Manufacturers risk losing out on several climate and energy tax credits if they don’t act fast—and will miss an opportunity to save millions.
That’s the message from Brian McGoff, president and chief operating officer of Dalrada Corporation—a manufacturing solutions provider focused on sustainability. The Biden administration and Congress have created additional financial incentives for manufacturers that embrace sustainable practices, but these incentives won’t be around forever.
The benefits: Currently, manufacturers can access a wide range of climate and energy-focused tax credits, grants and other benefits, from new programs and funds created through the Inflation Reduction Act to legacy tax credits like the 179D tax deduction—a provision that was expanded recently to offer significantly more value.
- “If you make qualified upgrades or a retrofits to your existing building or facility, the government used to give you a tax credit through 179D that was worth $1.88 per square foot times your tax rate,” said McGoff.
- “Now, it’s $5 per square foot for projects that meet the prevailing wage and apprenticeship requirements. That’s a direct tax credit—so if you define the project, design it, start implementation and have the proper software to demonstrate the required savings, you can apply.”
- “The lifetime cap on the maximum deduction allowed for a property was replaced with a more favorable three-year cap,” he added. “Companies are allowed to elect an alternative deduction for energy-efficient retrofits in the year the retrofitting plan is certified, to reduce the building’s energy usage intensity by at least 25%.”
How it works: The 179D commercial buildings energy-efficiency tax deduction primarily enables building owners to claim a deduction for installing qualifying systems in buildings, says McGoff.
- Taking advantage of ESG-related tax provisions doesn’t only help these companies become more sustainable, he explains. It also helps companies save money on upgrades and other infrastructure projects; cuts down costs over time once their operations become more energy efficient; and makes their property more valuable.
- “I can fix my leaky roof for the third time, or I can invest in more efficient lighting, airflow and structural upgrades for rooftop solar and improve my overall energy efficiency,” said McGoff. “I’m going to spend 10 or 50 percent more to do that, but I’ll get significant returns through these grants, tax deductions and benefits, along with direct savings from increased energy efficiency over time. The alternative is you just keep fixing your roof the same way.”
- A few other useful notes: Tenants may be eligible if they make construction expenditures, and in the case of a system or building installed on federal, state or local government property, the deduction may be taken by the person primarily responsible for the system’s design.
The rush: The current value of these credits and opportunities won’t last forever. Several of these programs, including 179D, will have a reduced value after 2024.
- McGoff cautions that the process for planning projects, vetting qualified technologies and applying for benefits takes months. And while the provisions in the Inflation Reduction Act aren’t set to disappear anytime soon, McGoff also notes that there is no guarantee that legislators won’t reduce or revoke the incentives at some point.
- “We meet with companies eligible for programs that would provide close to $3 billion in value, but more than $1 billion of it goes away in December of next year,” said McGoff. “And there’s so much work and labor that goes into creating the right design, implementation strategy and qualifying for these programs that if they don’t get started now, they’re not going to finish in time.”
The last word: “When I talk to companies about taking advantage of these programs, I tell them, you ought to do it right now, because a large portion of the value in these tax credits is going to be reduced in 18 months,” said McGoff.
Related support: Looking to strengthen your bottom line? The NAM Incentives Locator, powered by Atlas Insight, can help determine your eligibility for a variety of benefits. Learn more here.
In an interview with Nick Pinchuk, you will start with JFK, meander through Ralph Waldo Emerson and the New Testament, meet Mother Teresa along the way and find out only at the end that he helped send the Viking probe to Mars. And let’s not forget another achievement: he delivered his own child in the backseat of the family car.
The Snap-on chairman and CEO, an executive committee member and stalwart supporter of the NAM, sat down for a very wide-ranging interview with NAM President and CEO Jay Timmons at the NAM’s recent board meeting, at which he received the Manufacturing Icon Award. Here are some of the highlights.
Starting with Kennedy: When asked how he got into manufacturing, Pinchuk cites Kennedy’s 1961 speech promising that the U.S. would put a man on the moon by the end of the decade. Pinchuk was one of the “millions of young people” who pursued STEM careers because Kennedy inspired them, he said.
- He then found himself shipped to Vietnam after a stint in the Reserve Officers’ Training Corps. His experience in the army later helped launch him into management at Ford, when the company was looking for someone who could “run something 24 hours a day”—just as he had in Vietnam.
