Broadband Technology in Manufacturing Final Report Prepared for: Commonwealth of Pennsylvania, National Telecommunication & Information Administration and IRC Network, Inc.

May 2014

Irene J. Petrick, Managing Director & Matthew Prindible, Associate Corresponding author: [email protected]

This project was financed by a State Broadband Initiative (SBI) grant from the U.S. Department of Commerce, National Telecommunications and Information Administration (NTIA), under the administration of the Commonwealth of Pennsylvania, Governor’s Office of Administration (OA) in partnership with the Department of Community and Economic Development (DCED).

TABLE OF CONTENTS Executive Summary ...........................................................................................................2 Overview .............................................................................................................................5 1.

The Web-Based Survey of PA Manufacturers .......................................................7 1.1 Survey Design ....................................................................................................7 1.2 Results ................................................................................................................7

2.

One-on-One Interviews ..........................................................................................14 2.1 Focus ................................................................................................................14 2.2 High Level Findings ........................................................................................15 2.3 Case Study: Videon Central, Inc. Sets an Example in Broadband Use and Information Technology Readiness for PA Manufacturing SMEs ...........16

3.

The Future of Manufacturing and Its Broadband Implications ....................... 18 3.1 3D Printing and Advanced Manufacturing ......................................................18 3.2 Considerations for Data Security and Intellectual Property in the Advent of Digital Manufacturing .................................................................................19

4.

Implications for the Need for Broadband & Programs that will Support its Adoption, Implementation and Successful Execution .....................20

Appendix 1: Broadband Programs and Examples of How Broadband Drives Competitiveness in Manufacturing ................................................................................24 1.1 Public and Public-Private Partnership Programs .............................................24 1.2 Broadband Connectivity and its Potential for Manufacturing, Particularly for Small to Medium-Sized Manufacturers (SMEs) ........................................29 1.3 Driving Manufacturing Innovation through Broadband Connectivity – In the Office .....................................................................................................31 1.4 Driving Manufacturing Innovation through Broadband Connectivity – In the Shop .......................................................................................................34 1.5 Summary ..........................................................................................................37 Appendix 2: Web-based Survey Content......................................................................38

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EXECUTIVE SUMMARY Background This report was commissioned by Pennsylvania’s Industrial Resource Center (IRC) Network, Inc., a system of seven manufacturing extension programs focused on enhancing Pennsylvania’s global leadership in manufacturing. The study’s objectives are to better understand best practices relative to broadband use within the manufacturing sector, identify trends and industry perceptions relative to broadband use across Pennsylvania-based manufacturers and to craft sound recommendations on how manufacturers can leverage broadband technology for competitive advantage. The findings of this study are also intended to inform state and federal policy development around broadband and technology-based economic development. The study included a critical review of secondary research, a web-based survey to collect information about the state of Pennsylvania manufacturers’ knowledge of and use of broadband, focus groups and one-on-one interviews with key manufacturers in the state to ascertain details about their use of broadband, the challenges associated with broadband use and the benefits derived from leveraging broadband technology.

Findings From secondary research, the following macro level trends were identified:  The evolution of advanced manufacturing, such as 3D printing, suggests a growing need for broadband connectivity in the future.  Broadband technology will be a key enabler to competition for increasingly customized products aimed at increasingly segmented markets.  The use of broadband varies widely among companies and is unique to their business and management environment.  A key theme in broadband effectiveness is tied to the company’s approach to its data management and communication flows.  As digital design and manufacturing increases, the importance of intellectual property and data security increases. Most small to medium-sized manufacturers are ill equipped to address these growing needs internally.  Broadband infrastructure and connectivity draw companies seeking new locations and enable existing companies to expand.  Pennsylvania’s policies and current law around broadband deployment mandates upload and download speeds, which are now behind emerging national trends and not sufficient to guarantee competitive advantage. While the preliminary data from various sources may be slightly different, a picture emerges wherein many Pennsylvania manufacturers are unprepared for the future of manufacturing that will be enabled by broadband connectivity and digital technologies. Only a small number of manufacturers surveyed or engaged in this study understand the potential for broadband-enabled data management, data transmission and storage and interactive collaboration and communication. Moreover, there are few detailed case studies that Pennsylvania manufacturers

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can reference to better understand how information technology (IT), digital manufacturing and broadband technologies can impact a manufacturing enterprise both strategically and operationally. The following key gaps have been identified:  Pennsylvania manufacturers, as a whole, have not fully evaluated the potential that digitally enabled manufacturing presents to their business. Many manufacturers only use broadband for email purposes. Broadband technology needs to be seen as a way of enabling further business, service and competitive advantage rather than viewed simply as an alternative communication technology. Both tangible (decreased cost / increased productivity) and intangible (increased creativity) benefits are critical for companies to understand.  Few good broadband case studies exist as references.  Few transition plans exist to help companies move from internally based IT management systems to a cloud based model.  The importance of website interactivity is undervalued by Pennsylvania manufacturers as a whole.

Recommendations Overall, Pennsylvania’s small to medium-sized manufacturers need to be able to assess where they are on the digital continuum from established to evolving broadband applications, where they need to be in order to maintain or leverage competitive advantage in their marketplace and how to manage the transition and the inherent risks/security vulnerabilities. Rapidly advancing markets driven by OEM/customer requirements and technologies, such as 3D Printing, will transform how manufacturers use broadband and their resulting IT infrastructure needs. Tools and polices need to be developed to help Pennsylvania’s small to medium-size manufacturers (98% of the PA’s total manufacturers) transition to new business models. Based on this exploratory study, TrendScape Innovation Group (TSIG) offers the following seven recommendations for the IRC Network, the Commonwealth of Pennsylvania and the NTIA: 1. Develop detailed and nuanced case studies that can help PA manufacturers better understand the business value of digital technologies and the potential for broadband to enhance their competitive advantage; 2. Develop an assessment tool that can help individual PA manufacturers determine the strategic potential for digital technologies in their business; 3. Develop an assessment tool that can help individual PA manufacturers understand their readiness to adopt digital technologies. Supplement this assessment with training on the high value add areas;

