A Model for Job Creation in US Manufacturing
Dr. John Irwin
Michigan Technological University
MET, SME Accreditation Committee Member
Mrs. Marilyn Clark
Michigan Tech Enterprise Corporation (MTEC) SmartZone is a business incubator funded by Michigan Economic Develop Corporation with a mission to create jobs in the technology sector. MTEC SmartZone has been a 501 3-C (non-profit) organization since 2003, and is funded through direct contributions, revenue from investments, restricted contributions from grants, program services revenue/rent grants, and local tax capture. As part of the job creation strategy in a rural community, MTEC SmartZone has helped Fortune 500 companies, such as Ford, GE Aviation, and Dematic, to create satellite offices near Michigan Technological University (Michigan Tech). These companies utilize student talent to provide a low cost alternative to outsourcing.
Why outsource manufacturing engineering to other countries when we can utilize American engineering students and retain their knowledge in the United States? This concept has been wildly successful at the MTEC SmartZone. Companies like Ford, GE and Dematic have found a reliable labor force that works in the same time zone and without language barriers. Michigan Tech students earn money and gain real world experience while attending school in their engineering field. Meanwhile, the community retains student jobs here rather than co-op opportunities found in other towns. Collectively these companies contribute millions in payroll dollars every year. Students are spending their paychecks at local bike shops and restaurants, impacting the local economy.
MTEC SmartZone’s efforts are equally focused on economic gardening--supporting local technology entrepreneurs who want to build technology businesses. These local technology companies also utilize Michigan Tech students to help affordably grow their business, offering the same kinds of manufacturing engineering opportunities as the larger firms in town. Many times technology jobs lead to companies manufacturing in the US. For example, GS Engineering, located in Houghton, Michigan, was incorporated in 2001 as the first company to graduate from MTEC SmartZone. GS Engineering initially began with 3 employees working from their homes, and in 2008 moved into a newly constructed facility that combines office space with several material testing labs and a high bay area for vehicle development projects. GS Engineering has grown to nearly 70 full-time employees serving the US market exclusively, with customers including the Department of Energy, Department of Defense clients, leading vehicle manufacturers, and material development companies. GS has been recognized many times over for their innovations and accomplishments, including the Michigan High-Tech Small Business of the Year by the Michigan Economic Development Corporation in 2003, and most recently Michigan's 2010 Government Contractor of the Year.
MTEC SmartZone Role
MTEC SmartZone offers an alternative for Fortune 500 companies to outsource engineering work to a rural community rather than offshore while supporting technology start-ups. Several Michigan Tech students with a manufacturing concentration in the Mechanical Engineering Technology (MET) program have gained valuable experience working for MTEC SmartZone companies. Some students start as interns and then become full-time employees after graduation. For example, student interns design and detail parts for electronic systems at GE Aviation which are used for testing and simulating the flight systems for aircraft. The knowledge of how parts are manufactured and understanding of quality control techniques are a key role of these engineers. This valuable knowledge is gained through both a laboratory intensive course curriculum design and on-the-job experience.
MTEC SmartZone History
Michigan’s legislature created the concept of “SmartZone’s” in the year 1998. The concept was in response to Michigan’s dependence on the automotive industry and the realization that jobs are created by entrepreneurs. All fifteen SmartZone’s are associated with Michigan research universities. MTEC SmartZone was the first in the state, which was created through the collaborative effort of Michigan Tech, cities or Houghton and Hancock and the local economic development agency. MTEC SmartZone is a business incubator, created to provide technology entrepreneurs business counseling, support, funding and space. MTEC SmartZone provides the basic internet, phone, copying and other services so the entrepreneur can focus on their business. MTEC SmartZone’s business coaching is critical to growing companies because most entrepreneurs are technical in nature and need help understanding the financial, marketing and strategic parts of the business.
The National Business Incubator Association indicates that only 44% of start-ups are still in business after 5 years. Start-ups graduating from business incubators improve their success rate to 87%. Clearly, to create a successful economic gardening environment, a business incubator can help create viable companies.
MTEC SmartZone “Made in USA” Success Stories
Michigan Tech offers our start-up firms, which are all technology-based, access to creative talent. Endres Machining is a start-up machine tool manufacturer created by Michigan Tech professor, Bill Endres. Endres utilizes interns and co-op students to help design, machine, and test their designs. Over the last six years, they have employed close to a dozen interns from Michigan Tech.
Talon Research is a small engineering firm started by female Michigan Tech alum, Dorothy Ruohonen. Ruohonen graduated from Michigan Tech with a Mechanical Design Engineering Technology AAS degree (the AAS degree was reworked in 2005 into the currently offered BS degree in MET). She remains involved in daily operations as the senior mechanical design engineer. Talon does CAD design for many business sectors including medical and military. However, Talon recently commercialized a technology and service that detects public road defamation more effectively and less costly than current methods. The technology was developed at Michigan Tech, and working with researchers Talon’s business skills helped create a new market. They have also accessed student talent at Michigan Tech to help further develop the product and provide engineering services. These students are learning hands-on design, testing and project management skills. Talon employs interns from Michigan Tech’s MET Program to work in the summer, and if their schedule permits throughout the school year.
However, the largest employers of student interns are Fortune 500 Companies who set up satellite offices in Houghton. GE Aviation employs 35-50 students per semester from various disciplines. The software that the students work with has to collaborate heavily with the hardware and controls in the design and testing of the aircraft’s “black box” product improvements. Not only do the students learn their own engineering area more completely, but they learn to collaborate with other disciplines, having to figure out the age old dilemma “It’s a software problem--no it’s a hardware problem!”
Dematic, a global $1.2 billion logistics company that specializes in material handling systems, employs Computer Science students, Mechanical Engineering and MET students. They joined the MTEC SmartZone “family” in April of 2012. Dematic worked closely with MTEC SmartZone and Michigan Tech to sign the lease, hire 11 students, and create work spacescomplete with computers, all within 20 days. The students work for the Engineering Development Department within Dematic, starting with projects that the engineers within the company cannot complete with their limited headcount. The company has been so pleased with the talent that they will be utilizing the students throughout the school year with increasingly challenging projects. Dematic will be adding full time employees in 2014 by hiring spring graduates to work in their home office for six months and then transferring them back to the Houghton area which is advantageous to both the students and employer.
Conclusions and Recommendations
The result of GE Aviation and Dematic’s efforts in matching projects to the students’ ability, and helping them grow by giving them increasingly complex projects, has helped create very desirable engineering graduates. Competitors even come to these companies asking for the names of any internship students that they will not be hiring permanently so they can hire the students.
Engineering education can be greatly supplemented with a program that encourages companies to hire students and provides them with “real-world” experience. The result is a graduating engineer with the skills needed to work within a company in a collaborative manner, and an engineer whose education has been enhanced through the synergy of classroom and hands-on experience.
Government project grants can be leveraged to support local organizations like MTEC SmartZone in communities around the country. Also, with the help of an organization like MTEC SmartZone, start-up entrepreneurship companies have the opportunity to bring new innovations into the marketplace without offshoring the engineering and/or manufacturing of their product. Companies like GE Aviation involved in military contracts can keep their engineering and manufacturing in the US without worries of national security issues or protecting their innovations. Moving work back to the United States in this manner helps move our country forward. ME