- He “parlayed” that experience into a business degree, then rose fast in two other organizations—United Technologies and Carrier. His experience in Vietnam helped a second time, leading Carrier to choose him to run its Asia operations.
- Finally, Snap-on came calling, looking for someone with international experience. “On a day in which the board of directors likely had too much wine,” Pinchuk joked, “they decided to give me the CEO job.”
The life lesson? “I probably am sitting here because I went to Vietnam. It could never have been planned.” Pinchuk said. “I’ve made friends in many countries. I’ve opened factories. I’ve met two canonized saints of the Catholic Church and actually a lot of presidents. They weren’t part of a life plan. They were opportunities that arose in which I was prepared and privileged to participate.”
- And here’s another thing he didn’t exactly plan: while driving his wife to the hospital at 4:30 a.m. after she went into labor, he found himself forced to “pull into an empty parking lot and run around, open the door and play catch.”
Purpose: Timmons and Pinchuk discussed the necessity of upskilling the workforce, and in the course of explaining why a sense of purpose is so important to workers, Pinchuk mentioned the time he met Mother Teresa.
- “I talked to her, and she said a bunch of things to me that changed my life. She said, here’s an example that might be useful to you. I was walking down a street with some of my sisters and a beggar got up from the curb.”
- “This was someone I would usually consider to be the subject or focus of my mission to help. The beggar walked over and gave me a coin of little value. And she said, you know why? It’s because he could find respect in the fact that he helped Mother Teresa. Purpose. Purpose is everything.”
On strategy: When asked about his successful 20 years at Snap-on, Pinchuk said, “I believe that an organization’s strategy best emanates from what actually works for it. And so if you understand what works for you, what’s inherent in the DNA and the capabilities of the people, then you say to yourself, ‘Well, that should be my strategy.’”
- “We have people who send me pictures of small Snap-on toolboxes with ashes of their loved ones in them because the loved ones believed that among the most important things in their lives were Snap-on tools,” he continued. “We cannot break that faith.”
- “Therefore, we have to know who we are. And, that is, we are those who give working men and women the means, through the use of Snap-on tools, to declare they’re doing something special and to signify the pride they have in their profession. Making Snap-on worthy of that belief is the core of our strategy.”
The last word: Timmons concluded the conversation by thanking Pinchuk for his support of the NAM and the Manufacturing Institute, saying, “We’re so grateful for your unwavering service to the NAM and your industry. You’re a true model for business leaders in America.”
How will AI change the work you and your employees do? The Manufacturing Leadership Council—the digital transformation arm of the NAM—is helping manufacturing leaders figure out the opportunities created by new generative AI technologies, including ChatGPT.
Recently, the MLC held a Decision Compass discussion to help manufacturers learn how to take advantage of these new tools safely and effectively.
The participants: The conversation was led by two members of West Monroe’s Center of Excellence for AI: Ryan Elmore and David McGraw. Elmore and McGraw shared their expertise and addressed questions from manufacturers throughout the call.
The use cases: AI is a diverse and complex tool that is likely to have a lasting impact on manufacturers across the United States. According to McGraw and Elmore, there are a range of applications for the technology, from supply chain optimization and production planning to predictive maintenance issues.
The workforce impact: According to Elmore, AI will also transform the manufacturing workforce.
- Some roles that involve repetitive tasks like data processing could be adjusted or eliminated, while some new jobs will be created around tasks like prompt engineering, which ensures AI programs deliver the most useful and accurate results. Most importantly, however, existing jobs will likely be modified to account for new tools.
- “Some are going to go away, some are going to be created, but the vast majority is going to change mentality, change infrastructure, change the way we work,” said Elmore.
Prompting success: Elmore and McGraw emphasized that the key to using generative AI effectively is developing useful prompts. How you ask AI programs for information, and what data you provide, will determine the quality of the output. They provided a few broad guidelines:
- Keep it simple: Your prompts should be detailed, precise and as succinct as possible.
- Data matters: The better and more detailed your data, the better your output will be.
- Keep it human: Generative AI still requires a human to determine the reliability of the output. Manufacturers shouldn’t plan to use outputs blindly without keeping a human in the loop.
