BECOMING MAKERS & MANUFACTURERS AGAINa 25 year vision for growing an economy built to last

in the forested regions of Pennsylvania, where the future still grows on trees

Pennsylvania Green Ribbon Task Force on Forest Products, Conservation and Jobs

Glenn A. Vernon, ArchitectFebruary 12, 2016

Roman Architect Vitruvius’ identified “commodity, firmness and delight” as the hallmarks of quality, of things made well, in his Ten Books of Architecture, written over 2,000 years ago.

Those 3 conditions of things made well, of things built to last—utility, durability, and delight,

--are the universal and timeless ideals central to the thesis of this report

To make things that last, things that get handed down from one generation to the next, things that get used, and reused or repurposed because they last, is to be sustainable.

Why so many manufacturers left Pennsylvania and—a century later—left AmericaWhy a handful of manufacturers who dug in their heels and stayed not only survived but thrivedWhat we can learn from the ones who stayed and the ones who abandoned our shoresWhat a vision for growing a more durable economy might look likeHow other places in America are putting themselves back together againHow singular companies are reinventing capitalism and doing rather well by doing singular things rather well Why adding value to lumber “here” instead of “over there” makes a lot more senseWhy it’s important to think in quarter centuries instead of quarterly earnings Why makers matter to manufacturers and manufacturers matter to makersExample of a durable company that could exponentially grow demand for lumber in PAExample of a durable company that could exponentially shrink demand for lumber in PAExtending PA’s brand to reflect a 21st century makers and manufacturers economyWhy crazy ideas matter

Thoughts on growing a more durable economy:

For most of the New World’s early inhabitants, lumber was the primary asset of Penn’s forested land, white pine was the lumber of preference, and the forests of north central Pennsylvania had an abundance of it.

As Adam Smith’s “free market economy” blossomed, so did America’s manufacturing sector. By the mid 1700’s, lumbering was the nation’s second-largest manufacturing industry.

By the early 1900’s, most of the region’s pine and hemlock forests had been entirely cleared of lumber, and the northern lumber barons began buying huge tracts of land in the south.

As the logging industry moved south, so did the secondary markets for lumber products.

In 2007, the American Furniture Foundation’s wiki timeline surprisingly goes silent. We must travel south to Alabama a half century earlier to discover why.

Alabama truck driver Malcolm McLean developed a durable standard size shipping container that became the industry standard during the Vietnam War, forever after revolutionizing the sea and land based transportation industry.

McLean’s shipping container made it possible to ship raw materials and finished goods anywhere in the world for pennies on the dollar.

Malcolm McLean, founderSeaLand Shipping Company

In the early 1990’s, Taiwanese computer maker Stan Shih began offshoring manufacturing to mainland China to take advantage of cheap labor and lax regulations. By the end of the decade, Shis’ offshoring model* had been adopted as the industry standard throughout the world.

Books like Beth Macy’s Factory Man, How One Furniture Maker Battled Offshoring, Stayed Local— and Helped Save an American Town, and Furniture CEO Michael Dugan’s memoir, The Furniture Wars, How America Lost a $50 Billion Industry, described how industry insiders literally gave away trade secrets in hopes of gaining a share of China’s 1.3 billion customers. And when the Chinese companies got what they wanted, they “dumped” their own products on the market and put the Americans out of business. For Dugan, it was a classic case of, “we have met the enemy, and he is us.” For Factory Man CEO John Basset, it was a hard fought and expensive battle to save his company and his town.

In the December 2012 issue of The Atlantic, Comeback, Why the Future of Industry is in America, James Fallows & Charles Fishman reported that the decades long outsourcing frenzy was finally coming to an end. In fact, for many companies like GE Appliances, outsourcing was a mistake as they discovered that manufacturing is part of an economic ecosystem. When you offshore manufacturing, product design, brand development and service suffer, forcing many companies to off-shore those professional jobs as well.

In 2012 ISI investment-research company released a 98-page report describing the beginning of a manufacturing renaissance. The report’s author said,

“I’ve been saying this since 2009. Even industrial companies told me I was crazy. Why are they telling me I’m crazy? Because they’ve spent the last 15 or 20 years putting the plants outside the U.S. That’s over.”

durable•[ ˈd(y)o͝orəbəl ]

adjective

adjective: durable

able to withstand wear, pressure, or damage; hard• -wearing:

"porcelain enamel is strong and durable"

synonyms: lasting · long-lasting · long-term · enduring · persistent

from the Oxford Online Dictionary

While many domestic manufacturers disappeared or left the region during the quarter century off-shoring frenzy, many others managed to survive and even thrive. The following pages

provide a sampling of durable makers and manufacturers and the durable products they still make in the USA

C. F. Martin Guitar CompanyNazareth, PA

6 generations of C.F. Martins have been making one of the world’s finest most coveted flat top acoustic guitars since 1833. Most Martin Guitars sell in the range of $2,000 to $3,000, but some limited edition and custom guitars sell at prices well over $100,000. Martin guitars are built to last. Vintage guitars made prior to WWII, Martin’s “Golden Era,” fetch prices upwards of several hundred thousand dollars. Martin’s union workforce employs over 500 craftsmen at its plant in Nazareth, PA, where annual sales in 2015 topped $120 million.

