July 2009 | Volume 3, Issue 2
Lean But Definitely Not Mean
Educating New Jersey’s Manufacturing Workforce
Looking forward, we are all concerned about what the economy will bring and how it will impact our ability to keep our company and employees at the top of their game. With so many changes in the marketplace, it becomes even more critical to continue to train employees in the best manufacturing practices to assure jobs stay in New Jersey. The New Jersey Department of Labor and Workforce Development (NJDOL) through the Workforce Development partnership (WDP) provides financial assistance to make certain that happens.
Through the Office of Grants Operations, the NJDOL provides a number of funding opportunities for New Jersey Businesses: Customized Training Grants, Literacy Skills Training Grants, Apprenticeship Programs, Green Jobs Training Partnership program, and Manufacturing Incentive Program.
The Department and the NJMEP have strategically partnered to ensure that New Jersey Manufacturers are aware of the Customized Training Grants and effectively take advantage of the opportunity to leverage state training dollars to train employees. To help those interested in applying for Customized Training Grants, the NJDOL hosts technical workshops quarterly to provide assistance in completing the application process. In addition, mini workshops, which require an RSVP, are scheduled twice a week. The grants are competitive, so it is important to understand the process and what the department is looking for in the application. NJMEP has a significant level of expertise in helping many NJ manufacturers in securing Customized Training Grants and implementing the training. In fact, NJMEP has assisted New Jersey manufactures to secure an average of $2.5 million in Customized Training Grants over the past three years.
Three points that will be key in the application process for FY 2009-2010 are:
1) The program for which funding is requested must be realistic in scope and deliverability.
2) A Career Ladder – Is there a career path on which employees can improve their position within the company.
3) The Narrative – What do employees need to succeed in the organization and what does the organization need to meet its mission. The narrative needs to provide a clear explanation of the vision and goals of the applying organization and how both employees and the business will benefit from enhancing the skills of the workers.
The State is expecting the grants to assist in the creation of new jobs, the retention of jobs and/or increasing in wages for the trained workers. A clearly written narrative defines the parameters on which to measure the success of the training program and should lay the foundation for indicating how the State’s objectives in funding the training have been met.
It’s no secret that the State is facing significant budget challenges just as businesses have been challenged by the economy. However, the Governor remains committed to help NJ businesses to remain and grow in the State.
When Ana Montero joined the Office of Grants Operations as Assistant Director, just as any business owner would do, she looked at her organization, then conducted an assessment that determined the application process could be improved to assist businesses and streamline efforts. After talking with businesses, stakeholders and staff, Montero determined she needed to publish a schedule of application and notification dates as applicants had previously no way of determining when grants would be awarded. She also made certain the application process was open, competitive and transparent to reflect the Governor’s new ethics code. Clients explained they were often unclear as to what the department was looking for in the application. To address this concern the quarterly workshops were established. This year, mini workshops were added twice a week. The workshops include a panel discussion with grant recipients who share their experiences with the process, the training and the results.
Driven by wanting to provide her clients with the best possible resources, Montero met with vendors providing the services to DOL clients. One vendor impacted her own operation. After hearing Bob Loderstedt, President of NJMEP speak, Montero applied some of the Lean practices Loderstedt spoke of to her group.
Montero recently spoke with us. “The Department is proud of the successful relations with NJMEP. NJMEP understands the manufacturing sector and is very realistic in its grant applications. They rarely leave unexpended dollars on the table, which allows us to make better grant determinations for other businesses,” reported Montero.
Baxter Healthcare, a DOL grant recipient and NJMEP client, sat on the panel during the most recent DOL technical Training workshop. Baxter’s HR training and Development expert Jennifer Grace, spoke on the importance the DOL grant played in funding its Lean Training. Another NJMEP client, Westlock Controls were able to train its workforce in Lean Manufacturing through a DOL Customized Training Grant. Sam Belony, production engineer for Westlock reported, “Through the training the company was able to reduce its shop floor by 50%, improve product workflow in one line by 75% and identify work that is currently being done on the outside that could be brought inside, creating more jobs within the company. We couldn’t have done it without the DOL grant.”
The amount of funding for the 2009-2010 grant programs have not been announced yet. Montero, speaking at the May workshop, shared her strategy should DOL experience the same kind of budget cuts other departments are facing… “We will not cut the number of grants, however, we will be looking very carefully for applications that are realistic regarding implementation of the programs seeking funding. If grant amounts are reduced, companies who wish to train their employees will still be able to receive assistance from us.”
