Manufacturing is responsible for a great deal of pollution in our environment, extending as far back as the 1700s. Anyone reading this article can probably easily recall pictures from grade-school history books depicting the early American factories of the industrial revolution: Smokey, dirty, and dangerous.  The effects of these historic factories on the environment and those of the following centuries have created a negative stereotype that manufacturing leaders continue to battle.  There is no doubt that the manufacturing leaders of tomorrow are the emerging environmental leaders of manufacturing today:  Green is the new color of manufacturing.

In this first installment of the Green: The New Color of Manufacturing series, we will focus on Boeing and the state of Arizona, demonstrating the importance of corporate community responsibility.  There is no doubt this leads to huge ROIs, and will be discussed in future articles of this series.

In order to quickly grasp the negative environmental effects of past decisions made by Manufacturing Leaders, let us use the Tucson Arizona International Airport (TIAA) Superfund site as a case study.  From the 1940s onward, Tucson’s water suffered a great deal of pollution, including the disposal of metals, chlorinated solvents and other wastes.  Aircraft and electronics facilities discharged waste liquids directly into the soil, fire drill training areas disposed of wastes from training operations in earthen waste pits, and several manufactures including the department of defense and their contractors disposed of hazardous wastes in landfills and earthen pits.  In each case, dangerous chemicals were absorbed by the soil, and by 1981 contaminated the water supply for over 47,000 people in Arizona. Discovering these detrimental disposals, the Environmental Protection Agency (EPA) working with the city of Tucson had to shut down 11 city water wells and additional household wells to control the spread of the pollution.

Without doubt, the wide-spread cases similar to the TIAA Superfund are revolutionizing manufacturing for the better.  Surveying the top manufacturing leaders, we see a widespread emphasis on green initiatives and community involvement through environmental preservation and clean-up.  Moreover these elite leaders are capitalizing on the huge ROI green initiatives have such as minimizing cost, drawing in a wider, environmental conscience customer-base, and creative solutions the investment in green research ultimate lead to.  Given the unfortunate 787 battery complications Boeing is facing, this is an opportune time to highlight Boeing’s highly laudable commitment to the environment and its communities.

Boeing, one of the leading manufactures across the globe, spearheads green technology through its own research such as fuel cell research, sponsoring a large number of environmental events, and its commitment to cleaning up the Duwamish Waterway.  As a member of Business for Social Responsibility (BSR), Boeing works with companies across the world to spread their innovative green initiatives through strategic partnerships.  Through Engineers Without Borders, Boeing strives to provide clean drinking water along with renewable energy to impoverished nations such as those in Africa and India. Boeing has several other green projects listed on its Environmental Affiliation Page, all of which are highly laudable and impressive.

Boeing Leaders continue revolutionizing the aviation industry.  Mr. Mark Severson, ERAU Worldwide Graduate student and US Navy Instructor, has been researching the use of composite materials in aircraft manufacturing.  Within his findings Mr. Severson sees, “[P]otential for composite materials to open up the doors for a greener initiative, and possibly cheaper.  The biggest environmental impact in the manufacturing process with the 787 is the use of bonded structures versus mechanical fasteners.  The reduction of mechanical fasteners (rivets, screws, bolts and nuts) in composite aircraft manufacturing is congruent with Boeing’s Lean Manufacturing process by reducing waste and improving the overall efficiency of aircraft manufacturing which reduces the industrial footprint on the environment.”

Boeing works diligently to encourage all its employees across the globe to take responsibility for their environmental impact.  In the grant guidelines for Arizona Boeing explicitly states, “We invest in programs that educate and engage communities about the importance of taking action to reduce their impacts on the environment and climate change. We support programs that teach citizens, particularly children, how to preserve and live compatibly with our desert environment and conserve natural resources. We also support programs that restore and protect critical natural habitats.”  This commitment to community is seen through many Boeing employees.  Even in the extreme Arizona Desert heat, Mesa Boeing employee Kamden Reedy cycles to work each day.  In 2009, 36 percent of Boeing employees in the U.S. were reducing their carbon footprint by using alternative transportation means such as biking, walking, taking public transportation, telecommuting and/or working flexible hours.

Given Boeing’s successful campaign to clean the Duwamish Waterway and their partnership with the Engineers Without Borders, it would seem a natural fit for Boeing to apply similar strategies to the Superfund Sites in Arizona.  Although this will take some additional man-hours, the ROIs are endless…the author will leave this to you to ponder, along with one final comment from Real Estate expert Phil Zepeda, “Businesses are strongly cautioned against purchasing real estate in these Superfund regions due to the environmental pollution.  However, with leading green technology, this is an opportune time for companies, like Boeing, to capitalize on.”