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4. Provide training around security vulnerabilities that may be introduced through the use of digital technologies. This training should include best practices about risk mitigation and should emphasize the responsibilities of both the service provider and the PA manufacturer; 5. Create networks of key PA manufacturers that are using digital technologies to support their production, operations, communications and innovation strategies. Actively engage and grow this network by linking them to external resources such as cloud based services, remote high performance computing and experts in advanced modeling and simulation; 6. Focus website upgrade projects on enhancing the interactivity between manufacturers and customers on multiple levels. Web tools must become more interactive. Mobile platforms and social media should be given careful consideration; and 7. Consider updating Pennsylvania’s policies regarding broadband upload and download speeds to make them current with emerging national trends and enable regional competitive advantage. In continued support of efforts to develop effective tools and policies enabling broadband implementation, further work is needed to: 

Clarify the Level of Understanding Regarding Broadband Impact: A relatively high percentage of surveyed manufacturers indicated no perceived value to broadband. Also, inconclusive response to broadband effectiveness opinion statements suggests either an ambivalence or lack of knowledge about broadband impact. Based on these preliminary indications, manufacturers do not see the value in broadband or don’t really understand its potential value. Confirmation and clarification of the level of understanding may be influential to the development of appropriate tools aimed at supporting broader adoption.



Understand Motivational Factors: Manufacturers indicated that they adopted IT for both internally and externally driven reasons. While beyond the scope of this study, it would be interesting to determine how different motivational factors affect both the type and timing of broadband technology adoption. A better understanding of motivational factors may potentially be beneficial to not only predicting but also supporting adoption.



Understand Use of Multiple Internet Connection Types: In the current study, we did not ask respondents who had multiple connections to the Internet how they used them or whether or not they were complimentary or competing. In terms of future possibilities for effective use of broadband, a better understanding of how companies balance fixed versus mobile connectivity would be valuable.

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OVERVIEW Motivation This project was financed by a State Broadband Initiative (SBI) grant from the U.S. Department of Commerce, National Telecommunications and Information Administration (NTIA), under the administration of the Commonwealth of Pennsylvania, Governor’s Office of Administration (OA) in partnership with the Department of Community and Economic Development (DCED). This report was commissioned by Pennsylvania’s IRC Network, Inc. (IRCN) a system of seven manufacturing extension programs focused on enhancing Pennsylvania’s global leadership in manufacturing. The study’s objectives are to better understand best practices relative to broadband use within the manufacturing sector, identify trends and industry perceptions relative to broadband use across Pennsylvania-based manufacturers and to craft sound recommendations on how manufacturers can leverage broadband technology for competitive advantage. Specifically, this study had the following primary objectives:     

Identify successful broadband private and public initiatives targeted toward the manufacturing sector from across the nation; Identify manufacturer success stories and best practices from across the nation; Assess the current state and overall impact of broadband utilization within the PA manufacturing sector; Identify potential future states and opportunities that broadband technology represents; and Identify barriers and challenges faced by manufacturers in assessing broadband technology.

The findings of this study are also intended to inform state and federal policy development around broadband and technology-based economic development.

Study Design The study had a four-part design: (1) assessment of secondary research studies; (2) a web-based survey to collect information about the state of PA manufacturers’ knowledge of and use of broadband; (3) focus groups and one-on-one interviews with key manufacturers located within the state to ascertain details about their use of broadband, the challenges associated with broadband use and the benefits derived from the leveraging of broadband technology; and (4) the integration of all of these findings into recommendations for potential activities that each regional Industrial Resource Center (IRC) might undertake and that state or federal policymakers might consider to accelerate the adoption of broadband technologies and their positive impacts on PA manufacturers’ competitiveness. TrendScape Innovation Group (TSIG) provided assistance on this project including an assessment of secondary research and reports on the use of broadband both in PA and nationwide, web-based survey design which was then executed by the IRCN and each individual 5

IRC, assessment of the web-based survey data collected, design of a one-on-one interview survey to clarify and/or expand on the web-based survey findings, one-on-one phone interviews with manufacturers and the integration of all of these into a final report assessing the state of broadband use among PA manufacturers.1

Organization of this Report In addition to the Executive Summary and Overview, this report contains four sections and Appendixes. Section 1 highlights the findings of the web-based survey, with an emphasis on the characteristics of the respondents, their knowledge about the potential of broadband, their use of broadband in internal business or production operations and in their Internet sales or support. In this section, we also note any potential relationships between use and company size or company revenue. Some of the data provided in this section are drawn from IRC-based engagements and other surveys. This section also details PA manufacturers’ knowledge of broadband and its potential impacts. Section 2 describes key findings from the one-on-one interviews. This section also includes relevant findings from a 2013 study of Pennsylvania’s manufacturing sector conducted by Dr. Edward Hill of Cleveland State University.2 Central to this section is an in-depth case study that highlights one of the interviewed company’s highly effective uses of broadband to support its business. Section 3 discusses the potential future state of manufacturing and what this might mean for the usefulness of broadband in supporting competitive advantage. This section draws from extensive work done by Dr. Petrick studying the manufacturing sector over the past decade.3 This section also highlights some of the challenges with the use of broadband, particularly in the area of security, which is becoming a growing concern. Finally, Section 4 draws conclusions about the state of broadband knowledge and use among PA manufacturers. This section identifies key knowledge and/or expertise gaps today and into the future and suggests ways in which the IRCs and/or state and federal agencies might develop programs to help PA manufacturers bridge these gaps.

