Automation, innovation and sustainability 

Iowa manufacturing experts discuss some of the industry’s most pressing issues 

By Joe Gardyasz

Meet the panelists:

Yarelis Hernandez, Site manager, Clinton Complex, for LyondellBasell Industries, a multinational chemical company and the world’s largest licensor of polyethylene and polypropylene technologies. A chemical engineer, Hernandez has held various leadership roles with the company over the past 24 years. 

Gül Kremer, Wilkinson Professor, industrial and manufacturing systems engineering, Iowa State University, whose research interests include applied decision analysis to improve complex products and systems, and engineering education. She has an industrial engineering degree from Yildiz Technical University in Turkey, an MBA from Istanbul University in Turkey and a doctorate in engineering management from Missouri University of Science and Technology.

Hank Norem, President and CEO, Ramco Innovations, an industrial equipment supplier based in West Des Moines, and co-chair of the Iowa Innovation Council’s Advanced Manufacturing Work Group. In 2018 he launched Maple Ventures, an entrepreneur support center in West Des Moines focused on industrial startups.

Carl Vieregger, Associate professor, Drake University. His professional experience includes more than 10 years of international management consulting and private equity investments. He has a doctorate in business and corporate strategy from Washington University in St. Louis, Mo.

The pandemic, worker shortages and supply chain constraints are among the vexing challenges that Iowa manufacturers have been dealing with over the past year and a half. Fortunately, resilience and innovative thinking are not in short supply for the companies that make up one of the state’s largest industries, a panel of manufacturing experts recently told us.

The emerging movements toward increased sustainability and automation, along with strategies for dealing with shortfalls in materials and skilled workers, were some of the issues that our experts discussed during the Made in Iowa: Manufacturing Forecast event on Aug. 19.

The panel discussion was moderated by Business Publications Corp.’s publisher and executive editor, Chris Conetzkey, and senior staff writer Joe Gardyasz, whose coverage areas include manufacturing and logistics.You can rewatch the entire event on-demand: Click to watch on-demand

Tell us a little bit about your role in manufacturing. And from that perspective, what do you see as some of the biggest challenges ahead for the manufacturing industry in the next year or two?

Hernandez: LyondellBasell is one of the largest plastics, chemical and refining companies in the world. As a plastics producer located in Clinton, Iowa, and as a site manager, I can tell you that the pandemic has really highlighted the important role that plastics play in our society – from keeping food fresh for takeout to milk containers, to plastic pipes that deliver water, to the use of plastics in personal protective equipment to keep our health care professionals safe, as well as making vehicles lighter so we can continue to enhance fuel efficiency. Our employees, not only at Clinton but throughout the world, have really been working together on three global challenges to advance sustainability, and that’s what we’re focused on for the next few years.

The first [challenge] is really eliminating plastic waste from the environment — we realize that is something that we need to continue to be focused on. Secondly, we’re actively working to identify and implement projects that address climate change by reducing CO2 emissions by 15% [per ton of product produced relative to 2015 levels] by 2030 as well as growing sustainable solutions such as blending of post-consumer recycling materials. A third global challenge that we’re really tackling is we want to ensure that we support a thriving society. So we’re enhancing our workplace and our operations by continuing to operate safely and reliably. We’re also collaborating, for example, with Eastern Iowa Community College and Clinton Community College as well as the Clinton Economic Development Corp. to develop programs that enhance workplace development so that we can continue to [develop] the skilled workforce that we need.

Kremer: I am a professor of industrial manufacturing systems at Iowa State University. And after what Yari indicated relating to sustainability and energy, I should also add that I am the ISU representative to the Iowa Energy Center, as well as the REMADE Institute, which is a national manufacturing institute that is focused on sustainability and reduction of embodied energy in manufacturing and manufactured goods.