Where are these manufacturing leaders that are empowering the manufacturing revival in the United States located and relocating to?  Leaders that have a clear vision and strategy for the betterment of their organizations’ performance.  Leaders that understand the empowerment of local community support for their manufacturing growth.  Leaders that seek out regions where success is more likely, often offering a competitive advantage.  Where are these manufacturing leaders that seek out “clusters,” (see the 2011 edition of AIR, pp 118 – 126)?

According to Joel Kotkin, contributor to Forbes, Seattle/Tacoma/Bellevue earns top marks.  Not surprising as the Seattle region itself has fared well through the economic downturn having a state-of-the-art seaport and airport, home to Boeing, and a strategic gateway to the west. Furthermore Alaska Airlines, which is constantly recognized for its breakthroughs in air-cargo technology, hub is SeaTac.  The City of Seattle also supports manufacturing growth through strategic partnerships, such as that with the Manufacturing Industry Council (MIC). Together, the City of Seattle and the MIC work to not only bring manufacturing to the Seattle region, but more importantly, to retain and grow it.

Texas tops out 4 of the remaining 9 cities in the Forbes top 10.  Listing all the manufacturing powerhouses in Texas is practically impossible, as the number of manufactures continues to grow at such a rapid pace.  For example, from current trends it is highly probable that Texas is becoming the Aeronautical/Aerospace capital of the United States.  Within Fort Worth alone there are three airports not including Dallas/Fort Worth International Airport (DFW).  Embry-Riddle Aeronautical University Worldwide recently opened a new campus at Alliance in July 2012, and continues to empower the Aviation/Aerospace Manufacturing sector through world-class education, conferences, and strategic business alliances.  The Center for Aviation and Aeronautics Leadership, (CAAL), headquartered at Embry-Riddle Aeronautical University Worldwide Alliance Campus, received a trademark for their STEM+M .  The CAAL initiative highlights the close relationship between STEM competencies and manufacturing.

In addition to the state of Texas and the city of Seattle, where should current and future manufacturing leaders establish residency?  Looking to the east coast, we note two areas that are prime for manufacturing leaders to capitalize on: Savannah, GA and New Smyrna Beach/Daytona Beach, FL.    Both areas are near international airports, strategic waterways, prestigious educational institutions, and within a two hour drive of the superior health care facilities in Jacksonville, FL.  Savannah is home to Gulfstream Aerospace Corporation, which has developed an elite program for its employees in conjunction with Embry-Riddle Aeronautical University Worldwide Savannah Campus and Embry-Riddle Aeronautical University Daytona Beach Campus.  GulfStream is a strong manufacturing leader in Savannah, and combine that with the fastest growing port in the United States, a diverse economy, and a supportive government, Savannah could possibly become the East Coast’s Seattle.

The commercial real estate in Florida is comparatively cheap, and thus one reason behind the increase in the number of manufacturing companies relocating to New Smyrna Beach/Daytona Beach.  These areas also offer a great deal to residents as they are surrounded by beaches, a short drive to the Orlando Theme Park Scene, and, as with commercial real estate, it is a buyers’ market in the residential sector too.  The city of New Smyrna Beach has several manufacturing companies taking advantage of their strategic location, and is looking to grow this further as it already has facilities available to support manufacturing growth.  Embry-Riddle Aeronautical University Daytona Beach is working with manufacturing leaders to develop a Research Park.

Mr. Phil Zepeda, a real estate expert in Tucson, Arizona notes that, “The housing bubble burst which began in 2006 causing the largest significant correction in the real estate industry since the great depression appears to be in the rear view mirror. Important indicators in the up-tick of the market are data coming from the hardest hit areas in the nation. The steady rise bodes well for commercial real estate developing and planning as it is well known in the industry commercial real estate has historically lagged behind the residential market.”  Expanding on Mr. Zepeda’s statement, employees are the heart and soul of any business, and it is vital for manufacturers to choose a location where family needs are easily fulfilled as well as manufacturing needs.

Manufacturing in the United States is experiencing a rebirth, and we enthusiastically await the amazing growth that both the short-term and long-term hold for the manufacturing industry, and the corresponding real estate markets that welcome and support their manufacturing leaders.

Over the period of the past twenty or so years, Indian economic liberalization has allowed the entry of other participants into the airline business, experiencing various degrees of success. At the same time, the Indian government and its states are building airline/airport infrastructure to accommodate the industry.  What is interesting to note is that unlike the United States, where the airline industry developed in sync with aviation technology, in India, the problem is very different. Since airline technology already exists so the aviation industry is being built in a very different manner. Some would say this gives the industry an advantage in that many technological problems have already been solved by the aviation industry in Europe or the United States and can be transferred. That is in fact partially true…and the existence of a Boeing or Airbus series of passenger aircraft does negate the requirement to go through that process of indigenously building and developing commercial aircraft. So, in effect, one might say the learning curve is much steeper in a country like India and therefore progress can be achieved much faster.