- Share safely: Assume anything you put into AI that is not behind a paywall is not private. Only use data that you’re comfortable with others viewing.
- Follow up: If you receive outputs that don’t make sense, or that indicate some sort of failure, ask the program for more context and problem solving to assess whether the output is accurate or beneficial.
Safety first: AI can also be used in negative ways—for example, by cyber attackers attempting to gain private information from you using software that mimics the voice of someone you know.
- Elmore and McGraw emphasized that manufacturers using AI should consider providing trainings so employees can recognize and guard against safety issues.
The last word: “I think most importantly, you’re only limited to your imagination,” said McGraw. “There’s really a lot of use cases that can be solved with this technology.”
Learn more: Want to find out more about how digital tools are changing manufacturing? The MLC will delve deeper into these issues at this year’s Rethink Summit, taking place June 26–28 in Marco Island, Florida. Learn more and register here.
Washington, D.C. – Today, the National Association of Manufacturers and Make UK hosted a meeting at NAM headquarters where they formalized manufacturers’ commitment to supporting close economic ties between the United States and United Kingdom. Make UK CEO Stephen Phipson and NAM President and CEO Jay Timmons signed an updated memorandum of understanding, which will serve as a roadmap to the cooperation between the two organizations and outlines the key goals and objectives for the partnership.
“The NAM and Make UK have such a strong, special relationship, just as the U.S. and the UK do, and we must continue to deepen that partnership and the commercial and economic ties between our countries,” said Timmons. “Cooperation between American and British companies not only makes our economies stronger, but also strengthens the transatlantic strategic alliances to support the rule of law, freedom and opportunity from those who threaten our shared values. Especially with Russia’s continued assault on Ukraine, it is critical that we unleash the power of commerce to preserve, protect and expand democracy.”
The MOU calls for Make UK and the NAM to work together to provide opportunities for their members to strengthen manufacturing through a number of avenues, including exploring potential trade delegations, trade fairs and business networks; facilitating visits and economic delegations between representatives of the two organizations for promoting trade, investment and commercial exchanges among member companies and organizations; and working together on joint meetings, conferences, seminars, reports, letters and mutually agreed advocacy on trade and investment-related issues.
“Make UK is delighted to have further strengthened our partnership agreement with our American counterpart, the National Association of Manufacturers, as we focus increasingly on boosting cross-Atlantic trade,” said Phipson. “In recent months, we have agreed to a process of even broader sharing of market intelligence, data and policy work, facilitating visits for economic delegations to visit on both sides of the Atlantic to unlock new trading opportunities.
“We will continue to work ever more closely as we look to cement commercial exchanges and opportunities for shared promotion as we build on the ties that have connected our two nations for generations. Relations with the U.S. are vital, and its market is the second-most important for UK goods. In a post-Brexit world, it is likely to assume ever greater importance as part of our efforts to boost global trade.”
Click here to view the full text of the MOU.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
The NAM is a meeting place like no other, where manufacturers of all sizes and sectors gather to make the industry stronger. Recently, along with its partner CONNEX Marketplace, it invited manufacturing leaders to D.C. for high-level discussions about supply chain challenges.
The big picture: This meeting came at an exciting time for CONNEX. Formerly known as Manufacturers Marketplace, the program pivoted in 2022 to combine state-specific installations with the national platform and become a more powerful SaaS.
- Connecticut launched its own version of the CONNEX platform back in February, thanks to the support of the CBIA (a state business association and NAM partner) and the state’s chief manufacturing officer, Paul Lavoie—who discussed some early success stories at the D.C. event.
- “In the first two weeks, more than 200 companies joined, significantly more than the state’s most optimistic projections,” according to a Hartford Business Journal piece—and Lavoie told the paper he expects signups to blow past 750 in the first year.
- Meanwhile, Kentucky is also getting in on the action. The Kentucky Association of Manufacturers (also an NAM state partner) recently launched its own CONNEX Marketplace installation, which was announced by the governor. KAM CEO Frank Jemley also came to D.C. for the meeting, bringing his own success stories.
Talking the talk: The leaders in D.C. focused on how manufacturers can improve security and resiliency in the supply chain. They also discussed how local and state governments can ease supply chain challenges for businesses.