As for my personal research, I work on increasing the manufacturability of end products, and recently we have been working on incorporating artificial intelligence in being able to accomplish that. In our department, we see ourselves as part of Iowa’s manufacturing network, because our job is to support the training of the engineers, and through that we feel we are part of the bigger manufacturing node. We also understand the importance of Iowa’s manufacturing for the whole country. Iowa is No. 5 in the whole nation in manufacturing output, and that’s very important to us.

What I am hearing from my colleagues in the industry is that they are increasingly seeing a shortage in workforce. This is coming at a time when we are trying to catch up our production; because of COVID and other reasons there was a huge slowing down in production. Now it’s time, we are ready to produce, but the workforce is not there. One of the biggest challenges in my view is that now as we are needing to invest in automation for Industry 4.0 to sustain competitiveness, how are we going to support workforce development in such a way that will make the manufacturing jobs attractive?

Norem: I am president of Ramco Innovations; we work with companies to provide automation solutions throughout the Midwest. We work with them on any sort of project to help them become more efficient and safe, leveraging those 4.0 technologies we’re going to talk a little bit about today. Also, within Ramco we have launched Maple Ventures, an industrial technology startup incubator of sorts where we’re housing a handful of startups that are immersed in these technologies as well. I sit on the Iowa Innovation Council and the advanced manufacturing subgroup of the council, which put together the Manufacturing 4.0 plan for Iowa, so I’m pretty versed in that area as well. I also sit on the technology commercialization committee [of the Iowa Economic Development Authority] that helps startups to get funding to take them to the next level.

As for the challenges, it’s hard to pinpoint just one — there are a handful and they’ve been touched on previously here — but the labor shortage is a huge issue for us around the country and certainly in Iowa as well. The second one is supply chain — we’re all feeling the impact of supply chain issues. The ability to source components is a very big issue for us in the manufacturing world. And the last one is broadband connectivity. We’re feeling a little bit of pain on the IT infrastructure side to implement some of these emerging technologies in the manufacturing space.

Vieregger: I’m an associate professor at Drake University in the college of business. My research and teaching focus on business strategy, corporate strategy, corporate innovations with a particular focus on capital investment decision making of firms — where firms choose to make their capital investments, and how those investments are influenced within the organization. The panelists have highlighted several challenges already. … I’m going to pick one that hasn’t been mentioned yet — the resiliency of the existing workforce. Workforce shortages are huge; almost everyone has mentioned them, and everybody who has mentioned them is also thinking about their current employees — how do we maintain their motivation? We are now about 18 months into what one executive has called playing Whack-A-Mole with their supply chains, [and in dealing with those challenges] those employees are tired. … What can we do to shore them up as we return to hopefully some semblance of normal?

What are some thoughts, particularly at the workers level at the plants, for keeping employees safe in the pandemic? How are workers being kept safe in the manufacturing environment?

Hernandez: From a manufacturing perspective it’s really added to, as Carl mentioned, the level of resiliency that we have seen in the workforce … because it was constant change; we kept changing things in the workplace to keep things safe. And it continued to evolve and to carry through to ensure that we had zero COVID transmission in the workplace. We’ve put a lot of plexiglass in place; we use a lot of digital health screening logs; we’ve increased cleaning; and we’ve really looked at what the community data was telling us. I would say another key takeaway that we had was the importance of staying connected, even though we had to be 6 feet apart. We provided a lot of our employees with laptops and touchpads if they became ill or had issues with child care or had to isolate their students. And we need to be cognizant of the environmental conditions. We’ve seen that we have to use a certain type of face mask in the summer as opposed to what we use in the winter. So being able to adapt and to listen to what our employees and contractors are saying.

Norem: Worker safety is not really a new concept in a manufacturing setting, it was just that a pandemic was a new concept for us and preparing for safety precautions related to that. So it was really, in some cases, applying some older technology to a new setting. It was interesting to see companies really huddle up and work together in borrowing practices from other areas, such as the service industry, where social distancing was already starting to be implemented. Of course, automation did start to play a pretty big role in that; where you can get data in a remote setting, you can provide barriers when needed. So really, companies that were proving to be agile were able to shift their workforce, shift their schedules.

