Building an Advanced Contract Manufacturing Innovation Cluster in Southeast Michigan 

The National Center for Manufacturing Sciences (NCMS) is a member of one of 10 public-private partnerships across the country that were selected through the federal government’s Advanced Manufacturing Jobs and innovation Accelerator Challenge to receive a total of $20 million in awards.  The purpose: to help revitalize American manufacturing and encourage companies to invest in the United States.

NCMS, along with its partners, the Workforce Intelligence Network (WIN), Detroit Regional Chamber’s Connection Point, Michigan Manufacturing Technology Center (MMTC), Society of Manufacturing Engineers (SME), Business Accelerators of Southeast Michigan (BANSEM) and The University of Michigan, are the primary players in the Southeast Michigan Advanced Manufacturing Innovation Realization Cluster.  

The Cluster received grant funding to implement a brand new business model.  The model is designed to foster innovation, bolster the design and manufacturing prowess of small and medium sized manufacturers, and forge connections between these SMMs (the so-called “missing middle”) and large manufacturing enterprises like GE.

Alissa Roath, the project manager at the NCMS, explains: “This is not a typical cluster where the participants are all engaged in similar industries such as automotive or defense; instead we’re focusing on what we call ’contract manufacturing‘ – smaller companies that have the desire to do a wide variety of manufacturing work for a cross-spectrum of industries.

According to MMTC’s Dr. Edith Wiarda, “This kind of contract manufacturer isn’t just renting its labor and machine time for production, but is actively involved in the design and launch of new products, both for large customers and for new startups.

“The problem is that small innovative companies or entrepreneurs often find it difficult to find a qualified manufacturer willing to work with them to develop their unique product and make it more affordable,” she continues.  “Many times, this kind of development requires a close collaboration between the innovator and the manufacturer to minimize discrepancies in the design and process over a number of short runs that may include a significant amount of prototyping.”

Roath says that the Cluster will help these SMMs work with advanced modeling and simulation tools that will speed up the design process and cut down on the need for expensive physical prototypes.  

Another facet of the Cluster program is that this will assist these SMMs in working with large Michigan manufacturers such as the General Electric Company and United Precision Products, with an eye to eventually becoming part of their supply chain.  

Cross-Industry Solution
"Our goal is to reintroduce Michigan’s supply chain as a collaborative, cross-industry solution,” says Trevor Pawl, Program Director of Economic Development for Connection Point, “And, in doing so, we provide a constant stream of ways for local companies to engage new, and sometimes unconventional customers.  Southeast Michigan is still the brain center for engineering and design in one of the world's most far-reaching and innovative industries. Michigan is also one of the most diverse regions in the country, with a wealth of woman-owned, minority-owned and veteran-owned companies.  There is great untapped potential in Michigan that this grant can help global supply chain teams unlock."

According to the Michigan Manufacturers Association, in January 2011, the Michigan manufacturing sector employed 498,000, comprising 12.7 percent of total non-farm employment in the state. Manufacturing jobs increased by 6.3 percent from March 2010 to March 2011, more than double the growth seen in any other sector.

During this time employment grew by 75,700 jobs; 30,000 of these jobs were in the manufacturing sector. And job growth in the manufacturing industry is expected to continue.  According to the MMTC’s Wiarda, “We’re betting that a lot of that growth will benefit contract manufacturers, rather than more traditional high-volume, repetitive parts manufacturers.”

The Cluster initiative will start with a set of 112 initially self-described Innovation Realization manufacturers. The Cluster partnership, with WIN as the initiative’s lead, will convene confirmed contract manufacturers into an explicit cluster and explore their connections to product developers and modeling/optimization tool providers.  Based on the expected payoff, the Cluster will then recruit more companies from the traditional manufacturing sector, providing them with such incentives as:

•    Access to dozens of niche markets
•    New modeling and simulation tools to evaluate design and conduct virtual prototyping
•    Opportunities to interact with customers in new industries
•    Assistance in the training of CNC operators and programmers

This being Michigan, a lot of the activity will center on the automobile manufacturers. Roath says that 45 percent of the contract manufacturers are active in this sector, and that improving their design and collaboration skills will help them expand their business into other areas.  

But there are other sectors involved, such as aerospace and defense.  A perfect example of the kind of company the Cluster is seeking is Omega Plastics located in Southeast Michigan.  The company, which was founded in 1984 with just a few employees, now employs 45 people housed in a 70,000 square foot facility.  Omega has become a world leader in tooling and injection molding solutions for prototype and low-volume production applications.  Initially an auto supplier, the company now is strong in medical devices and consumer products as well, making it, Roath says, the poster child for the Cluster’s contract manufacturing concept.

Working with GE

As part of this program, NCMS will leverage its close relationship with GE. NCMS has been working with the big manufacturer for about a year, in particular with Doug Dinon, the technology leader at GE’s Advanced Manufacturing and Software Technology Center. The Center’s scientists and engineers are developing next generation manufacturing technologies for GE’s leading renewable energy, aircraft engine, gas turbine and other high-technology products. This includes the development of composites, machining, inspection, casting and coating technologies for GE’s Aviation and Energy businesses. A major current focus is on carbon fiber processes.  

Dinon, is an active leader in the NCMS digital manufacturing SIG (Straegic Interest Group) which is launching a network of Predictive Innovation Centers (PICs). The PICs will provide access through a secure web-based portal so that manufacturers of all sizes can experiment, use, and adopt AM&S tools to optimize their own innovation processes – eliminating the insurmountable up-front costs that exist today. The Cluster will be leveraging the first of these NCMS Centers, which will be located at General Electric.

According to an executive summary published by the Cluster, Success will be measured by the increase in the proportion of cluster members’ sales that come from making new products. The project team forecasts that, over the three years of the project, Cluster members will realize at least $20 million in new orders. That will translate into 240 additional direct and indirect jobs and $9.6 million in additional payroll. Taxes on those additional earnings will exceed $2.4 million, including $1.9 million in additional federal receipts, thus paying back the federal investment the team was awarded.

Most important, said Lisa Katz, Executive Director of WIN, “the program will add a qualitatively new capacity in the region’s economy to translate innovation into products for export to the nation and world.”

Getting Underway
The Cluster is still in its early planning stages, Katz says.  She has high praise for the initiative, and she is not alone.  In addition to the enthusiastic participation of the other Cluster members and companies like GE, the Michigan Economic Development Corporation (MEDC) has provided and additional $500,000 through the MI Match program, signaling its interest in seeing the program succeed.

“The Cluster initiative will create jobs and expand our regional manufacturers’ capabilities to take on new and innovative projects,” says Rick Jarman, CEO of NCMS, “By having access to high-performance computing and advanced modeling and simulation tools, these companies will be better equipped to compete in the global marketplace.  There’s no question that Michigan is the place to do this – we have the workforce, the talent, and the resources typified by the Cluster partners.  We have strong players in Michigan, and as it all comes together, this initiative can really be powerful.”