New Jersey manufacturers have been able to implement programs that otherwise would not have been possible had it not been for the DOL Customized Training Grants. If you are interested in learning more about the grants, how they can assist your company, and applying for a grant, contact us for more information or for a complimentary Quick View Assessment to identify areas in which a grant can be most beneficial.
Responsible Waste Management Can Add To Bottom Line
Manufacturing companies throughout the US are looking at ways to reduce costs. Many have found waste management as a place to do this, and through a little research and innovation, some manufacturers are actually making money from implementing responsible waste management programs.
Whether simply looking at introducing recycling paper, bottles, cans and cardboard or looking at a comprehensive program throughout an organization, more companies are taking up the Reduce Reuse Recycle mantra.
Garry Peterson, president of the Institute for Green Business Certification, Inc. shared stories of companies he has helped become a certified green business. A mid-western lumber company had been paying $17,000 per year to have its sawdust removed to landfill. With some research the company located a manufacturer of animal bedding that used sawdust to produce it product. Instead of the sawdust shipping to landfill, the bedding manufacturer provides a dumpster, picks it up weekly and pays $200 per load for the sawdust.
Imperial Billiards, located in Hope Township, New Jersey, turned its sawdust into a new product line for his company. Valerio Vindici, co-owner of the company that manufacturers pool tables, shuffle boards and bars, took a customer’s comment to heart and within months was supplying his sawdust to wood pellet manufacturers and began distributing the product.
Vindici, who has been separating his wood waste for ten years, is able to divert approximately 1/3 of his sawdust from landfill to wood pellets as only his solid wood waste can be used for the pellets. The wood pallets and scrap wood are given away to further reduce the volume of waste. “In the past four years my cost per dumpster per month has gone from $72 to $98. Factoring in the additional per ton surcharge I now have to pay, there is definitely a savings,” reports Vindici.
Vindici and his partner Anthony DeFillippis were recently featured in the Star Ledger as a small business dealing with the impact of the recession. Ingenuity and responsible waste management teamed up and provided this company with a win/win waste management model.
US Foods also turned its contribution to landfill into a profit center. Rather than paying $50-80,000 annually to dispose of its large amounts of shrink-wrap, at the suggestion of Peterson’s company, US Foods purchased a compactor. They then sold the compacted wrap to a manufacturer of decking material adding $12,000 to its bottom line.
Part of the green business certification process requires looking at the company’s waste management process. Many companies conduct waste audits as part of its transition to a green business while others use it as part of its overall operational analysis. These audits are taken to:
· Establish baseline or benchmark data
· Characterize and quantify the waste streams
· Verify waste pathways
· Identify waste diversion opportunities
· Identify source reduction opportunities
· Assess effectiveness of current systems to improve efficiency of waste management system
· Obtain detailed data on waste generation allowing more accurate product costing.
In Australia, manufacturing companies are required to be compliant with waste legislation. One medium sized food manufacturer with multiple sites and 800 employees invested in a detailed audit of total waste and its recycling stream. The audit included a process and site review and developed recommendations and an action plan, which included educating all site personnel and the creation of waste reduction teams.
The findings indicated 62 per cent of material generated could be diverted from landfill, an additional 30 per cent of the waste was identified aspotentially recyclable. The savings, identified through process improvements, could amount to $132,000 annually. In adddition, the audit indicated the value of product being discarded totalled $700,000.
Within six months of the inauguration of the waste reductionteams the company had realized annual savings of $413,000 in its waste costs, with a ROI of 477 per cent.
Fimbel Architectural Door Specialties, of Whitehouse has recently been certified as a green business. Bob Dashnaw, project manager, and Erin Fimbel were responsible for the certification process. Looking at the company’s waste management model was part of the certification process.
Fimbel had environmentally sound practices in place when they began the green certification process. The company has been donating its wood scraps to the theatre department of local schools and saw dust, which they bag, is given to local farmers for use as horse bedding. Fimbel ADS goes beyond simply recycling materials. The company placed a dumpster dedicated to collecting aluminum cans in its parking lot. Its available to the community for depositing cans that are donated to a local charity. The cans are crushed and money received from the recycling is presented to the charity.