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The initial TSIG role was to be one of advisor, with the IRCN providing much of the staffing for actual execution of tasks. As the project progressed and IRCN project leadership changed hands, TSIG’s role increased. 2 Edward Hill (2013) Pennsylvania’s True Commonwealth: The State of Manufacturing Challenges and Opportunities 3 See for example, Petrick, I.J., Maitland, C.F., Pogrebnyakov, N. and Ayoub, P.J. (2007) Effective Supply Network Practices. Final report to the Manufacturing Extension Partnership Program, National Institutes of Standards and Technology, December 2007; Frank, M., Wysk, R. and Petrick, I.J. (2002) Managing Product and Process Decisions in Early Product Development. International Association for Management of Technology 11 th Annual Conference, Proceedings. March 2002.

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The Appendixes provide detail on:  select public and public-private partnership activities related to promoting advanced manufacturing and/or broadband use (Appendix 1), and  the web-based survey content (Appendix 2).

SECTION 1: The Web-Based Survey of PA Manufacturers 1.1

Survey Design

The web-based survey4 was intended to gather an overview of PA manufacturers’ knowledge about broadband and their uses of Information Technology (IT) in general. The survey objective was to identify patterns of broadband use and impact. The survey design used a cascading model where answering “Yes” to a particular category of IT use would result in a subsequent pop-up window (or set of pop-up windows). If the respondent did not indicate a particular IT use, they would not be presented with that pop-up window. A similar approach was used throughout this survey. This design minimizes the number of questions that are not relevant to any single participant while also reducing the time to complete.

1.2

Results

Demographics of Respondents A total of 71 responses were attempted with 42 respondents completing the entire survey. Thus, each question is not necessarily based on the same number of respondents. Since this was an exploratory effort, TSIG believed that it was more beneficial to include all responses regardless of whether or not the full survey was completed. Readers are asked to pay special attention to the number of respondents for each individual question when assessing the results presented. The majority of respondents reported being in a senior leadership position. Of the 44 respondents who reported their position or job title, the majority (30) were senior leaders (Owner, CEO, President, Vice President, and Operations Manager). The remaining respondents included IT managers (6), finance officer or manager (3), staff support (3), human resources (1) and marketing (1). See Figure 1.

Senior Leaders IT Managers Finance Managers Staff Support Human Resources Marketing

Figure 1: Survey Respondent Positions

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The survey tool, Qualtrics, (qualtrics.com) was used to gather results from respondents and to later conduct statistical analysis. 7

In terms of the type of manufacturing industry, the majority of respondents reported metal or plastics fabrication (38 of 45 responding to this question). The remaining respondents represent electronics (2), services and consulting (3) and graphic arts and communication (2). Thus, the results in the following sections can be considered to be representative of PA manufacturers.5 See Figure 2.

Metal/Plastic Fabrication Electronics Services & Consulting Graphics & Communications Figure 2: Respondent Company Sector

Of the 47 respondents that gave details about company size, 60% have between 1-50 employees and 34% have between 50-250 employees. Only 6% of the respondents indicated that they have between 250-500 employees. This is consistent with PA manufacturers in general, and so this sample can be considered representative of the larger PA population of manufacturers. See Figure 3. In terms of revenue, the 42 Figure 3: Respondent Company Revenue Distribution respondents who provided data about their company’s revenues are normally distributed. This suggests that a large number of either very small or very large companies did not skew the findings. Information Technology Use The majority of companies in the survey are using information technology (IT) in some form or another with only three companies not using IT at all. See Figure 4. Of the 63 responses to this question, 56 (89%) report using IT for general business support, 49 (78%) use IT for manufacturing planning or operations and 40 (63%) use IT for internet sales or support. Recall that a respondent may select more than one response for this question. It is interesting to note that statistical analysis of IT use indicates that there is no correlation between IT use and either company size or company revenues.6

5

Note that no attempt was made to assess the demographics of non-respondent companies. Since the survey was administered as a web-based survey, it is not possible to determine whether non-responding companies are not Internet savvy or simply didn’t take the time to participate. 6

Statistical significance in exploratory studies for correlations is typically established with a p-value of .10 or less. This generally is interpreted as “The patterns observed can be attributable to chance with a 10% or less probability.” 8

Sales & Marketing CRM Word Processing Human Resources Accounting Email 0

10

20

30

40

50

Figure 4: IT Uses

General Business Support From a business support perspective, IT is used to support a wide range of services within the internal operations of the firm. There were a total number of 51 respondents who indicated specific ways in which IT supports their general business practices. Manufacturing Planning or Operations While IT is used extensively for manufacturing, planning/scheduling and supply chain management, it is used less extensively for 3D Mnfg Production modeling, simulation 3D Mnfg Design and advanced design and production. There Simulation were a total of 45 Scheduling respondents who Shop Floor Data indicated specific ways Inventory/Warehouse Management that IT supports their Supply Chain Mgmt manufacturing activities. See Figure Material Handling 5. CAE CAM

From a broadband perspective, the need for this technology is 0 5 10 15 20 25 30 35 highest in complex Figure 5: IT Uses in Manufacturing Planning or Operations modeling, simulation and 3D design and production. Moreover, it is the transmission of large amounts of data over the Internet or processing of data in the cloud that warrants broadband. CAD

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Internet Sales or Support Of the 34 respondents who reported specific ways in which Social Media IT is used for Internet sales or On-line Shipping/Delivery support, all 34 report having a Tracking website. See Figure 6. About On-line ProductCustomization 40% have an Internet catalog and/or have online ordering and On-line Ordering report using social media, but it is unclear how interactive any of Internet Catalog these activities are. Online Website product customization (3 respondents for 9% of those 0 10 20 30 40 responding to this question) would be the most interactive Figure 6: IT Use for Internet Sales or Support activity between the company and its customers and/or suppliers. Companies that anticipate using more video to describe their products or their manufacturing processes may find that broadband facilitates communication between their websites and their customers and/or suppliers. Motivation Fifty-three participants responded to this question. Respondents indicate that they are adopting IT for both internal (49 respondents for 92% of those responding to this question) and external reasons (37 respondents for 70% of those responding to this question). While it is beyond the scope of the web-based survey, it would be interesting to learn more about how company motivations to adopt IT were related to what the company did and when they did it. There is no indication of time of adoption in the current survey. Note that for both internal and external motivations, respondents could select more than one response. Internal Reducing costs (85% of the 44 respondents who continued to provide details about their motivations) appears to be the main reason that companies are adopting IT, but promoting internal collaboration (84% of the 44 respondents) is a close second. Interestingly, IT adoption does not appear to be heavily driven by a desire to reduce headcount. This suggests that, at the present time, IT has already been used to automate what can be automated. See Figure 7.

