February 29, 1999

New Jersey's Manufacturers Getting Hands on Help

The New Jersey Manufacturing Extension Program (NJMEP) today announced a broad plan to assist New Jersey's manufacturing sector address the Y2K problem. This effort was structured in response to survey information presented by Industry Week demonstrating small manufacturers were among the least prepared in the manufacturing sector for the Y2K problem.

NJMEP, a not-for-profit organization, provides small and medium sized manufacturers with access to technology and business management tools. The program, which was modeled on the Agriculture Extension Program, utilizes Field Agents assigned by county to enhance a manufacturer's ability to take advantage of NJMEP's network of academic and private sector resources. While New Jersey's MEP has only been in existence for two years, the program has been in place nationally since 1988 and boasts a total of 75 centers across the country with at least one in every state. NJMEP has provided over 200 New Jersey manufacturers with industrial modernization or business management assistance since its inception. Services range from writing Employee Handbooks to developing Product Prototypes to Chemical Materials Analysis.

The Y2K issue is a serious threat to New Jersey's manufacturing economy according to NJMEP because banks, insurers and major corporate leaders across the country are threatening serious actions against those who do not exhibit 'due diligence' in reviewing their operation's for potential Y2K failures.

Robert Loderstedt, President of the New Jersey Manufacturing Extension Program, submitted written testimony to U.S. Senator Bennett at an October 7th, 1998 meeting of the Special Committee on the Year 2000 Technology Problem that indicated 1,000 of the 13,000 small manufacturers in New Jersey could face potential closure in the Year 2000 and between 2000-3000 others may need assistance in becoming Y2K compliant.

"The Y2K challenge is one of many that a manufacturer faces, but the real danger is that they do not see it as a business problem. Instead it is viewed simply as a computer problem and relegated to a low priority.

The truth is time is running out - banks are refusing to extend credit and insurers are refusing to issue policies based on whether or not an organization can demonstrate they are Y2K compliant. The manufacturing community needs to move forward and move forward quickly," stated Robert Loderstedt, President of the New Jersey Manufacturing Extension Program.

In order to reach a larger number of manufacturers, NJMEP has partnered with New Jersey's nineteen county colleges, the Department of Labor and the Office of Accounts Management in the Commission of Commerce and will be hosting seminars, user-groups and on-site assistance to aid New Jersey's 13,000 manufacturers. At no cost, NJMEP will provide a Y2K Self Help Tool that allows a company to inventory all office machine software and factory floor devices (embedded systems) and prioritize them according to their criticality to the business. Guidance will also be given to assist in finding whether the systems are Y2K compliant. If the information is not readily available, a manufacturer can contract with NJMEP to look up various embedded systems on a nationally recognized database supplied by Tava Technologies.

In tandem with its effort to assist New Jersey's manufacturers with the Y2K issue, NJMEP has also worked diligently to provide small and mid-sized manufacturers with access to technology and best management practices.

For example, NJMEP worked with Besam Automated Entrance Systems, located in East Windsor, (Mercer) to look for fresh ideas and a better way to conduct their management program. Besam designs, fabricates, installs and services swinging and sliding door systems for the commercial marketplace.
To begin the process, a NJMEP Field Agent conducted a Quick View™ assessment to evaluate the company’s technical and business operations. Quick View™ compares companies of similar size and Standard Industrial Classification (SIC) in various operational areas to identify areas of concern. This analysis, which is available to any New Jersey manufacturer, showed Besam had a significant weakness in quality management, specifically, in external failure.

“What we perceived as a very complex issue, they (the NJMEP Field Agent) made clear and simplified and provided a solution not very difficult to administer,” says Besam President Joe Loria.

The NJMEP field representative recommended and provided "A Cost Of Quality Program" which is a universally accepted model that measures the cost of quality in proportion to the total sales volume. According to Jim Cicca, Director of Plant Operations, “adding an investment of $5000 to the prevention cost and $15,000 to the appraisal cost Besam was able to save $150,000 in both internal and external costs.”

The external failure cost reflects the most significant loss for the effect is not only in revenue, but in company credibility resulting from dissatisfied customers.

“By taking preventative measures the cost of quality went from 9% to 8% in one year,” says Cicca.

As a result, cost of quality has considerably declined and structure was given to their quality initiatives. In addition, the increase in productivity has been a pivotal rallying point internally in heading toward a more productive and prosperous direction. Loria points out, “Besam is seeing an ongoing improvement, not just an initial bolstering.” NJMEP continues a relationship to assist in other areas and has played an integral role as the Besam Corporation continues to grow.

In another instance, C-Tech Associates, which is located in Andover, (Sussex County) manufactures test instruments for computer and communication networks. The firm supplies training kits and tools to training programs for certified network technicians. Through an innovative agreement, graduates are recognized as certified Lucent and the International Brotherhood of Electrical Workers network technicians.

C-Tech needed to reduce manufacturing time so it could respond more quickly to the rapidly increasing order demand, but did not want to hire additional employees. A NJMEP Field Agent came out to review their plant and found that C-Tech was employing a very time consuming hand soldering process to produce its printed circuit boards. While automation was not an option because the volumes were too low, NJMEP was able to demonstrate a technique using a solder pot that mimics the timesaving advantages of machine soldering.

As a result, C-Tech reports that it is producing printed circuit boards five times faster than before. With more experience, this will increase to 8-10 times faster, and production demands will be met within existing staff resources.

While NJMEP believes that the most immediate problem for the manufacturing community is the Y2K issue, it also believes that over the long term there are many other business and technology issues that need to be addressed. The organization's overarching mission is to make New Jersey's manufacturers more productive, profitable and globally competitive.

"Part of our mission is to move each of these companies to high performance firms. What is largely overlooked is the importance of this to New Jersey pharmaceutical and high tech industry because people do not realize that it is these small manufacturing enterprises that make up the supply chain for our state's larger corporations," emphasized Loderstedt.

Loderstedt also pointed out that the decline in manufacturing jobs over the last decade has not lead to an equal decline in the productivity. Business News New Jersey's Don Scarry cited statistics in a March 30, 1998, article that indicated 'between 1985 and 1994 manufacturing employment in New Jersey declined from 729,000 to 512,000 (a loss of 30%) yet during this same period the contribution of the manufacturing sector to New Jersey's GSP only declined from $36.4 billion to $35.6 billion, a decrease of only 4% in constant 1992 dollars.'

Loderstedt concluded that 'New Jersey's manufacturing sector made enormous gains in productivity while streamlining its workforce and left New Jersey with the opportunity to build a manufacturing future - NJMEP will act as a catalyst to make this happen.'

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