Fimbel’s general waste is picked up by a Raritan Valley Disposal, that also provides them with a covered dumpster for all recyclables—the contents of this dumpster are limited to glass, paper, some plastics and corrugated cardboard. The disposal company, which is owned by Republic Services, salvages, repackages and sells the recyclable materials to third parties. Non-recyclable waste goes into Fimbel’s Municipal Waste dumpsters. “Recyclable content to Raritan Valley Disposal is approximately a four yard container per month. We are charged for the pick-up of recycling for Raritan Valley Disposal and all of our scrap metals. Plastics used in the manufacturing process are picked up when we get deliveries and reused at no charge or credit to our account,” reports Dashnaw.
“Companies need to start by looking around at their waste. As we learned it is easy to start a recycling program. The most rewarding aspect of recycling is being a responsible member of the community. Our employees have taken many of the lessons learned home. Most follow the requirements of the municipality they live in regarding recycling. We’ve even seen more carpooling by employees,” Dashnaw added.
Take a look around your facility and at your waste management bills. Possibly with some creative thinking you can change a cost center into a profit center and take a small step down the road to an environmentally responsible waste management program and becoming a good corporate citizen.
Smart Energy Policies Can Reduce Taxes
Energy Efficient Lighting Systems Can Save Up To $0.60 Per Sq. Ft.
There are significant federal tax incentives available to manufacturers through the Federal Energy Policy Act of 2005 and the Emergency Economic Stabilization Act of 2008. These bills encourage energy conservation and efficiency through tax incentives. The energy savings must be accomplished through energy and power cost reductions in a building’s heating, cooling, ventilation, hot water, and interior lighting systems. The amount deductible is up to $1.80 per square foot of a building floor area providing a buildings achieves a minimum of 50% energy savings based on ASHRAE Standard 90.1-2001. These tax deductions are available for systems “placed in service” from January 1, 2006 through December 31, 2013. The incentives are available through December 31, 2013.
The opportunity to take advantage of these energy tax incentives can begin with an immediate need such as replacing an HVAC system or changing out a facility’s lighting. We spoke with Matt Rader, Director of Commercial Building Tax Deduction and Cost Segregation Services, of SourceCorp Professional Services, a Fort Worth-based firm specializing in business tax consulting and asked him how manufacturers can further benefit from the incentive. Rader recommends focusing on lighting.
Because lighting systems are easy to upgrade and the precise energy savings gained by upgrades are already known, building owners and lessees are encouraged to focus on lighting improvements first. Lighting systems that reduce lighting power density by 40 percent and employ bi-level switching and master controls qualify owners for a full tax deduction of 60 cents per square foot off the cost of purchase. The IRS also outlines a prorated incentive schedule. As an example, consider a manufacturing building. In this instance, the baseline for that occupancy is 2.2-watts/sqft. If the building’s lighting has an overall 1.32-watts/sqft, the deduction would be $.60 per foot. To realize the $.30/sqft, the lighting power density would need to be 1.65-watts/sqft.
Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems.“We have had a manufacturer replace their fluorescent T-12 lights with 32W T-8 lights with a high efficiency ballast. With the addition of occupancy sensors and dimmer switches they received a $.60 per foot deduction,” reported Rader. “It is not just the lamps that are measured but the ballast or fixture itself. If you just replace the bulbs there is nothing preventing you from changing back at some point,” he added.
“Manufacturing facilities use a substantial amount of power for processes, but plug load and equipment power draw is not part of the calculation for determining the level of efficiency,” Rader points out. Only the building systems—the HVAC, lighting, and envelope qualify for the tax incentive.
The Energy Policy Act of 2005 also created a new tax incentive for constructing energy-efficient commercial buildings. Section 1331, the Commercial Building Tax Deduction, establishes a tax deduction for expenses related to the design and installation of energy-efficient commercial building systems. To claim the deduction under § 179D of the Internal Revenue Code1the taxpayer must obtain certification that the required energy savings will be achieved. That certification can only be issued by a properly licensed engineer or contractor, in the jurisdiction in which the building is located, using DOE-approved software.
Additionally, in certain specific circumstances, the owner of the property may allocate the § 179D deduction to the person primarily responsible for designing the property i.e., an architect, engineer, contractor, environmental consultant or energy services provider who creates the technical specifications.
