effort to identify the needs of industry, create career pathways that provide businesses with the skilled workforce they need, and to assist in putting unemployed and underemployed Californians back to work, Governor Brown has rebuilt and reinvigorated the state's long-neglected Workforce Investment Board (WIB). I am excited to serve on the WIB.

Those who know me or follow me through social media know how passionate I am about technical education opportunities for California's students and workforce.

The stripping of classes in our K-12 educational system that expose students to potential technical career opportunities is an embarrassment. The focus on our states’ four year colleges disenfranchises so many of our state's youths. I feel it has had a direct correlation on our dropout rate from high school. Our current dropout rate is at 23.7 percent, according to a report released in June 2012 from the California Department of Education. This reality then puts a huge burden on our community colleges that then serve the needs of these many students later trying to educate themselves in order to enter the workforce.

In June, I was elected to serve as chairman of the California Manufacturers and Technology Association (CMTA). I am so proud to be associated with this association. The staff is truly world-class and works tirelessly to defend and support manufacturing in our state. As a small manufacturer I feel that CMTA gives me a platform for my concerns to be heard. Being part of this association allows me to make an impact on the state of manufacturing in California. My desire is to see many more small manufacturers join me at the CMTA. Your membership in the CMTA does make a difference.

Our collective voice matters. The only way for us to affect a change is for us to speak up and be heard by our state politicians. So many of our politicians have never run a company and too many of them still believe that manufacturing is a dirty and unhealthy work environment for workers. They need to be educated that manufacturers provide some of the best jobs to be had in our state, and often, cutting edge environments using industry inspired innovations.

As I settle into these positions, tell me how I can help. What do you want me to champion? What do you want me to share with you through social media? I want to be confident that I am speaking for all of you who work within the manufacturing sector in California.

We’re Fools For Being Number One

Just in time for April Fools, on April 1, the United States became the country with the highest corporate tax rate in the world. This was triggered by Japan reducing their rate. As cited by The Daily Caller, “Our top corporate tax rate has hovered at 35 percent for years. Meanwhile, other countries have gotten the message that lowering corporate taxes encourages growth. Canada has engaged in a series of cuts, ultimately reducing its corporate rate to 15 percent. Great Britain recently announced it will drop its corporate tax to 24 percent next month and then 22 percent by 2014.”

I know some of you are going to say, well what about all those big companies that pay no taxes? Well you are right. The effective tax rate for the large companies drops us to about sixth highest in the world, according to some economic pundits. The problem is that most companies are not operating like those big guys and it is the small and medium size businesses that are really the economic engine of our country. When you figure that most small business are filing as S corps, then I have heard that the effective tax rate could be as high as 50 percent.

In my state it is even worse since California is broke. There is no plan in sight to create any sort of economic development. Instead we pass the most stringent environmental laws IN THE WORLD that cost billions to California based businesses. Now we have two proposals to increase income taxes, once again, a direct hit to all those small businesses that file as S corps.

For those of you who complain about U.S. jobs moving off-shore, this tax burden is a huge part of that equation, along with the fact that US companies carry about a 20 percent regulatory cost burden above any other country in the world.

Personally, I would love to see the tax loop holes closed up and a movement toward a flatter tax rate. There is definitely a problem when I am in a meeting to discuss tax issues for small business and the two IRS representatives can’t even agree on what the tax law is or how it should be applied.

I know this is a hot topic right now, so share your creative ideas on how you would solve our country’s tax code problems and once again make us competitive with the rest of the world.

A Different Kind of Christmas Story

This is a time of year that many sit down and share traditional holiday stories with their children. Families reminisce and tell tales of past family members and of times gone by. As I sit here at my desk in my factory in California I also think of stories; one where California had a GDP larger than most countries, and one of where the United States had the best skilled workers in the world and could make anything the country needed or wanted.

As I visit high schools in my area and talk to kids, they are not hearing the story that the USA is still the preeminent manufacturer in the world. A story that is OK and should be revered when someone can take raw materials and make it into a desired end product and that having such a skill will pay you on average $20K more a year than a service-based job. A story of how America makes products in the greenest fashion in the world — especially here in California.