Security: As the participants observed, the key challenge is “illuminating risk” inside the supply chain, so that companies know what they’re facing.
- They discussed the many types of risks involved in supply chains, including cybersecurity, financial, business continuity, capacity and more.
- What’s next: CONNEX is working to integrate technology that will identify and highlight potential risks in a company’s specific supply chain.
Cooperation: The supply chain functions (or doesn’t) on the strength of manufacturers’ cooperation, from the largest companies to their smallest suppliers.
- Furthermore, competition is not company vs. company, but supply chain vs. supply chain, the participants agreed.
- Small manufacturers might benefit from a coach or guide to walk through the sourcing process so they understand how to remain resilient and competitive, one attendee recommended.
- What’s next: CONNEX is working on a playbook that entities such as manufacturing extension partnerships can use to help coach SMMs through the procurement process.
Progress: Executives from CONNEX reported more than 4,000 suppliers were connected to buyers in 2022, while the platform hosted 396 separate “postings” from manufacturers looking for specific parts or supplies.
The NAM will host another forum this fall where manufacturers will tackle supply chain issues. Contact NAM Senior Director of Member Business Services Anna Chongpinitchai for details.
“Making a difference” might be the best description of what Mountaire Farms does. Founded in 1914, the fifth-generation family-owned chicken processing company has a long history of helping its communities thrive.
Mountaire Cares: Through its Mountaire Cares program, the company’s employees are committed to changing lives for the better.
- “The Mountaire Cares program was created to fulfill three main core pillars: how are we faithful to our people, how are we faithful to our communities and how can we look to be faithful to the future,” said Mountaire Cares Director JR LaPearl.
Meals for thousands: One of Mountaire Farms’ biggest events during the year is its Meals for Thousands program, where the company partners with local churches, food banks and nonprofit organizations to provide meals for families in need at Easter, Thanksgiving and Christmas.
- The program had humble beginnings 28 years ago, with Roger Marino, who was PR and community relations director at Mountaire, leading the group to provide 300 meal boxes at Thanksgiving. The company has distributed more than 1 million boxes since then.
- For this year’s Easter event, the company’s employees and other volunteers packed 15,000 meal boxes, each of which contained a Mountaire roaster chicken; vegetables; macaroni and cheese; mashed potatoes and gravy; and brownies—enough food to feed a family of four.
- “Our employees really enjoy being a part of this effort to give back to the community,” LaPearl said. “What I love about these events is that they bring people together to share love and kindness to one another.”
Feeding all year long: But hunger doesn’t just exist during holidays. Mountaire Farms donates chicken to local food pantries every month so they can help fill the need all year long. And they partner with groups like nonprofit organizations, little leagues, fire companies and more that use chicken to help fundraise during the year.
And that’s not all . . . Mountaire’s food programs are just one way the company gives back. It has partnered with Habitat for Humanity and several Boys & Girls Clubs on service projects, while also collaborating with local schools on renovations of playgrounds and basketball courts.
Why they do it: For LaPearl, it all starts with the company’s mantra “High Performance for a Higher Purpose,” striving to be a positive light to those around them.
- “Our people are the reason we’re able to do what we do and give back,” said LaPearl. “If it’s not volunteering, it’s the everyday work that we do that really helps to feed families here locally, around the region and around the world. It’s interesting when our employees are upset they were unable to volunteer on a particular day. I remind them that what you’re doing on a daily basis is making a major impact in the lives of people that you don’t even know because of your hard work and performance.”
- “When I have the opportunity to visit our processing plants and I see people smiling, singing in their respective cultural languages and just enjoying their job, that speaks volumes in today’s culture. I can tell they love being here. That’s the way we’re built.”
Mountaire cares about its employees: Through Mountaire Cares, the company offers leadership classes to help employees succeed in their roles and advance in their careers. It also provides scholarships to children and grandchildren of employees.
- In addition, the company built medical facilities at each of its processing plants, and recently established a chaplaincy program that offers employees guidance in times of crisis and high stress.
The last word: LaPearl has some advice for manufacturers who may want to start a program similar to Mountaire’s:
- “Clearly understand your strengths as a company and create an exceptional foundation to build off that. We weren’t able to do all of this overnight, so start small and really focus the first few years on going slow and being purposeful. And always show your employees you care.”