Martin’s commitment to the environment is an integral part of the company’s corporate culture.The company maintains Forest Stewardship Council™ (FSC®) Chain-of-Custody certification,meaning it complies with one of the highest social and environmental standards on the marketand supports responsible management of the world's forests.

C. F. Martin Guitar CompanyNazareth, PA

EMECOHanover, PA

First, We Make Things That Last

EMECOHanover, PA

Emeco manufactures chairs from recycled materials like plastic, aluminum and repurposed lumber. The company was formed in 1944 on the outskirts of the small town of Hanover, PA. Emeco’s most famous product, the one that earned it a reputation for making things that last, is called the Navy 10-06 chair. The aluminum chair was developed with Alcoa during WWII to meet the Navy’s strict specifications for a chair that was lightweight, portable and wouldn’t rust or corrode in the harsh salty ocean environment. The chair has been in continuous production since then. Emeco’s Lancaster Chair features recycled ash milled by Amish craftsmen.

Steinway & SonsQueens, NYC

Steinway makes 1,000 pianos a year at its Long Island factory , its concert grand is the piano of preference for 97% of concert pianists. It takes a year to make a Steinway concert grand. Steinway pianos are still manufactured by hand, from the careful selection and aging of wood to the delicate voicing of the finished instrument. Steinway’s pianos are built to last (my daughter plays a 1921 model M grand), and so is the company. In 2013, Steinway & Sons was purchased by a private investor for $506 million.

Stickley FurnitureManlius, NY

Stickley employs approximately 1,000 craftsmen to turn 6 million board feet of hardwood lumber a year into some of the finest most coveted and collected Arts & Crafts and Colonial styled furniture in the world. Barbra Streisand paid $350,000 for a Stickley sideboard made in 1910, creating a huge buzz in the antique world that sparked a renewed interest in StickleyFurniture. Stickley’s “Legacy” brand furniture relies on timeless designs that get handed down from one generation to the next.

Filson’s “Unfailing Goods”Seattle, WA

The popular west coast outfitter of durable outdoor gear describes itself and its products as “purpose driven” and “built to last,” and has remained “stubbornly” committed to maintaining manufacturing in the US, as this full page ad from their August 2014 catalog explains:

While others moved their manufacturing operations overseas, we wished them well and then built two more factories in the USA. We’ve made our own goods here for more than a century and that’s not going to change. Our American factories allow us to keep an ever-watchful eye on product innovation and quality while giving us the capacity to manufacture even more of our own products. That’s the Filson way-a longstanding, stubborn approach, built upon practices and beliefs that have become increasingly more relevant over the last 117 years.

ATTRIBUTES OF A DURABLE COMPANY

•well managed, results driven companies that employ best management practices (e.g.; lean manufacturing) that help them constantly improve and adjust to changes in the marketplace. •embrace technology (e.g.; robotics, CNC’s, AI, etc.) to reduce labor costs, but also recognize that some tasks cannot be replaced by a machine without compromising the integrity of the brand.•has a sincere, robust and transparent commitment to sustainability that is woven into the fabric and culture of the organization in a way that is prominently and effectively communicated to and understood by everyone in the chain of production•think of themselves and the people who work for them as craftsmen •have well developed training and mentoring programs in place for passing those skills on to successive generations of workers.•maintain a commitment to making and/or manufacturing products that exhibit the timeless and universal values discerning customer’s demand and expect--utility, durability, and beauty•recognize the value that good design brings to their brands, and how to leverage or extend that value through co-branding.•committed to taking a long view, resisting pressure to offshore operations for short term quarterly gains at the expense of long term growth and stability. •understand that making durable products is not only the right thing to do from an environmental point of view, it’s the right thing to do for their employees, their communities, their customers, and their country.

When a company’s products become known for their durability, the company also becomes more durable. Durability becomes part of the company’s brand, part of its structure and its identity. Companies that make products built to last are able to compete against low cost manufacturers overseas not only because discerning consumers are willing to place a value on that durability, but because the process of figuring out how to make products that are durable makes the company more durable too. Durable companies also make durable communities, offering stability and contributing to pride of place. And when many durable companies are located in many durable communities, the entire region becomes more durable.