Can you give some examples of ways that existing technologies were sort of repurposed?

Norem: Like I mentioned, remote monitoring has been around for years, for decades, really. But that was really fast-tracked in a COVID setting where I don’t actually have to be on-site, I can monitor a piece of equipment remotely. That’s becoming more prevalent nowadays with 4.0 technologies; it was really fast-tracked in that COVID setting, so it was pretty exciting to see companies start to embrace these technologies.

For many manufacturers, remote monitoring or working remotely may not be an option. So are there any particular hybrid approaches in addition to what Hank mentioned?

Hernandez: We do have workers who are what we call location-critical — they have to be physically near the equipment to be able to operate it safely. So we really shifted our focus to identifying who were these location-criticals, and those who are non-location-critical so that we can focus on those to work remotely. But we also found there was a balancing act because there are still things that those that we deem non-location-critical have to come to the facility to do. We really look at the data that the Iowa Department of Public Health puts out weekly — it used to be daily — in regards to what is happening [with infection rates] in our community, focusing on where our employees and contractors work. So it’s imperative that we have access to that information so that we’re making smart decisions.

Kremer: Engineering cannot be learned remotely, so we continued our operations, especially for our manufacturing course, in person. So we felt the need to keep everyone safe. Also, through our capstone design program, our students have to be on location at the manufacturing facilities. I want to personally thank all our manufacturers within the state because our students reported back to us that they had great interactions with you all out there, and they also felt safe. Regarding supply chains, I have been reading this report on the defense-critical supply chains. … If we really want to benefit from globalization and global supply chains, we really cannot disregard or underestimate the issues around the big supply chains, and even those who are really weaponizing those supply chains. … These problems are going to get bigger – even in non-COVID times – because vulnerabilities, man-made or natural, are going to remain. Regarding resiliency, I would really like us to consider resiliency in our workforce knowledge. How is it that we can increase that knowledge base, so that when there’s the need, we can pivot, we can get the technologies that Hank has been talking about for Industry 4.0 … and reduce those vulnerabilities in our supply chains.

With these supply chain constraints, we’re hearing about the chip shortages and how those are affecting vehicle production. Are there some examples from Iowa in how end users are being affected here by that shortage, and ways that manufacturers are working around this issue?

Hernandez: The manufacturing industry really operates in a global economy, so conditions in one location, whether it’s the U.S. or international, really impacts our supply chains as well as trade in all locations. So we definitely agree with [Kremer]; we need to care about what happens globally. And not only that, but these extreme events do have a significant impact on our supply chain. We saw it from the winter storms in the Texas Gulf Coast area — that was an unprecedented event that took all of our Gulf Coast industry down for over a month. And we are still seeing the impact of the uncertainty that the pandemic created for manufacturing. We weren’t sure how [the pandemic] was going to impact [the economy] so a lot of the industry was really trying to hold back on the amount of inventory that we had on hand. As soon as you take that supply away, the demand is still there. We’re certainly seeing some of the impacts of the chip shortage. Some of our business’s [products] that go into the automobile have had to be curtailed. For our Clinton facility, it’s something that’s on our horizon now that may start impacting some of our electronics devices.

Are there other supply chain issues that we should be considering as we think about the next year or two?

Hernandez: Another [impact] that we’re seeing is on cargo and trucking and even rail. What we’ve seen is that if a region starts to see a large number of COVID cases, that starts impacting the movement of rail or the movement of trucking. From what we’re reading and hearing, some of that is due to [drivers] wanting to be on shorter runs as opposed to some of the longer runs. As a global company we do look at how we move from one region to another so as to minimize the impact to our customers.

Any thoughts on particular areas we should be keeping an eye on?