As manufacturers confront an ever-expanding list of cybersecurity threats, the NAM is mustering the leading cybersecurity minds in the sector to fight back. Since March 2021, it has been gathering chief information security officers from a large range of companies to discuss their shared challenges and the strategies that have worked against them.
Recently, a group of these cyber leaders met at the NAM’s D.C. headquarters to exchange their latest updates. Here is a sneak peek inside this meeting, where the future of the industry’s cyber defenses was being shaped.
On the agenda: The discussion covered both IT and OT technology and the interdependence between the two that requires a careful but not restrictive cyber strategy.
- Beyond the technology itself, the CISOs also detailed how they present their progress to their boards, including their metrics for success.
Zeroing in: Cyber training for employees was a particular focus for the group, as manufacturers work to educate their workforces about these threats.
- Though most cyber training is directed at IT personnel, there are more and more plant floor workers who also use computers and must receive security training, the CISOs noted.
- It is best to embed training into the overall asset care process, recommended one leader, so it becomes a long-term priority.
- In addition, role-based training ensures all bases are covered, including contractors, according to another CISO.
Guest speaker: The meeting also featured an appearance from a congressional adviser on cybersecurity, who detailed what policymakers are planning.
- Emily Burdick, professional staff member to the majority on the House Homeland Security Subcommittee on Cybersecurity and Infrastructure Protection, explained how the subcommittee is working to oversee the Cybersecurity and Infrastructure Security Agency’s two roles: overseeing critical infrastructure and monitoring federal networks.
Government priorities: Congress is focusing on four key priorities for the year, Burdick said. These include:
- Monitoring CISA’s soon-to-be-proposed rule on cyber-incident reporting (on track for a Notice of Proposed Rulemaking in March 2024, with the final rule expected by September 2025); this proposed rule would require covered entities to report cyber incidents within 72 hours and needs clarification around “covered entities” and the timing of incident reporting;
- Measuring CISA’s effectiveness as a sector risk management agency and as the national risk coordinator;
- Improving private-sector partnerships through the Joint Cyber Defense Collaborative and other processes; and
- Strengthening the national cyber workforce.
What they’re saying: The CISOs in attendance told the NAM how much they valued these high-level discussions.
- “While we often cross paths with fellow CISOs at trade shows and other industry events, it is important for us to gather in small groups and share what we are experiencing in an intimate, off-the-record setting so we can speak openly and honestly about challenges and potential solutions,” said Beth Schulte, CISO of Louisiana-Pacific Corporation.
- “I was able to share some tips with the other CISOs based on my experience and came away with tangible actions and takeaways to both implement immediately and research further after hearing recommendations from peers,” she continued.
Get involved: The NAM’s CISO group is working on industry benchmarks that will be shared with other manufacturers, so the industry can raise its defenses across the board. These benchmarks will help other CISOs evaluate their own practices and keep their boards and executives informed about industry standards.
- If you’d like to weigh in on your company’s activities, please take the short survey here.
Why would a company give away its “secret sauce” recipe for success? In Toyota’s case, the answer’s easy: because it’s the right thing to do, according to Jamie Bonini, president of the Toyota Production System Support Center, Inc.
How it all began: The TSSC, which last year celebrated its 30th anniversary, is a nonprofit organization founded by the auto manufacturer in 1992 to help other companies improve their manufacturing processes using the proprietary Toyota Production System.
- “In the early ’90s, companies would come visit our factory in Georgetown, Kentucky, for tours and asked, ‘How do you [manufacture] in the U.S. competitively?’ We said, ‘It’s TPS.’”
- TPS is Toyota’s lean-manufacturing system, based on the Japanese philosophies of jidoka (which can be roughly translated as “automation with a human touch”) and “Just-in-Time,” which refers to producing “only what is needed for the next process in a continuous flow.”
- Toyota said yes to the growing number of requests from outside the company to share TPS principles, and soon developed an entire center devoted to TPS teaching.
The substance: TSSC, which is subsidized by Toyota, provides companies with the training needed to implement TPS principles, which help boost efficiency, product quality and workplace safety—while reducing costs and lead times.
- “TPS emphasizes the elimination of waste, continuous improvement and respect for people,” Bonini said.