Expand to New/Global Market Promote External Collaboration Promote Internal Collaboration Reduce Headcount Reduce Costs 0

10

20

30

40

Figure 7: Internal Motivations for Adopting IT

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External Twenty-nine respondents provided additional detail about how their Supplier Required motivations to adopt IT were influenced by external factors. For Customer Required for Cothose companies that reported being design, etc. motivated to adopt IT by customers or suppliers, nearly 80% adopted IT to Customer Required submit bids and participate in sales Adoption for Sales/Bids opportunities as required by their 0 5 10 15 20 25 customers. Nearly 60% indicated that their customers wanted them to adopt Figure 8: External Motivations for Adopting IT IT to better collaborate on design, innovation and/or testing. Suppliers were the motivating factor for IT adoption in approximately 40% of adoption decisions. See Figure 8. According to one Williamsport manufacturer who participated in a recent focus group, “Our IT has extended to our customers’ IT. We developed their order forms within their systems. If we didn’t bridge that gap, we could never have gotten the business because they couldn’t do it themselves. The integration of that supply chain lets you reach right into your customers’ operation and try to figure out what they need.”7 Internet Connection, Broadband Familiarity & Effectiveness of Use When asked what type of Internet connection the company uses, 49 respondents noted their type of connectivity. Note that a respondent could select more than one type of Internet 3G/4G/LTE Mobile… connection. At the present time, the majority of respondents (59%) indicated that they are High Speed Leased Line using cable (e.g., Comcast, Time Warner, Wireless Broadband Blue Ridge Communications, etc.). It is Satellite interesting to note that the second highest Cable connectivity was 3G/4G/LTE Mobile Phone (37%). With the growth of mobile devices in ADSL all business and consumer settings, this might 0 10 20 30 40 be expected to be a higher percentage in coming years. See Figure 9. Figure 9: Internet Connectivity Type In the current web-based survey, we did not ask respondents who had multiple connections to the Internet how they used these multiple connections or whether or not they were complimentary or competing. In terms of future possibilities for effective use of broadband, a better understanding of how companies balance fixed versus mobile connectivity would be valuable. A recent assessment of over 60 companies that have received support through Pennsylvania’s SBI-funded Broadband Technical Assistance Micro-Grant Program suggests that the cost of 7

From Hill, 2013, Pennsylvania’s True Commonwealth: The State of Manufacturing Challenges and Opportunities

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access to broadband varies widely.8 Cost appears to be associated with speed of transmission and may also depend on geographic location. For example, the lowest monthly cost reported was $10/month with download speeds of less than 200 kilobytes per second (kbps) and uploads of less than 700kbps. Similar upload and download speeds were also quoted at $25 and $50 per month with different carriers. Even in download and upload megabytes per second (mbps), costs vary widely with 10mbps up and 10mbps down at a high of $895/month and the highest reported cost for up to100mbps up and 10mbps down at a whopping $1,100 per month. As a follow-up to the connectivity question, we asked respondents specifically about their knowledge of broadband with a companion question about why they made that specific choice. Table 1 summarizes these results. Note that there is no statistical correlation between broadband use and company size or company revenue. Table 1: Broadband Familiarity Familiarity/Use No, I don’t know why broadband would be useful. Yes, my company is aware of broadband, but we’ve chosen not to use it.

Respondents 4

Percent 8%

6

12%

Reasons    

Yes, my company has tried broadband but has since stopped using it.

2

4%

Yes, my company is using broadband for some or all of our Internet communication needs. Total

38

75%

50

100%

 

Too expensive to initiate No apparent value over our current communication networks Worried about security breach We don’t have any employees with expertise to take advantage of this Too complicated We lost the expertise needed to effectively use broadband due to employee turnover

The majority of the 50 respondents indicate that they are using broadband for some or all of their Internet communication while only 4 respondents indicated that they did not understand the value of broadband. For those who either decided not to use broadband or who tried it and then stopped using it, the main reasons seem to be a perceived lack of value or the loss of/lack of expertise to fully utilize broadband connectivity. Note that there is no statistical correlation between broadband familiarity and company size or company revenue. For those companies using broadband, we attempted to better understand the value that they were getting from this connectivity. We asked a series of opinion questions, scored on a 5-point scale. Thirty-five respondents provided their insights. Table 2 details their responses.

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Broadband Technical Assistance Micro-Grants summaries provided by Chris R. Wilusz, IRC Network 2013 12

Table 2: Use of Broadband and Perceived Effectiveness of Use Statement

My company has been able to more effectively serve existing customer needs due to broadband connectivity. My company has been able to add new customers due to broadband connectivity. My company has been able to more effectively serve existing suppliers’ needs or find new suppliers due to broadband connectivity. My company has realized cost savings due to broadband connectivity. Broadband requires specialized IT experts. Broadband has enabled my company to more effectively use the Internet for sales and support. Broadband has enabled my company to design, develop and/or test new products for customers. Broadband is critical for my business to succeed.