So my wish for 2012? That California and the entire U.S. will write a robust and exciting chapter for manufacturing. That once again, young students (both male and female) will see the promise of working in the manufacturing sector. That every student will be given opportunities for hands-on learning within the high school environment. That we provide every means possible to promote a STEM curriculum within our schools. That we once again as a nation have pride in our craftsmen, trade workers, machinists and engineers.

This is the chapter I wish to write within the story of manufacturing. What’s yours for 2012?

Why California Manufacturers Need Flex Time

It may come as a surprise to you but in California the wage and hour laws for the manufacturing sector do not allow for flex time. We are governed by an eight hour day versus a forty hour week. I find this law so out of step with how business and personal lives work in 2011.  If a company is brave enough, here is the process they can try to go through to achieve flex time.

 

Currently, in order for employees to adopt an alternative workweek schedule, an employer must conduct a secret ballot election with two-thirds of employees in the work unit approving the proposal. The process is complex, and any misstep by the employer could lead to costly lawsuits.

Under current (and very detailed) Industrial Welfare Commission wage orders, employers may institute alternative work schedules only if a supermajority of affected employees agree to the arrangement in writing and by secret ballot. Employers must hold discussion meetings at least 14 days before secret ballot voting. Two-thirds of the company’s employees must agree to the change. Any deviation from the rigidly controlled process voids the election and subjects the employer to potential lawsuits that can seek up to three years of back overtime pay for affected workers, along with huge penalties and fines.

Moreover, variances in schedules or the use of more than one schedule—unless it was offered in the secret ballot election—are prohibited without repeating the voting process. This in effect eliminates most employers and employees from choosing schedule options such as compressed workweeks.

So today my HR Manager Katie Mendoza went up to Sacramento to testify in front on the Senate Labor and Industrial Relations Committee. I appreciate that the California Manufacturing and Technology Association is behind changing this law to help support manufacturing viability in our state. Below is the letter she will be presenting on my behalf.

November 14, 2011

Dear Senator Lieu, 

Bishop-Wisecarver Corporation (BWC) is a family owned manufacturing company incorporated in 1950, that in its second generation is WBENC certified woman-owned. We have made a variety of industrial products over the years and currently specialize in guide wheels and guided motion technologies. My father founded the company and I have been working for BWC since 1991.

Our product line includes quality made components and accessories, manual linear guide systems, actuated linear guide systems, and rotary guides and systems. Stainless steel, high temperature, and clean room compatible products are among Bishop-Wisecarver's more recent product introductions. Our more popular product offerings include the following trade names - DualVee®, LoPro®, UtiliTrak®, and GV3. New product development continues to be an ongoing process at the Bishop-Wisecarver Corporation, with innovative designs being introduced at regular intervals.

We have 51 employees of which 14 are part of Steel Workers of America.  We have a proud history that mixes both strong values and continuous improvement. Our commitment to quality and our customers has enabled us to achieve sustained growth with our various product lines since the beginning. We are also committed to the next generation of engineers and machinists. We are an active supporter of local STEM programs and FIRST robotics.

I value my employees and their feedback and feel it is important to ask for their feedback and implement their ideas.  At the end of 2010, I asked employees, several questions, but the one that stood out the most in regards to flexible work schedules was, “BWC would be a better place to work if…”  I received multiple responses like the ones below: 
   “The ability work 9/10 – to have every other Friday off”
   “Have more flexible hours – work 4/10’s and have Fridays off or 9/10s and have every other Friday off.” 
   “More flexibility with work time.”
   “Flex work hours or alternate schedules would be good.”

In addition, you will find a list of signatures of employees that support a flexible work schedule.  Unfortunately, due to business needs, they could not come to voice their support.

If as a company we were able to implement a flexible work schedule it would increase our productivity, employee morale and customer satisfaction.  I am a firm believer in providing exemplary customer service and being the customer’s first choice.  With this change, it would boost the morale of my workforce enabling them to provide even better customer service.

I truly thank you for your time and consideration of this important decision.  Unfortunately, due to business travel I am unable to attend, but my HR Manager, Katie Mendoza will be there to represent Bishop-Wisecarver Corporation and the employees.