However, from a leadership perspective, the issues are much more complex. India does not have a ready reserve of aviation industry people who have grown with the industry. Rather, in many cases its leadership has come from other economic sectors, and is replete with entrepreneurs who are attracted to the idea of flight but have little real aviation experience. Also, the leadership must deal with consumers who are not aviation savvy and an intensely bureaucratic government apparatus which has historically governed all aspects of the industry in a very controlling manner, not to mention global competition. As a result, the Indian aviation industry lacks a solid base of experienced leadership and finds itself in the middle of a highly complex fluid environment. As we all know, aviation is not always a forgiving enterprise, so Indian aviation leaders have much to be cognizant of as they move forward. The best news was that we found these leaders to be highly enthusiastic and motivated to succeed despite the difficult circumstances they find themselves in!

Well, we’re movin on up,
To the east side.
To a deluxe apartment in the sky.
Movin on up,
To the east side.
We finally got a piece of the pie.

Chorus of Movin’ On Up, Cowritten by Ja’net Dubois and Jeff Barry

Hearing that song again (well, technically…having the song stuck in my head again) got me thinking about career progression and moving up the company ladder. My colleague and I are working on a leadership study of small- to medium-sized aerospace manufacturers. We are investigating how leadership impacts performance in these companies. We recently interviewed two individuals at a small aerospace manufacturing company. One person (Bill) was a technician who had been working with the company for over 16 years. He loved his job, performed well, and seemed very happy in his role. The other (Joe) was a first time supervisor who had been with the company for just over a year and had been recently promoted from a line job.

I asked Bill about career progression and opportunities within the company. He explained his perception that there was not a lot of possibility for career progression and that when the rare position did become available, management had already decided who would be put into the role. Joe had a completely different outlook. In fact, Joe couldn’t understand why some people in the company were content to just sit back and do their jobs without thinking about how they might progress in the company. He had taken the time to ask his supervisor and his manager what opportunities might fit his interests and abilities. He also asked how he could become a more valuable team player.

I was struck immediately by the tremendous differences between the two. Bill seemed to have an external locus of control – events in his life happened to him. Most likely, Bill will remain in the role that he is in no matter how many times his supervisor’s position becomes available. I am not suggesting that is a bad thing, just that if there are limits placed on how high he ascends in the organizational hierarchy, those limits are self-created and self-imposed. Joe had an internal locus of control – he made things happen around him. So much so, that even his manager (Jill – two levels up) had mentioned that we would be interviewing someone whom she had identified as a fast mover within the company. That also struck me…Jill specifically said that she had identified him, giving the impression that she also has a high internal locus of control. Undoubtedly, both will continue movin’ on up the company ladder.

We are still in the very early stages of our research. Nevertheless, themes are starting to emerge. One theme is that smaller companies have limited opportunities for advancement. Many smaller companies don’t have sophisticated Human Resource systems that will identify individuals for advancement. Instead, individuals have to be proactive and find ways to get onto the radar in a positive manner. This is no groundbreaking revelation, unless you happen to be “stuck” in a job with no perceived prospects for movin’ on up.

Fresh out of the Air Force, I followed my friends to the place where ex-fighter pilots went to fly commercial airliners and tell stories about days gone by. I soon found out that Southwest was much more than just another airline…although Southwest flies the same Boeing machines, uses the same airports, is subject to the same FAA rules and regulations, and so forth, there was definitely something different about the company and the people who worked there. Those observations started on the very first day of training at Dallas Love Field in June of 1995.

The first event on the schedule Monday morning, for my class of 25 new hires was “breakfast with Herb”. Although I don’t remember too much about that event, what does stick in my mind was the way Herb interfaced with all of us. He was easy, self effacing, confident, a jokester, and a generally nice person to meet. By the end of breakfast he knew everyone’s name and was on first name basis with all of us…I also remember seeing a bottle of Wild Turkey somewhere in the room. He was definitely not cast in the mold of a corporate CEO!

As training continued and I began to fly on the line, I found myself part of an organization that was more family than employer…all in the style and culture created by Herb. I enjoyed the three years I spent at SWA and when I decided to leave in 1998, the decision had nothing to do with the airline itself… but that is another story altogether. A number of years later, when my wife left corporate aviation, she was hired by SWA and so happily, my association with SWA was renewed, although this time at arm’s length. It wasn’t long before another Herb story surfaced.