Strongly Disagree (1) 0

Disagree (2)

Agree (4)

Strongly Agree (5)

1

Neither Agree nor Disagree (3) 6

Mean Score

18

10

4.06

0

9

12

11

3

3.23

0

5

6

17

7

3.74

0

5

10

14

6

3.60

2

10

11

9

3

3.03

0

6

6

19

4

3.60

0

9

12

13

1

3.17

1

5

3

12

14

3.94

In these opinion questions, there is no statistical correlation between company size or company revenue and the opinions expressed by respondents. Broadband is perceived as being positively related to effectively serving existing customer needs and effectively meeting supplier needs. In addition, there is a perception that broadband has enabled the company to more effectively use the Internet for sales and support. There is also a perception that broadband is critical to business success. The areas where broadband is considered highly positive (compared to all other responses) are indicated in grey shading in Table 2. Several of the opinion statements are inconclusive (agree vs. disagree) since there are quite a high number of “neither agree nor disagree” compared to other responses. This suggests either ambivalence about broadband impact or a lack of knowledge about broadband impact. The webbased survey is not able to differentiate between these two alternatives and additional study is needed to clarify this.

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Perceived Benefits of Broadband and Future Expectations Forty-two participants responded to the question about perceived No Value benefits. See Figure 10. Most of the Better E-learning respondents believe that broadband Improved Productivity contributes to a combination of productivity gains, efficiencies and More Efficient Procurement cost reductions. Reduced Operational Costs Increased Sales

Interestingly, 17% of respondents 0 10 20 30 40 saw no perceived value to broadband. This suggests either Figure 10: Perceived Benefits to Broadband respondents don’t see a value to broadband or they really don’t understand its potential value. Additional work in this area is certainly needed to clarify this point. When asked whether or not they believe that a broadband connection will be important in the next five years for them to conduct their business, 70% (32 of 46) of respondents indicated that they believe that a faster connection will be needed while 30% believe that existing connectivity speeds are adequate. An Erie-based manufacturer noted, “The manufacturing of tomorrow is going to be here faster than it was in yesteryears. You have to stay ahead of that …to stay effective. It’s that technology moving forward that we, as company owners, have to watch and embrace or be left behind and we can’t even imagine it.”9 The 32 respondents that indicated a faster speed will be needed in the future believe that the pressure for this speed will come from customers (91%), suppliers (44%) and their own engineering design staffs (56%), purchasing staff (53%) or sales staff (44%).

SECTION 2: One-on-One Interviews 2.1

Focus

This effort was initiated to supplement the results gained from the web-based survey. The webbased survey was intended to identify patterns of broadband use and impact. What we found, in general, is that PA manufacturers are aware of broadband overall, but are less equipped to understand the potential contributions of broadband connectivity to their business operations or to their interactions with their suppliers or customers. In the one-one-one interviews, we were seeking to determine (1) whether or not companies were seeing value through broadband; (2) what motivated companies to adopt broadband; (3) what challenges these companies faced in using broadband and (4) what company leaders thought the 9

From Hill, 2013, Pennsylvania’s True Commonwealth: The State of Manufacturing Challenges and Opportunities 14

future of broadband might be in general and for their company. We used open-ended questions to elicit the most information from interviewees. Thus the interview protocol was developed at a high level with the intent that a conversation would emerge between the interviewer and the interviewee. In exploratory research, it is often the unanticipated information that is most useful in framing future problems and/or needs. Ultimately, five companies participated in one-on-one interviews:     

Die-Tech, Inc., a precision metal stamping company that makes micro to small parts. Videon Central, Inc., an engineering services company that specializes in in-flight entertainment and high end home entertainment systems. Quality Mould, Inc., a small machine and mould making shop that designs moulds for the glass, power generation and mining industries. Venango Steel, Inc., a job shop that specializes in metal parts. Lean Green, LLC, a start-up energy management company that leverages broadband as part of its business model.

These five companies represent the variety of manufacturers that we encountered in the webbased survey, ranging from established companies making specialized parts and moulds to an engineering services company and a start-up. While the numbers are small, these companies reflect the profiles of the companies we encountered in the web-based survey.

2.2

High Level Findings

With such a small sample, it is difficult to determine key themes since the uses of broadband vary widely among the companies – three of the five are only using broadband for e-mail, choosing to keep any of their computer-based applications in-house. Moreover, wirelessly enabled access is rare for most company operations to date. Thus, we identify three high level observations:   

The use of broadband varies widely among companies and is unique to their business and management environment. Technical/engineering savvy companies are more likely to understand the potential of broadband and to use its capabilities for multiple areas of the business; and Traditional metal working shops, while reliant on computer applications such as CAD, CAM and even CAE, do not access these using broadband or the cloud. The use of broadband in these companies is limited to e-mail communications.

There are also some takeaways from the one-one-one interviews. Specifically, 

Broadband appears to hasten the transition between systems. Moving to the cloud offers companies the ability to attain current technology and software capabilities without investing in these as licenses and purchases. Instead, cloud computing enables companies to “buy access” to needed capabilities that are then supported on the backend by the service/cloud provider. This capability insures that companies have the most up15

to-date hardware, software and security protection. 

The tangible benefits to broadband – decreased cost and increased productivity – are important, but there are intangible benefits that are also critical to note. Intangible benefits include increased curiosity among existing technical staff as they play with always-new software and can use simulations to play “what-if” games with everything from design to materials tradeoffs to manufacturing specifications.



A very important tangible value that is often underestimated is the ability to keep critical talent as these employees want to (or need to because of location) work from home. As distributed work patterns become more prevalent, particularly among knowledge workers (designers, engineers, and other professionals), the ability to support their work in a seamless way will be increasingly enabled by broadband.

These observations, with respect to the one-on-one interviews, are consistent with national trends and what Dr. Petrick has seen in other contexts. While there may be pockets of computer sophistication with respect to modeling, design, simulation and manufacturing, for example, most companies see this as part of their intellectual property (IP) and thus try to closely guard it, keeping this data inside of its own firewalls. Since broadband is an enabler of data transmission and sharing, those companies that maintain this complex data within their own walls have little need for broadband.