If you need any additional information or you would like to meet or speak at a later date, I would be happy to help in any way possible.

Warmest Regards,

Pamela Kan

President

Bishop-Wisecarver Corporation

cc:           Senator Mark Wyland (Vice Chair)

                Senator Mark DeSaulnier

                Senator Mark Leno

                Senator Alex Padilla

                Senator Sharon Runner

                Senator Leland Yee

Everything Grows with Manufacturing

I am currently serving as Vice Chair of the California Manufacturers & Technology Association (CMTA). The CMTA staff worked very hard to put together the California Manufacturing Summit, "Everything Grows with Manufacturing" last week in Sacramento. I was happy and encouraged to see how many people showed up. I think the panel, with its diversity of interests, shows how important the topic is to our state, the economy, and our children's future.

Here are the top ten topics of discussion:

1) California cannot survive as a service based economy. A strong middle class is based upon the wages earned within the manufacturing sector (the average manufacturing job earns about 20K more than a service industry job).

2) We have to make technical education, with strong Science, Technology, Math, and Engineering (STEM), a priority for all schools for all children. Business has to get involved in helping schools develop their STEM curriculum. Young people need to get a marketable skill. Investing in career technical training is one of our best bangs for the buck. Apprenticeship programs are another way to advance the skill-set of our kids and grow long-term job skills, and prepare our future workforce. We have to open the door to the future of our kids. Eighty percent of California students don't go on to the UC system. Employment Training Panel funds (ETP) must be used in the best manner. California can't afford to lose these monies to the general fund. Workforce investment funds are needed to train for the needs of a higher skilled workforce. We need to see our schools as long term incubators.

3) Our skilled workforce is aging and we don't have a backup. We have to make manufacturing a focus again. Parents need to feel that it is a safe and smart choice for their kids to want to make a career in manufacturing. Kids have to see manufacturing as a cool, creative and innovative career choice and understand that manufacturing does pay well.

4) While California is the hot bed of venture capital, often the ideas are then produced in other states or countries. We need to keep production within our state as well. California dominates VC money because of the ideas and innovation coming out of our California university system. We are a financial innovator on a global basis. If California fails to attract the growth capital sector we will kill off our future. We currently have the JFK gap. JFK created a whole decade of enthusiasm by stating we have a purpose as a country. California is also a country. What is our purpose? A simple economic point, California is incredible at attracting the best minds into our universities but we completely lose the scale up after school.

5) Coast of Dreams. California needs an economic plan. It is shameful that a state that is the 8th largest GDP in the world has no defined economic plan. There is no economic development office for our state. This does not work for our state. This is about our democracy not just our state. We must create a vibrant private sector that allows entrepreneurs to take risks and build businesses and innovate. When people come together with a purpose we can get things done. Real passion makes a difference. We need to pick the most critical systemic reforms to focus on. A cabinet level position that reports to the governor to make business feel wanted, would be a great first step. We have to start marketing California. We had ten overseas offices at one time, now we have none. The private sector votes with their feet. We need to keep them here in California. In 2003 we shut down our trade and commerce offers, while other states were vastly expanding their offices. Even cities like Chicago are opening offices. We have to have an export and trade strategy. We have to acknowledge the problem. Stop the denial. We have depression era unemployment statistics in several counties in our state. This then leads to skills gaps in our workforce. California is still the innovation capital of the world and we need to get that message out and change perspectives. Texas is one cohesive state. California has to get its act together and got one purpose on both sides of the aisle. We need to develop a robust retention framework.

6) Globalization is not going to go away. California has an unfavorable business climate while other states are actively striving to improve their business climates. Supply chain is a vital piece of the pie for a vital manufacturing sector in California. We need to reduce the cost of manufacturing in California. We can take actions to change our policies if we have the WILL to do so. California is blessed by its visionaries that invested in our infrastructure and facilitated our golden area. Versus the choices we making now and cutting from our future. There is no commitment to how we are going to generate our future revenues.

