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 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.

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

Was Kermit Right?

Several weeks ago I attended the Annual Conference for the Women’s Presidents Organization in Vancouver, BC. One of our keynotes on the last day was Mae Jemison, and she pushed the group to think about our world environment and the impact our businesses are having on the world. She asked us if we were really being good stewards in how we run our businesses. My table had, at the gist, the following questions posed to us:

1) Run your company for maximum profits and ignore the environmental impacts, and

2) Sacrifice profits, make less money but operate in an environmentally respectful way.

I was seated at a table of all manufacturers and I am proud to say we all decided that there was actually a third option – respect the earth and still make maximum profits. Maybe since we are manufacturers we think in a more solution minded manner. But I do feel that one option does not need to be exclusive of the other.

So this question has been bouncing around in my brain ever since the conference. And I keep asking myself, is it really that hard for a business to be “green”? Flashbacks of my childhood came to mind and I remember Kermit the Frog from Sesame Street singing, “It Is Not Easy Being Green.”

Now let me just say I am not talking about “green” to the level like my state of California is trying to mandate in AB32 or the green chemistry initiative.

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.

Bishop-Wisecarver’s first step on this journey was to become a Bay Area Green Business.The process was not too difficult. We had to make a few changes and investments in our business and go through several audits but the changes we made where good financially, as well as environmentally. We use less water and electricity and thus save money on an ongoing basis. We also received rebates for several of the investments, and that made it even less painful.

We are very focused on LEAN/Continuous Improvement methodologies. To me, this is really the basis of a good “green” program. We now strive for more commonality of parts (fewer materials) and faster more efficient processes (less energy and processing materials). When we look at the improvement of our capital equipment, many solutions offer better efficiencies with less scrap, little to no coolants and a reduction of other chemicals. Designing closed loop systems that recycle fluids etc. also help to reduce our impact on the environment.

So, I wonder is Kermit really right? 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? What do you think?

Your One Piece of Advice

I am currently in Vancouver BC for the annual Women President’s Organization conference.We ended a great day of programing last night with a dinner. At my table our hostess threw out a fabulous question – looking back on your time as President what is the one thing you wish you had done or learned sooner? Wow! Great question and it fueled a fabulous evening of discussions. What is great is that all the advice was relevant regardless of the business. From me being a manufacture of bearings and linear guide systems, to law, marketing, construction, consultation, healthcare and production companies, the advice all rang so true for all of us.

The following is a list of some of the top pieces of advice we discussed:

-          Trust your instincts

-          Make your career something you really love and inspires you

-          Don’t be afraid of lawyers

-          Be committed to your decisions

-          Ask for help – reach out to your network

-          There is real power, knowledge and support in peer review groups

-          The more you delegate, the more your business will grow

-          Learn and continue to work on how to be a great leader

-          Don’t be afraid to scale your business

-          Have a strategic legal plan for your company

This is the start of a great list. I would love to read what others advice would be. Please post your comments below for all to learn from.