2.3 Case Study: Videon Central, Inc. Sets an Example in Broadband Use and Information Technology Readiness for PA Manufacturing SMEs Videon helps media technology firms simply, quickly and cost-effectively move their digital media initiatives from concept to market. With over 30 million devices using Videon’s streaming media solution, DVD and Blu-ray technology, Videon is a proven partner and supplier to the world’s leading technology companies. Based in State College, Pennsylvania, Videon Central, Inc. was founded in 1997 and is a privately held company.10 The company’s appreciation for technology, along with its expert and intuitive understanding of software development, combine for a winning recipe in leveraging cloud-based IT systems for business productivity and product innovation. About Videon Central, Inc. Videon Central, Inc. is an engineering and services company that develops, programs and tests middleware for media players and consumer electronics. The company also designs, builds and manufactures some of the devices that use that same software.11 Videon often finds itself working in partnership with the semiconductor industry to develop software solutions to maximize the microchip’s value, helping large OEMs bring to market new designs, software, licenses, support services or offering complete product development lifecycle support to vertical market OEMs. These partnerships and collaborations, combined with deep technical domain knowledge, help Videon deliver innovative media solutions to customers all over the world.12 10

For more information, please visit http://www.videon-central.com or call (814) 235-1111. Videon Central, Inc., Company, http://www.videon-central.com/company 12 Videon Central, Inc., Why Videon?, http://www.youtube.com/watch?v=nTyatCiaoUc 11

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Along with its brilliant engineers, Videon Central relies heavily on its managed information technology infrastructure and cloud-based applications to keep the business ever creative and productive. Managed Infrastructure and Cloud-based Applications Videon has been using broadband connectivity since it came to the region about 15 years ago. It was first used to establish and support a virtual office environment. Asterisk, the software solution the company uses for Voice over IP, allows employees to have a “desk phone” and phone number anywhere they might be, whether it’s in Pennsylvania, Arizona, California, Virginia, Ohio or even Kenya. In its current state, Videon uses the services and expertise of Flashpoint Informatics, a local cloud-hosting provider, to manage the company’s servers, infrastructure and the virtual machines that run Videon’s business and shop floor applications. Videon uses Google Apps for email, Hangouts, calendars and documentation; manages its engineering designs and software code through SVN; uses FTP for large file hosting and transfer and tracks customer, order, product and project data through hosted ERP systems such as Accpac, MIsys and Sage. Prior to this, each application was in its own silo, cut off from the larger business or production context. As these systems moved from being hosted in-house to a managed cloud-based solution made possible through broadband connectivity, the ability to integrate these applications and have all business and product information in a single database became a clear strategy. Today that system powers all of Videon’s internal communication and project tracking. The Culture and Business Model of Curiosity, Creativity and Collaboration Videon’s experience and expertise with IT systems can be traced back to its history of developing custom in-house applications to support business and manufacturing activities. From a company born out of electrical and computer engineering, the ability to create software solutions that were specifically sensitive to the company’s immediate internal needs became a routine operation. In a recent interview, Videon CTO Jim Condon recalled an example: “MIsys is our inventory package and we have [an employee] who hated it. […] Matt didn’t like MIsys’ interface so he created ‘Mattsys' which is a C# program to pull out the information we needed from MIsys easier. He did it on his own time, produced it, brought it in and we use it here as a key project.” Creative solutions such as this are not only convenient, but can generate immediate business value. In one example, an existing customer exposed an external portal for ordering projections to its suppliers. Videon was able to integrate their existing information systems with this customer’s system in order to create a workflow that helps optimize inventory—previously, Videon relied solely on word of mouth to predict inventory levels. Wider system integration allows Videon to automatically track products from order to shipment and provide a Statement of Conformance (mandatory for some products) that states officially that a particular product is the exact same product that has been shipped every time before. For

17

in-flight entertainment systems (a highly-regulated product), this automatic recording and reporting helps Videon effortlessly deliver on strict AS-9100 certifications. This type of system integration and collaboration is critical to the continued success of Videon’s business. Controlling the Pace of Development Another one of Videon’s key applications is Jira, a project and resource tracking tool from Atlassian Software Systems that three of its largest customers also use. Typically, Videon would be at the mercy of these companies’ often large and bureaucratic systems and processes—forced to accept a process that might not work for a small company, leading to increases in overhead and losses in productivity. Instead, Videon uses the customer’s Jira application, integrated with their own system, as the primary means for tracking and communication—information is available in real time to Videon and the customer. For example, one of Videon’s airline customers requires a 10-day turnaround on service requests. Previously included in that 10-day window was the time it took for the customer to approve certain steps. Because it went undocumented before the Jira integration, Videon was often penalized for being late when in reality, the delay was due to the customer’s process. Now if Videon is waiting for the customer to respond, the waiting time is tracked and not counted against their service agreements.13

SECTION 3: The Future of Manufacturing and Its Implications for the Need for Broadband 3.1

3D Printing and Advanced Manufacturing

Today we see manufacturing as a collection of companies arranged in a supply chain that begins with raw material suppliers and where product flows through several tiers of suppliers to the original equipment manufacturer (OEM) and to the customer. Most traditional PA manufacturers are organized to support this model. However, with the advent of 3D printing (also called additive manufacturing), a disruption to the traditional supply chain model is coming.14 This disruption is already being felt in products that are polymer based and will occur in the coming 5-7 years in metal-based products. Already, key producers are experimenting with 3D printing capabilities and the costs of the technology are dropping while their capabilities are improving dramatically. The emergence of 3D printing/additive manufacturing will significantly change the dynamics of competition and will also introduce new entrants into the manufacturing sector. All of these activities will be heavily based on advanced computing, large-scale data transmission, simulation

13

Jim Condon and Micah Willy, personal interview, June 2013 See Petrick (2013) The Future of Manufacturing, and Petrick and Simpson (2013) How 3D Printing Disrupts Manufacturing: How Economies of One Creates New Rules of Competition, Research Technology Management. 14

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and collaborative development. All of these activities suggest a growing need for broadband connectivity in the future. While many PA manufacturers are relying on broadband for e-mail only, in less than a decade, broadband will be THE key enabler to competition for increasingly customized products aimed at increasingly segmented niche customers. The future is not here yet, but it is soon upon us.