Norem: We’re seeing many companies go from [shipping by] sea to air. There are obviously huge issues with our ports right now, we’re congested in those areas. We’ve heard reports that ships have had to turn around because they can only be [at sea] for so long waiting to get into a port. Another thing is that companies are looking at brokers that are in it every day, for sourcing components. So they’re trying not to detract from sales and engineering, and turning to other parties to help with this. Another area that has been worked on in the state — we’re trying to connect Iowa-based suppliers with each other and set up a supply chain portal. So there are many sources within our state that could be leveraged that we might not be tapping into. Instead of looking outside our state, how can we set up and build out our infrastructure right there in our state to provide a better supply chain? In some cases, we’re talking about really basic components — cables and metal fab — that we’re not able to source that maybe we can do right here in our state. There’s more to come on that — the state is working on some initiatives that should be coming out this fall to [better] connect our manufacturers and suppliers.

Are you seeing more manufacturers trying to be a little bit closer to their source suppliers? Is that something you’ve seen more [companies] doing across the United States?

Norem: They’re trying. Cost was an issue historically, but now cost really isn’t an issue and most companies are just saying, “When can I get it? We’ll worry about price secondarily.” They are looking more inward, and doing some reshoring along with that, hopefully, and that would benefit all of us in the state, certainly.

Vieregger: Some manufacturers have seen the ability to pass on those costs with higher prices, and some haven’t nearly as much. From a strategic perspective, what I’m really looking for in those firms is that the ones that are going to be able to do much better are those that are able to quantify those increases in costs so that they’re able to set the prices at a level that doesn’t overly impact the bottom line. Which is difficult to do when everything is moving in a thousand different directions.

Kremer: While these volatile supply chain issues are happening, let’s not disregard or forget about the impact on cost management as Carl was talking about. Also the impact on the workers. If these shortages are really stopping or slowing down production, how are our manufacturers handling all of those delays in shipments? You know, [the effort of] getting your money back, and in the meantime incurring additional labor costs — these are major burdens. I agree with my co-panelist that this is a very important strategic topic, and I think that the universities, governments and manufacturers need to get around this and continue the conversation on this very important issue.

Considering workforce, there is a lot of upward pressure in the economy to pay employees better, whether it’s in manufacturing or across the board. How are manufacturers responding to upward pressure on wages?

Norem: I think we’re seeing it in all industries. Manufacturing is getting hit pretty hard with wage increases, and there’s pressure from other areas as well as the service and retail industry lacks for workers. We see it every day when we go out to eat or go for any sort of service. They’re struggling for workers so they’re paying top dollar. Reuters just reported that the service industry is doubling down, basically trying to grab some of the manufacturing workers by providing sign-on bonuses. … It’s just one more reason that companies are turning to automation to look for ways to reduce cost and increase productivity, all at the same time.

Would you say there are some strategies that the Manufacturing 4.0 Plan has built in that would directly address this in terms of workforce training and availability?

Norem: The work on [Iowa’s] 4.0 plan predated the onset of COVID, and [the workforce shortage] was a concern at the time, and COVID has definitely fast-tracked that concern. I was impressed with how quickly the state brought together resources to study the landscape and figure out where the shortages were from a workforce perspective, and what came through on that was the need to upskill workers. … There’s an Industry 4.0 consortium coming together, CIRAS [the Center for Industrial Research and Services] is going to lead this in collaboration with the community colleges, and it’s really to help identify workforce needs. So, it’s talking with the employers, figuring out what skills are needed in the field. For example, we have welding positions open across the state.

A question that we have from the audience: What federal-level policies are currently in the works that will influence or provide opportunities for U.S. manufacturing? Are there specific things that the federal government is doing that are really influencing or benefiting manufacturers right now?