The meaning of lean: TSSC has many long-term clients, some of which have been with the nonprofit for most of its three decades. The reason: TPS isn’t a one-and-done, single-size system that can be superimposed on all organizations the same way, Bonini said.
- “‘Lean’ has come to mean different things to different people,” he continued. “But this is what we mean by a Toyota production system: an organization-wide culture of highly engaged people who are solving problems and innovating to drive performance.”
- “When we work with a company, [our solution is] customized; it’s highly situational. What we’re trying to build in an organization is a culture. And to build it, it has to be nurtured, fortified. That’s why we like these longer-term engagements.”
Who’s involved: TSSC has worked with a wide range of companies in many industries, as well as with nonprofits and even governments. This year, the TSSC is working with approximately 50 companies and organizations, about 30 of which are nonprofits.
- The nonprofits are not charged for the consultations. “It’s completely free for them, but they have got to put a lot of hard work into it,” Bonini said.
- Meanwhile, the companies are charged a fee that doesn’t cover all of Toyota’s costs. Toyota donates its time, labor and transportation expenditures, according to Bonini.
The working relationship: Given the bespoke nature of TSSC’s consultations with companies, the work varies from client to client. It may consist of monthly visits, onsite consulting for specific projects or regular remote check-ins and discussions.
- Whatever the client needs from TPS, it requires the TSSC team’s touch. “We have worked with companies that have studied lean manufacturing for many years, and six or nine months in, they’ll say, ‘Wow, Jamie, TPS is very different from what I read.’ You really need to experience it. It’s like learning to swim or ride a bicycle,” said Bonini.
Future plans: TSSC isn’t slowing down after 30 years. It recently began hosting TPS-focused Toyota plant tours, and it has big plans for them.
- It offers half-day tours, because “we want to make TPS very understandable in a short time,” Bonini said. However, TSSC is “also likely to develop an enhanced, two-day tour. On the second day, [tour participants] would talk to us about their particular business and structure and get tailored advice.”
The last word: “A lot of companies look at lean operations as installing a collection of tools: visual management, daily huddles,” Bonini said. “In fact, the tools are part of the system, not the system. Our goal is to help companies understand that the really important thing is the tool users.”
It’s no easy feat to transform a struggling family business into a thriving digital enterprise, but that’s exactly what Cooley Group President and CEO Dan Dwight is doing.
Change for the better: Cooley Group was formed in 1926 as a family-run textile manufacturer in Rhode Island. In 2011, Dwight, a member of the NAM Board of Directors, joined the company as president and CEO to navigate the ship through a new age of manufacturing and market demands.
- Today, the private equity-backed extrusion and textile manufacturer is the leading global maker of polymer-coated textiles. Applications range from single-use blood-pressure-cuff materials, to proprietary urethane combat raiding crafts for U.S. special forces, to liners and covers for some of the world’s largest water reservoirs.
How they did it: “As a family-run business, Cooley inherited aging equipment and an aging workforce,” said Dwight, who also serves as vice chairman of the Manufacturing Leadership Council’s Board of Governors. (The MLC is the NAM’s digital transformation arm.)
- “We not only modernized our equipment and infrastructure to compete in the digital age, but also revolutionized our culture. Hierarchies slowed us down.”
- “Digital transformation isn’t only beneficial for the advancement of our physical technologies; it’s also critical to develop a more collaborative company culture that empowers employees at all levels to take action.”
Starting small: “Digital transformation—the integration of digital technology into all facets of an organization—can seem daunting at first,” Dwight said. “But that can’t deter an organization from jumping in.”
- “I advise companies, particularly mid-sized manufacturers like Cooley Group, to approach digital transformation incrementally,” he said. “Don’t expect the cultural, institutional or technological benefits of digital transformation to manifest overnight as some mega-solution.”
- “Think strategically about the areas of your business that are the first movers. Once one aspect of the business is modernized, the digital insights and team’s enthusiasm for change will build momentum to push the remaining pieces into place.”
Gaining momentum: The transformation of this firm of 300 people is ongoing. “Ten years ago, we had trouble keeping our equipment operating for any period of time,” Dwight said. “Now everything in all our factories is digitally [Manufacturing 4.0]-driven across a single operating platform.”