3.2

Considerations for Data Security and Intellectual Property in the Advent of Digital Manufacturing

With the coming shift toward advanced manufacturing methodologies featuring digital modeling, simulation and analysis and processes driven by cloud-based applications and services, small and medium-sized enterprises (SME) will face a dual security threat—protecting both business data and product data (intellectual property). However, the economics and service-oriented nature of cloud-based applications and managed infrastructure should help alleviate these stresses by shifting concern to the service provider. Rely on the Cloud for Security and Expertise In choosing to use a cloud-services provider, manufacturing SMEs are not only outsourcing the hardware and software to run their business to an external vendor (the more obvious, tangible things), but are also outsourcing the maintenance and security of the systems—more intangible, but extremely valuable for companies that might not have the resources for a full-time IT and security expert. Instead, manufacturing SMEs should rely on the collective experience and expertise of their vendor, especially ones who have met strict industry and ISO standards for data security. This makes the selection of a cloud-based services vendor a critical issue. In addition, the roles and responsibilities of the SME and the cloud-based services vendor need to be fully understood and firmly established. Digital Intellectual Property Considerations As design and modeling move from physical artifacts to digital files, the threat of losing data in a security breach increases. Consider the recent story of Internet intruders trying to gain access to highly sensitive data from the Pentagon’s Joint Strike Fighter project through the systems that help integrate all its contractors’ supply chains (such as BAE Systems, Northrop Grumman and Lockheed Martin).15 Though these companies and the Pentagon deny the attacks were successful, it represents an increasing trend in digital attacks and the need for more advanced data and computer security.16 As digital tools for design and manufacturing become more sophisticated, so do the tools for stealing intellectual property. Consider a report recently released by Gartner Group of its top predictions for IT organizations for 2014 and beyond. Gartner predicts that by 2018, 3D printing (here we can assume Gartner is talking about everything influenced by the rise of additive 15

Mount, Mike, Hackers stole data on Pentagon's newest fighter jet, CNN, http://www.cnn.com/2009/US/04/21/pentagon.hacked/ 16 Wong, Edward, Hacking U.S. Secrets, China Pushes for Drones, NY Times, http://www.nytimes.com/2013/09/21/world/asia/hacking-us-secrets-china-pushes-for-drones.html?_r=0

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manufacturing, including digital modeling and simulation) intellectual property losses globally will total at least $100 billion per year.17

SECTION 4: Implications for the Need for Broadband & Programs that Will Support its Adoption, Implementation and Successful Execution While the preliminary data from various sources may be slightly different, still a picture emerges wherein PA manufacturers are not prepared for the future of manufacturing that will be enabled by broadband connectivity and digital technologies. Few manufacturers that we have surveyed or talked to truly grasp the potential for broadband-enabled data management, data transmission and storage and communications. Proven, mature applications such as email are more broadly adopted than evolving ones. This is no different than we might expect with the evolution and adoption of any new technology. However, the critical difference is the relative speed of broadband technology evolution and the step change and paradigm shift implications to current business practices. PA manufacturers need to fully understand and be able to predict the potential paradigm shift impacts and opportunities relevant to their particular business. Broadband technology needs to be seen as a way of enabling future business, service and competitive advantage rather than viewed simply an alternative communication technology solution. As a result, TSIG sees several key gaps that need to be addressed: 

PA manufacturers, as a whole, have not fully evaluated the potential that digitally enabled manufacturing presents to their businesses; and thus, do not appreciate the need for high speed communications or data transmissions that will require broadband communication.  This suggests a need for education programs focused on digital manufacturing, the competitive dynamics of digitally enabled business models and the building blocks that will be needed in the hardware and software infrastructure.  There is a need for both strategic and tactical frameworks in which to consider digital manufacturing. We have seen few manufacturers able to link the strategic to the tactical operations and this will be essential to future successes.  Supply chains will also be influenced by digital technologies and PA manufacturers will need to position themselves more strategically. A clear understanding of alternative technology solutions will be required to support both supplier and customer interactions.



There are few good case study examples that PA manufacturers can reference to better understand how IT, digital manufacturing and broadband technologies can impact a manufacturing enterprise.  There is a need for clear case studies in multiple sectors, based on companies of a

17

Gartner, Inc., Gartner Reveals Top Predictions for IT Organizations and Users for 2014 and Beyond, http://www.gartner.com/newsroom/id/2603215 20

range of sizes and revenues and targeted to a range of manufacturing types to better portray the implications of digitally based technologies on manufacturing.  New metrics need to be developed that can capture the value added by digital technologies, specifically broadband. Both tangible and intangible value needs to be explored. 

There are few transition plans presented in the literature that help companies move from an internally-based IT management system to a cloud-based IT model.  Models need to be developed that help PA manufacturers assess what their needs are for future computing.  Maturity models need to be developed that help PA manufacturers better understand the progression from internally-based to cloud-based IT management systems. These models would also help PA manufacturers determine their “readiness,” helping them to also understand potential investment needs around hardware, software and personnel.  A better understanding of the security implications must be developed. Information and training about privacy and security need to be articulated. Key vulnerabilities will need to be identified with risk mitigation plans for each. This will require a level of IT sophistication beyond what many PA manufacturers possess presently.



While most PA manufacturers have a website, the level of interactivity and the importance of this in the future is undervalued. One-way communication (from the company to the customer) and data pull (the customer seeks information rather than having it provided to him/her) are becoming less compelling. Web tools must become more interactive and as this interactivity increases so will the need for broadband (particularly around video).  Projects that include web upgrades should focus on interactivity between manufacturer and customer on multiple levels.  Mobile platforms should be carefully considered as a major target for interactivity.  Social media programs should be developed that include multiple formats. Tools should be developed to help manufacturers better understand the relationship between the desired interaction, the messaging and the device/platform. Social media savvy will become an expected capability in the future.