Hernandez: From our industry perspective, is the industry support from the U.S. administration really visioned with regards to unrestricted trade? So really [there is] the need for incentivizing investments in U.S. chemical production capacity so that we can enhance our competitiveness and to continue to spur new jobs as well as continued economic growth and innovation. We also are continuing to cultivate those integrated supply chains that we were speaking about before, and then also boosting the exports of these innovative chemicals and plastics so that from a business perspective it can be benefiting [us] not just domestically but internationally as well. There is a need to repeal the retaliatory China tariffs — those have really severely impacted international trade by imposing tariffs on chemicals, especially in our case the polyethylene business.

Norem: At the state level, there is a grant program that will be launched in September that’s really just for automation in small and medium-sized companies. [Manufacturing 4.0 Technology Investment Grant Program]. If you want to start to automate you’ll want to look at an application for this, because if you’re from three to 75 employees, you’ve been in business for three years, and more than half of your revenue comes from manufacturing, you’re a candidate for this. If you’re going to employ 4.0 technology — robotics, sensing equipment, any sort of automation equipment — you’re eligible for this. It provides up to $50,000 on the hardware side and $25,000 on the software side, and it’s a one-to-one match. Really this was driven by larger manufacturers as well, because they are really dependent on these small and medium-sized manufacturers to enhance their supply chain. If these smaller companies fall behind, it only hurts our larger equipment manufacturers.

Vieregger: I want to expand a little bit on what Hank was talking about as part of this grant program. One of the requirements is to engage in a strategic review of the manufacturing process. As we talk to manufacturers, less than 20% of senior executives of manufacturing organizations feel that their strategy is effectively aligned with their current manufacturing processes. Right now, taking on some type of larger capital investment project, especially with so many cross currents and uncertainty in the air, might seem daunting, as Hank mentioned. The ability to match some of the spending up to a certain amount, and this formalized strategic process that you engage in can be a great opportunity to perhaps take a step, maybe even just a smaller step, toward automation and something that a manufacturing firm might not be able to otherwise do.

Norem: Sometimes it’s just a personnel issue — they’re just short-staffed and they don’t have the ability to do that strategic planning. There are resources in the state at the university level; there are support groups. CIRAS is going to do an assessment at the front end of these grants, so it will really help them to dial in, because as Carl mentioned, it’s pretty tough for these smaller companies to just launch an automation project when they’ve never done it before or maybe had a bad experience in the past.

Hank, you had mentioned earlier your involvement in the technology commercialization committee for IEDA. In addition to the matching grant program that you mentioned, can you give any examples of smaller manufacturers that are seizing opportunities as startups?

Norem: The state’s very supportive of the startup culture, and one of the five pillars of this Manufacturing 4.0 program was really accelerating our startup-type companies, and we’re seeing a lot that are coming through that [technology commercialization committee] that are advanced manufacturing based. So it’s pretty exciting to see that emerging technology come through our state. And again, back to large companies, they’re excited about this as well because they want to see emerging technology pop up here that they can use. You’re seeing some of the larger companies start to acquire some of these smaller companies, just like you reported recently on Deere acquiring a robotics company [Bear Flag Robotics].

Hernandez: Here’s a quick plug for the Manufacturing Institute. We were talking about the resources at the federal level that could support the efforts of small and even larger manufacturers. By their very nature, the Manufacturing Institute requires collaboration with academic institutions and manufacturers at a one-to-one level. From my experience, what is required from manufacturers is [cooperation] with academics to be able to collect data, in-kind support and access to different facilities. But then, the benefits to the manufacturers are really tremendous. … We do have current projects with the Manufacturing Institute. … And of course, as regents universities, we would love to support our manufacturers in Iowa.

Norem: Just one more point on the small manufacturers. Larger companies get this already, but I think on the education side, it’s not only education for the future workforce — it’s education for the current workforce as well. It’s teaching them the value of some of these technologies. We get reports fairly often that certain employees get nervous about automation. Rightfully so, it could displace a job or position, but it’s not ever going to replace, from what we’ve seen, a person’s employment. … In the longer term, especially in the rural areas where population is declining, educating them on the value of [automation] and upskilling them on these new technologies helps everyone.