Liz was dead-heading to training in Dallas, and when she got to Dallas, she called me immediately and relayed the following story:
Her flight had an intermediate stop in Austin and at the assigned departure time, the Captain got on the PA and announced the flight had been delayed because they were waiting for a late passenger – who happened to be Herb Kelleher. The Captain apologized and asked for the passengers’ patience. Herb arrived for the flight and as he boarded the flight he was met with huge applause and he hugged every female on the jet as he made his way towards the back where Liz was seated…he got to her seat and gave her a huge hug, a sloppy wet kiss and loudly proclaimed to the adoring passengers “I feel a sexual harassment lawsuit coming on….”. Everyone laughed, more pictures were taken and the flight proceeded to Dallas. Upon arriving at the gate, Herb was again surrounded by passengers who wanted to hug him, shake his hand and have their pictures taken with him. In Liz’s breathless words, “He was treated like a rock star!”

So, why is it that this one airline has grown to be the largest in the country and one of the most admired companies in the United States? The airline industry is a cutthroat business and known for everything from brutal competition among companies to disagreements between labor and management that have effectively killed entire companies. Why is Herb, who long since left his role as SWA CEO and is fully retired, still a folk hero among Texans? Why would Liz receive a book this week before Christmas from her employer, co-authored by Colleen Barrett (former SWA CEO) and Ken Blanchard (a leading expert on leadership and organizational development) and titled Lead with Love? Doesn’t that sound a little “over the top” for a book about an airline that engages in fare wars, competes on the basis of ridiculously small margins and slugs it out every day with its competitors? What is going on here?

I will leave you with those questions and invite you to comment….and in a few weeks, we will revisit the story of Southwest Airlines – a fierce competitor in the unforgiving world of commercial aviation, and yet a company that leads with its heart.

Look forward to hearing from you…

Cheers, Kees

At Embry-Riddle Aeronautical University’s Center for Aviation and Aerospace Leadership (CAAL), we have a team of experts whose focus is on keeping our industry and the companies and institutions within it abreast of the best ways to compete in the global marketplace. Our findings at CAAL will be shared at the Second Annual Summit in February; and stay tuned for our “Aerospace Economic Report and Outlook 2011” which will be published in April through CAAL.

In the interim, here are some issues to think about on strategic planning in the global A&D manufacturing industry.

The strategic planning process, whether it is being conducted by Boeing, Airbus, Lockheed Martin, Raytheon, the metal-bending firm in Ohio, the fastener company in Florida, or the aerospace research incubator in Warsaw or Mumbai is the same, though with varying degrees of input, output and implementation plans. While the strategic planning process can be straight forward and clear, its development and implementation can be complex and challenging.

Strategy has been used for centuries. The victors were those who used strategy best. Most of us are familiar with The Art of War , written by the Chinese general Sun Tsu, in sixth century BC. He viewed strategy as both deterministic and emergent. As Sun Tsu posited, one aspect of strategic planning is conducted in a static/controlled environment; and another aspect of strategic planning emerges as circumstances change in the fog of war, as supply chains are disrupted and as competitors’ plans change and clash, and unanticipated consequences and events arise.

Then and now, strategic planning includes understanding the environment in which our firms compete:

• What is driving our industry and the economy in which it competes;
• What are our firms’ and our competitors’ strengths and weaknesses and how can we leverage them; and
• How does our firm respond to industry drivers and align our resources and capabilities to not only effectively compete—but to win.

Those of us who operate in the A&D manufacturing industry do so in a very complex, and often arcane, environment. In order to compete effectively – and profitably – we must deal with a vast array of issues that involve complex economics, finance, new competitors in emerging markets, industry consolidation, and intricate and multi-national supply chains. In addition, there are often counter-intuitive import and export regulations, new alliances with former competitors and foreign partners, technology and process transfers, and operations in countries and cultures that may truly be foreign to us. How do we “boil the ocean” to a set of industry drivers and requisite resources and capabilities, not just to compete, but thrive in what is without doubt a global—and uncertain—marketplace?

That is where CAAL comes in. Our major mission is to help firms rise to the challenge of developing a solid understanding of the global environment, grasp what is driving our industry, and capitalize on the ever-changing economy in which it competes.

If you want to improve your place in the industry, the best place to start is at our 2nd Annual Aviation and Aerospace Manufacturing Summit, Thriving in Global Markets: 2011 and Beyond , February 23-25, 2011 in Orlando, Florida.

Join leaders from across the industry, ranging from the U.S. military, NASA, and Department of Commerce to private industry and academia, as they lead what promises to be outstanding sessions and seminars. The array of industry presenters reads like a “Who’s Who” in aviation and aerospace.

Immediately before the summit begins, you may wish to take advantage of our strategic planning workshop that will help you to outline plans for your firm’s individualized strategic planning process. Go to our web site to find out more.

Most successful companies “call in the experts” to help them grow and thrive. We are the experts in strategic planning in the A&D manufacturing industry. We truly hope you will avail yourselves of our resources, not only for the benefit of your own firm, but also to help keep the overall A&D manufacturing industry strong for our nation’s economy and security. Tailored presentations are also available for your firm or for academic, federal, regional, economic development agencies, and trade associations.

I look forward to seeing you at the Summit in February, if not before.