7) Innovation - Research and development follows manufacturing wherever it goes. Small companies create a lot of innovative as well. We need to support the creation of new technologies. Manufacturing drives innovation not just entrepreneurs.

8) Going Green - The five largest clean tech deals where in California, a prime location for the bio-fuels market. We have the resources and the agricultural waste needed. A bio-fuel plant has to be within 50 miles of their source materials. California could really go after this market if it had the desire. It is a great opportunity for our state. But we have to build consensus across unusual allies to make this happen. Green business has to make good stuff happen sooner. Not just stop the bad stuff.

9) Regulatory Burden - The increased costs of doing business in California are well documented. But along with the costs comes an increase in time. Decisions by state agencies can take months or years. Don't drag out the answer; create a system that allows agencies to tell businesses yes or no faster. Site selection is a very metrics driven process. Why would a company chose to come into California with the current system? When companies are started here in California the easiest thing to do is to keep them here. California needs to focus on this issue first as to why business is leaving and/or not reinvesting in our state.

10) Create an informed state government. All government officials need to understand the regulatory impact of their actions. We have to get our act together and got one purpose on both sides of the aisle. California needs to establish a framework of leadership. Politicians tend to be risk adverse. But at this juncture California needs political leaders to take some risks. The governor needs to show up in the parts of our government where things need to get done. That would create an exciting future for our state. The governor needs to be an economic cheerleader for our state. Our state politicians need to demonstrate leadership that they care about a change in behavior. We are at a unique juncture in our states history. The best is yet to come for California.

CMTA Manufacturing Summit:
Moderator for the Day: Political Columnist, California's Capitol - Greg Lucas


Panel:
Bob Clesia, Boeing
Ross DeVol, Milken Institute
Bob Dutton, CA 31st District, CA Senate
Bob Epstein, E2
Mike Jimenez, CA Correctional Peace Officers Assoc.
Eric McAfee, AE Biofuels, Inc.
Gavin Newsom, Lt. Governor, CA
Art Pulaski, CA Labor Federation, AFL-CIO
Jack Stewart, President, California Manufacturers & Technology Association (CMTA)
Julie Meier Wright, CA Council on Science & Technology

CMTA overview of the summit - click here

This week I was quoted in the WSJ. See the article below.

ECONOMY

AUGUST 11, 2010

Firms Spend More—Carefully

Equipment Purchases Make Up for Recession Cutbacks, Not to Raise Production

By JUSTIN LAHART

(Please see Corrections & Amplifications items below)

Companies in the U.S. are stepping up purchases of equipment and software at the fastest pace since the late 1990s. But much of the spending is aimed at replacing older equipment after recession-related postponements or to improve efficiency—not to raise production or boost hiring.

After one of the sharpest declines in spending on equipment and software, companies in the U.S. boosted their spending on such products at a 21.9% inflation-adjusted annual rate in the second quarter, after the first quarter's 20.4% increase, the U.S. Commerce Department said.

The second-quarter jump was the biggest since 1998, when enthusiasm for technology was running hot. It was a much stronger increase than what was seen after the previous two recessions.

That stands in sharp contrast to the muted hiring and lackluster consumer spending that have characterized the economy since it began growing again in the middle of last year.

International Paper Corp., for instance, cut capital spending to $534 million last year from $1 billion in 2008. This year, it expects to raise spending to about $800 million.

Some of the company's higher spending will add capacity in developing markets such as Brazil, where demand for paper products is growing. But in the U.S., where the bulk of International Paper's operations are, the money will go into maintenance, improving energy efficiency and meeting regulatory standards, rather than boosting capacity.

"Businesses invest when there's demand," said International Paper Chief Executive John Faraci. "There's not going to be any [U.S.] capacity expansion, or for that matter job creation, until you see an increase in demand."

American companies, particularly manufacturers, recently have been raising output without adding workers.

The Labor Department reported Tuesday that productivity, measured in output per hour of work, fell at a 0.9% annual rate in the second quarter from the previous quarter. It was the first quarter since the end of 2008 in which productivity didn't rise. That's a hint that companies may soon need either to increase workers' hours, hire new ones or install more labor-saving equipment.