How durable companies contribute to making durable communities and durable economies

The vision presented in this report is a response to an avalanche of changes that have occurred in the region, the Commonwealth, the nation, and the world over the last decade, including:

•changes in worker values and attitudes favoring jobs that offer greater opportunity for autonomy, mastery and purpose; •innovations in financing, like Kickstarter, that reduce barriers to entry in the marketplace of ideas; •the use of social media to build communities of like-minded buyers; and •the birth and explosive growth of the makers movement

responding to an avalanche of changes in the region, the Commonwealth, the nation, and the world

VISIONTo become known as the region of the country with the highest concentration of makers and

manufacturers of the finest, most coveted (wood) products in the world, by growing an ECONOMY BUILT TO LAST in the forested regions of Pennsylvania,

where the future still grows on trees.

An ECONOMY BUILT TO LAST includes:•COMPANIES built to last (purpose driven companies committed to sustainability and long term investments in technology and

training) •making and manufacturing PRODUCTS built

to last (products that are functionally, aesthetically and physically durable and

reliable) •that create JOBS built to last (jobs that can’t

easily be off-shored) •in COMMUNITIES built to last (regions with

diversified economies, i.e., tourism, manufacturing, etc.)

•for a NATION built to last (one founded on the institutions of rule of law, accountability

(democracy) and a strong, effective, knowledgeable state willing to devise and

implement public policies that address the real needs of all of its constituents.

In the March 2016 issue of The Atlantic, James & Deb Fallows describe how America is putting itself back together as they journeyed across America in their twin engine plane. Fallows says, “Most people in the U.S. believe their country is going to hell. But they’re wrong.” The Fallows three-year journey by single-engine plane revealed reinvention and renewal occurring in the most unlikely places by the most unlikely people.

How other places in America are putting themselves back together again

ZERO to ONE, Notes on Startups, or How to Build the FuturePeter Thiel, Founder, Paypal, initial investor in Facebook

“Creative monopoly means new products that benefit everybody and sustainable profits for the creator. We preach competition, internalize its necessity, and enact its commandments; and as a result, we trap ourselves within it—even though the more we compete the less we gain.”

How singular companies are reinventing capitalism and doing rather well by doing singular things rather well

Why adding value to lumber “here” instead of “over there” makes a lot more sense

A knock-off violin made in China usually sells for under $500A typical violin weighs 465 grams

465 grams of gold is worth about $17,000

A violin made by a luthier schooled in Italy’s Cremona region typically sells for $17,000Wood + Craft is worth its weight in gold

“This spring Laurence Fink, the CEO of BlackRock (manages $3 Trillion in assets), sent a cautionary letter to hundreds of CEO’s. As a group, he said, they were too attentive to short-term profitability and stock values, at the cost of the long-term welfare of their firms. The average Fortune 500 CEO has a term of only 5 years, Fink [said]. If you’re going to build a new factory in a manufacturing company, the break-even point is probably longer than that. There’s an incentive not to reinvest. You see these behaviors year after year, and it’s a big problem.” From The Investment Secrets of Al Gore, November 2015 issue the Atlantic

Why it’s important to think in quarter centuries (or longer) instead of quarterly earnings

Plant a Tonewood Demonstration Forest in Ole Bull State Park.

It takes 100 to 250 years to grow a tree with tonal qualities. People don’t live that long, but nations built to last do.

example of thinking beyond the quarter

Why makers matter to manufacturers, and manufacturers matter to makers

Knoll Furniture, Greenville, PA

PRE-FAB HOUSING

Acre Designs Zero Energy Prefab Homesold on line

packed and delivered in a shipping container1,100-1,800 SF at $300/SF

only 3 months to build (fast-fabrication)utility HUB uses Plug & Play technologygoal to sell 2,000 homes in 5 years ($1B)

Example of a durable company that could exponentially grow demand for lumber in PA

CHIP REUSABLE PALLETS

Durable pallets leased from companies like CHEP (painted blue and tracked worldwide by the company) could

eventually replace the cheap throw away pallets that have been the backbone of the Commonwealth’s lower

grade hardwood industry.

Example of a durable company that could exponentially shrink demand for lumber in PA

Extending PA’s brand to reflect a 21st century makers and manufacturers economy

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes, the ones who see things differently…they invent, they imagine, they heal, they explore, they create, they inspire, … they change things…While some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think they can change the world are the ones who do.”

Steve Jobs, founder, the world’s most valuable company

Why crazy ideas matter