- The company plans to do the pilot phase of an artificial intelligence implementation later this year.
Figuring it out: The MLC was key in Cooley Group’s remarkable transformation, according to Dwight.
- “I’m not sure we would have figured it out on our own,” he admits. “I’m an avid reader; I was born excited to build things. I read a lot about manufacturing and leadership. But even if I could have figured out M4.0 strategy, actually implementing it on the plant floor would have been difficult without the support of MLC members to share best practices and to encourage the Cooley team to embrace transformation.”
Get involved: Companies can jumpstart their own digital transformation by attending Rethink, the MLC’s premier event for manufacturing executives, in Florida on June 26–28. Check it out here.
It might be hard to believe, but there are “more possible staff solutions than particles in the universe” for the typical factory, according to D-Wave Vice President of Quantum Business Innovation Murray Thom.
Yet thanks to quantum computing—or computers that employ the effects of quantum mechanics to operate more quickly and efficiently—D-Wave can help its customers solve this sort of knotty problem, whether they are trying to organize pallets, piers or people.
We spoke to Thom recently about the advantages of quantum as well as one of the company’s big successes, a collaboration with software company SavantX to increase the efficiency of Pier 300 at the Port of Los Angeles. Here’s what he had to say.
The future of computing is hybrid: When does it make sense to look beyond classical computing methods and add in quantum? As Thom explained, “Classical computers have to break things down into simpler steps—addition and multiplication.”
- However, a lot of logistical problems involve immense complexity. For example, let’s say you have boxes of components that must be shipped all over the country at different times. Thom puts it, “This box is going on this truck or that truck, [and that decision] affects other decision-making. It’s that cascade that makes this difficult for classical computing.”
- By contrast, quantum computers can take a huge volume of possible solutions, compare them all quickly and come up with a usable schedule.
- Marrying classical with quantum computing—called quantum-hybrid technology—provides the best of both options and delivers robust solutions, said Thom.
The Port of LA: In 2018, SavantX was hired to improve the efficiency of Pier 300, which processes millions of containers every year.
- To juggle the many factors involved—trucks, containers and cranes that load the containers—and to model their movements inside a confined space, SavantX would need a lot of computing power. That’s why it brought in D-Wave.
- SavantX modeled the whole system using a digital twin of the pier, Thom explained. The digital twin allowed SavantX to run all types of simulations, some of which would never occur in the real world.
- Quantum-hybrid technology was then used to “ingest the whole problem” and configure it all at once “like a Rubik’s cube”—simulating an impressive 100,000 cargo-handling runs to find the best algorithm.
- And thanks to D-Wave’s proprietary cloud platform, no one at SavantX had to get “a degree in quantum physics,” Thom added. Instead, “the platform let them configure a solution, while D-Wave handled the complexity.”
The solution: SavantX discovered that the key to greater efficiency was repositioning the rubber-tire gantry cranes.
- By reorganizing the trucks’ pickup times to match when the RTGs were available, and by distributing the containers more widely around the yard, SavantX greatly decreased waiting times.
- This solution resulted in “a 60% improvement in the amount of cargo they were handling, and a reduction in truck turnaround time of 12%,” Thom said.
Working with quantum: As quantum computing is still a new resource in the logistics and manufacturing industries, Thom explained to us how he works with new customers.
- First, he often talks to customers for an hour or more at the first meeting, to get a handle on how they understand the problem from the inside.
- The company’s work is “really about adapting the technology to suit the industrial challenge,” not the challenge to suit quantum computing, he explained.
- Next, D-Wave goes through “a discovery process, building out proof of concept and answering the high-level question,” Thom said. After that, its team “can build formulations and software for businesses to operate on their own systems, putting those quantum-backed applications into production.”
What’s next? D-Wave has a number of manufacturing-related projects in the works, spanning factory optimization, improvements in construction efficiency, carbon emission reductions and more. These include:
- A collaboration with ArcelorMittal to improve steel coils, and another with Johnson & Johnson to optimize the packing of pallets.
- A project with DENSO, an auto parts manufacturer, that aims to improve the safety of autonomous vehicles.
The last word: While quantum computing may sound both complicated and intimidating, “What people are delighted to find out is that it’s no more complex to use than any other technology,” Thom said.