Companies may keep increasing spending on equipment, computers and software even if they don't add capacity. Nomura Securities economist David Resler calculates that businesses didn't spend enough in 2009 on new equipment to offset the wear and tear on their existing equipment. As a result, the capital stock—the inflation-adjusted value of all business equipment and software in place in the U.S.—dropped 0.9% from 2008—its first decline since World War II.

Mr. Resler estimates that even with the recent sharp increases in capital spending, the total capital stock is still $100 billion less than it was two years ago. That suggests that capital spending could continue to grow strongly the rest of the year.

The rebound in capital spending and strong demand from overseas markets such as China have boosted companies that make equipment and software. Revenue at technology companies in the S&P 500 index was up an estimated 21% in the second quarter versus a year earlier, according to Thomson Reuters, and profit rose by 65%. Capital equipment makers such as Caterpillar Inc., Rockwell Automation Inc. and Illinois Tool Works Inc. reported large second-quarter sales and profits gains.

Sales at Bishop-Wisecarver Corp, a Pittsburg, Calif.-maker of motion systems used in everything from wood-shop machinery to food-processing plants, are up sharply from last year, and are on track to be as strong as in 2007, before the recession kickded in.

Bishop-Wisecarver President Pamela Kan thinks some of the rebound has come from companies trying to make plants more efficient, but she worries that many customers are catching up on projects put off during the downturn. That makes it difficult for her to gauge how strong business will be in the future and plan accordingly.

"I don't know how much of this is just pent-up demand," she said. "It's a finger in the wind now."

As a result, she's hesitant to hire, but is looking to add a few workers to the company's payroll of about 45. She doesn't plan to make any big purchases, in part because the company did major upgrades to its equipment right before the recession hit.

In general, manufacturers, which are benefiting from the global economic upswing, are boosting capital spending more than services companies are.

In a survey conducted by KPMG International in June, 35% of U.S. manufacturing executives said they expected to increase capital spending over the next year, while just 7% said they expected such spending to decline. In comparison, 27% of service company executives expected to increase spending, with about 9% expecting to spend less.

On Monday, Carrols Restaurant Group, which operates Burger King franchises and other restaurants in the U.S., said it expected to make capital expenditures of $40 million to $45 million this year, up from $37 million in 2009, but below 2008's $62 million. Most of that increase will be devoted to remodeling and equipment purchases at existing restaurants.

"We have limited capital spending for new-unit development this year so that we can continue to reduce debt," said company President Dan Accordino.

Ariens Co. of Brillion, Wisc., which employs about 1,000 workers making lawn mowers and snow blowers, has been buying capital equipment steadily over the past two years, taking advantage of the flood of inexpensive machinery that came on the market as other companies pulled back. Those purchases were aimed not at increasing Ariens' manufacturing capacity, but rather to bring in house work that it used to have outside suppliers perform.

Last year the company bought a pulley-making machine from a former General Motors Co. supplier for $1 million—a new one would have costs $4 million, said CEO Dan Ariens—and began making pulleys it used to buy. "It kept about 15 of our people busy," he said, helping the company avoid layoffs.

Mr. Ariens reckons he will keep buying equipment, but that he will be getting less bang for his buck in the year ahead than he has in the past year.

"I'm pretty confident that the cost of hardware and software is going to go up as the recession abates," he said.

Corrections & Amplifications

International PaperCorp. plans capital spending of about $800 million this year. This article incorrectly gave the figure as $800 billion.

Write to Justin Lahart at justin.lahart@wsj.com

 

The Intel-Affiliated Contra Costa Science & Engineering Fair

The 2010 Science Fair was held on March 25, 26 and 27 at Los Medanos College in Pittsburg. My company had the honor of supporting this event again this year. My father, Bud Wisecarver has been a judge for several years now and we have also been a sponsor. This year we gave out two special awards – one in the junior division and one in the senior division - for displaying the best "Principles and Technical Innovation within Mechanical Engineering". We wanted to reward students that showed some imagination and critical thinking. We awarded $200 to Caroline Lamoureux and $800 to Michael Blatz.  Caroline attends NorthCreek Academy and her project was "The Effect of Weight Distribution on Bridges". Michael goes to De La Salle High School and his project was the "Mitigation of Carbon Dioxide in Car Exhaust". I was honored to be present to give the awards in person. Armed with the company video camera I also attempted to take video. Stayed tune for the YouTube link to that as soon as it gets edited. It is so inspiring to be around kids that are excited about science and engineering. The enthusiasm is contagious and electrifying. I was really amazed at the level of some of the projects presented. We will be rooting on Caroline as she advances to the state competition. Michael was selected as an alternate. To learn more about the fair see http://www.cccsef.org/index.html