We spoke with Desie O’Grady of Amgraph Packaging, a national supplier of high-quality flexible package printing for national brands and private labels. The company is dedicated to environmental stewardship and sustainability with a commitment to clean air and water, sustainable packaging and reduced dependence on natural resources.
“When the company was planning our 35,00 sq ft expansion the original design was put aside in favor of a structure that would be more energy-efficient. The degree of efficiency of the new design qualified for the energy tax deduction, which was very beneficial for us,” said O’Grady.
Thanks to these federal incentives, companies are seeing substantial tax saving in the cost of implementing energy conservation and efficiency within their organizations.
|Property Type: Manufacturing Facility|
114,000 sq ft
• High efficiency lighting
• Upgraded insulation
• Upgraded HVAC systems
|Reference Building Annual Energy Costs (per computer model):||
|Actual Building Annual Costs (per computer model):||
|Percent Energy Savings:||
|IRS Threshold For Full $1.80/sqft Tax Deduction:||
Qualified for the full
|IRS Deduction Amount:||
|Property Type: Warehouse|
High efficiency lighting & controls
|Reference Building Lighting Power Density:||
|Actual Building Lighting Power Density:||
|IRS Threshold For Full $.60/sqft Tax Deduction:||
Qualified for the $.60/sqft deduction
|IRS Deduction Amount:||
Charts provided by SourceCorp.
For more information on energy conservation and efficiency, and the tax incentives contact NJMEP.
1Internal Revenue Bulletin – 2006-26: June 26, 2006, Notice 2006-52, “Deduction for Energy Efficient Commercial Buildings”
2Internal Revenue Bulletin – 2008-14: April 7, 2008, Notice 2008-40, “Amplification of Notice 2006-52; Deduction for Energy Efficient Commercial Buildings”
NJMEP Offers Two New Programs
NJMEP is bringing two new offerings to its library of educational programs, Green 101 and Top Line Growth: Profits 101. Both programs are designed to provide manufacturers with opportunities to educate its workforce on critical issues for remaining successful in a changing marketplace.
Green Generalist (Green 101)
Green Enterprise Development
If you are looking for a straightforward and simple way to get the lowdown on introducing green into your organization, NJMEP is offering a Green 101 Workshop.
The one-day workshop, which is appropriate for the entire workforce, will give you the opportunity to learn green concepts, key environmental issues and the components of sustainability.
You’ll learn how to apply sustainable, environmentally friendly practices in the workplace. Expect a fun, fast-paced day that combines classroom-style learning with interactive “live” simulations.
Date: Tuesday, October 13th, November 17th, December 15th
Location: NJMEP, 520 Speedwell Ave. Suite 116, Morris Plains, NJ 07950
Time: 8:00 AM – 4:00 PM includes lunch
Price: $395 /per person
To Register: Visit our website www.njmep.org
Top Line Growth (Profit 101)
Think Smarter And More Creatively
Are more profitable customers, markets, products or services on the top of your priority list? If so, this half-day workshop is for you. NJMEP’s Innovation Service Profit 101 teaches you methods, tactics and techniques for growing profits.
The Profit 101 workshop uses an interactive case study format to enhance learning. Participants help a fictional electronics company find ways to confront declining sales and profits as a result of an economic recession and foreign competition. The learning simulation teaches you a fact-based approach to accelerating profitable growth. The workshop is based on a scientific process and the analysis of the success and failures of more than 4,000 innovations.
Date: Wednesday, September 16th, October 7th, November 11th, December 9th
Location: NJMEP, 520 Speedwell Ave. Suite 116, Morris Plains, NJ 07950
Time: 8:00 AM – 1:00 PM including lunch
Price: $75 /per person
To Register: Visit our website www.njmep.org
Join us at NJMEP or bring us to your facility for a day of green education or a day of creative thinking that will change the way you think AND help you grow your business.
Why not do both?
To learn more about Green 101 or Profit 101 call us at 973-998-9801 or email Kathleen Baldwin, firstname.lastname@example.org
Congratulations to HK Corp.
HK Manufacturing Corp. Receives SHARP (OSHA) Award by the New Jersey Department of Labor and Workforce Development. The SHARP (Safety and Health Achievement Recognition Program) award recognizes small business employers who demonstrate exemplary achievements in workplace safety and health.