It was great to see so many people there to cheer on the students! 

More on the California Jobs Initiative

To learn more about the California Jobs Initiative 2010 and to download the petition go to http://www.jobs2010ca.com/

Fiorina slams California's global warming law (March 27)
Calling it an "unbelievable job killer," GOP Senate candidate Carly Fiorina on Friday urged the elimination of California's landmark global warming law. If AB 32 is not scrapped, Fiorina said, she will back an effort to suspend the law until unemployment in the state drops to 5.5 percent and stays there for one year. "Suspending it is better than keeping it in place," Fiorina said in a meeting with The Bee Capitol Bureau. Fiorina said the state law and a federal effort to cap greenhouse emissions would cost trillions in lost economic output. Calling it an "unbelievable job killer," GOP Senate candidate Carly Fiorina on Friday urged the elimination of California's landmark global warming law. If AB 32 is not scrapped, Fiorina said, she will back an effort to suspend the law until unemployment in the state drops to 5.5 percent and stays there for one year. "Suspending it is better than keeping it in place," Fiorina said in a meeting with The Bee Capitol Bureau. Fiorina said the state law and a federal effort to cap greenhouse emissions would cost trillions in lost economic output.
Rob Hotakainen in the Sacramento Beehttp://www.sacbee.com/2010/03/27/2636899/fiorina-slams-californias-global.html
 

Why Bishop-Wisecarver Supports the California Jobs Initiative

Earlier this week as a director for the California Manufacturers & Technology Association (CMTA)  I voted to support the California Jobs Initiative, a proposal to temporarily suspend implementation of AB 32 until California's unemployment rate sinks to 5.5% for four consecutive quarters.  The initiative will likely go before voters on the November, 2010 ballot.

 I believe along with the CMTA that adjusting the schedule of regulations under the state’s greenhouse gas reduction law until the California economy recovers is necessary because:

AB 32 will cost California even more manufacturing jobs

Restoring jobs and supporting a healthy California economy should be our state’s first priority.  We’ve already lost over 630,000 high wage manufacturing jobs since 2001 and AB 32’s costly regulations will put even more jobs at risk – jobs we simply can’t afford to lose. Temporarily suspending AB 32 will help keep manufacturing in California.

 AB 32 implementation will increase costs for manufacturers, employers and consumers

Sharp increases in energy and other costs for manufacturers under AB 32 will translate not only to lost jobs but to higher costs for employers and consumers at a time they can least afford it. This will worsen the current recession and delay the economic recovery California so desperately needs.   

 Temporarily suspending AB 32 will help keep California manufacturing competitive

Because manufacturers in other states and countries are not subject to AB 32 costs, implementation at this time will create an unlevel competitive playing field for California manufacturers.   The temporary suspension of AB 32 will give California manufacturers an incentive to remain in the state rather than move jobs and tax revenues to states where their operating costs would be more affordable. 

 California will still have the strictest environmental laws in the country even if AB 32 regulations are postponed until the economy recovers

AB 32 applies only to greenhouse gas emissions, which do not have local impacts.  Suspending AB 32 will not weaken or repeal other existing laws that protect our air and water quality, which have made California manufacturing facilities cleaner-operating than most in other states.

 I am part of a family that has lived in California since 1854. I love my state, and I want to see it return to the vibrant economic powerhouse it once was. Manufacturing jobs are essential to California’s economic recovery. Temporarily suspending  AB 32 will help preserve jobs and make it easier to create more.  The California Jobs Initiative will help put Californians back to work and its economy back on track.