Pennsylvania policies around broadband that were developed several years ago are now behind emerging national, state and public-private partnership trends with respect to upload and download speeds.  Serious consideration needs to be given to the targets for upload and download speeds that PA manufacturers will need (and that PA government programs will support). While

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upgrading to broadband may make a PA manufacturer more competitive relative to other PA manufacturers who have not upgraded, it may not be sufficient to guarantee competitive advantage at a regional or national level given what other states are targeting. As the IRCN considers these needs, it is important to also assess the capabilities at each IRC. Current efforts to improve competitiveness and innovativeness among PA manufacturers will need to be augmented to include digital strategies. While not every manufacturing company will become solely digital, these enterprises will successfully compete with the more traditional economies of scale, physically-based manufacturing models. This will require a fleetness of foot for both manufacturing leaders and those economic development agencies that support them. Such fleetness of foot may require re-staffing and retraining for both manufacturers and the economic development staff that support them. Based on our exploratory study, TSIG offers the following seven recommendations for the IRCN: 1. Develop case studies that can help PA manufacturers better understand the business value of digital technologies and the potential for broadband to enhance their competitive advantage. Because there is such a wide range of basic understanding about broadband and its potential, these cases need to be diverse and nuanced to provide PA manufacturers with insights. 2. Develop an assessment tool that can help individual PA manufacturers determine the strategic potential for digital technologies in their business. 3. Develop an assessment tool that can help individual PA manufacturers understand their readiness to adopt digital technologies. Supplement this assessment with training on the high value add areas. 4. Provide training around the security vulnerabilities that may be introduced through the use of digital technologies. This training should include best practices about risk mitigation and should emphasize the responsibilities of both the service provider and the PA manufacturer. 5. Create networks of key PA manufacturers that are using digital technologies to support their production, operations, communications and innovation strategies. Actively engage and grow this network by linking them to external resources such as cloud-based services, remote high performance computing and experts in advanced modeling and simulation. 6. Focus website upgrade projects on enhancing the interactivity between manufacturers and customers on multiple levels. Web tools must become more interactive. Mobile platforms and social media should be given careful consideration.

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7. Consider updating Pennsylvania’s policies regarding broadband upload and download speeds to make them current with emerging national trends and enable regional competitive advantage. In continued support of efforts to develop effective tools and policies enabling broadband implementation, further work is needed to: 

Clarify the Level of Understanding Regarding Broadband Impact: A relatively high percentage of surveyed manufacturers indicated no perceived value to broadband. Also, inconclusive response to broadband effectiveness opinion statements suggests either an ambivalence or lack of knowledge about broadband impact. Based on these preliminary indications, manufacturers do not see the value in broadband or don’t really understand its potential value. Confirmation and clarification of this level of understanding may be influential to the development of appropriate tools aimed at supporting broader adoption.



Understand Motivational Factors: Manufacturers indicated that they adopted IT for both internally and externally driven reasons. While beyond the scope of this study, it would be interesting to determine how different motivational factors affect both the type and timing of broadband technology adoption. A better understanding of motivational factors may be beneficial to not only predicting but also supporting adoption.



Understand Use of Multiple Internet Connection Types: In this study, we did not ask respondents who had multiple connections to the Internet how they used them or whether or not they were complimentary or competing. In terms of future possibilities for effective use of broadband, a better understanding of how companies balance fixed versus mobile connectives would be valuable.

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APPENDIX 1: Broadband Programs and Examples of How Broadband Drive Competitiveness in Manufacturing This appendix highlights exemplary public and public-private partnership programs from across the nation. The intent is not to be an exhaustive list of all programs, but rather to showcase the diversity of programs that exist. This appendix also presents examples of the way that broadband connectivity has enhanced the competitiveness of several manufacturers.

1.1

Public and Public-Private Partnership Programs

Several initiatives have been undertaken in the past several years to enhance broadband connectivity. Many of these initiatives include building not only the infrastructure but also the underlying capabilities that will be needed to take advantage of this infrastructure. Below, we begin with Pennsylvania’s focus and then provide examples of national and state initiatives as well as public/private partnership initiatives. What they all have in common is the desire to hasten the adoption of broadband to yield competitive advantage for companies, often in conjunction with creating a more connected citizenry. Pennsylvania Act 183 of 2004 Pennsylvania has mandated that every city, town and municipality have access to high-speed Internet connectivity through its Incumbent Local Exchange Carrier (ILEC) by 2015. Highspeed Internet connectivity, or broadband, is defined in Act 183 of 2004 as a communication channel using any technology and having a bandwidth equal to or greater than 1.544Mbps downstream and equal to or greater than 128kbps upstream. This program has been integral in accelerating the deployment of a minimum level of broadband service to all geographical areas statewide, particularly to those rural and remote areas whose only option may have been dial-up or satellite.18 Broadband Stimulus Programs The American Recovery and Reinvestment Act (ARRA) of 2009 provided $7.2 billion to support broadband projects in the categories of comprehensive community infrastructure deployment, state broadband planning and mapping, public computer centers and sustainable adoption programs. In 2010, the Commonwealth of Pennsylvania was awarded over $36 million in broadband stimulus funding awards by the U.S. Department of Commerce, National Telecommunications and Information Administration (NTIA) to support middle mile broadband infrastructure deployment as well as broadband mapping and planning activities. In total, broadband stimulus funding investments were made into 20 projects, which benefited Pennsylvania entirely or in part. The National Broadband Plan of 2010 Using a portion of the American Recovery and Reinvestment Act (ARRA) of 2009, the Federal Communications Commission (FCC) outlined a plan to improve Internet access throughout the country. The plan called for 100 million households to have access to connections that average 100Mbps downstream and 50Mbps upstream by 2020 with every community having access to 18

Pennsylvania Department of Community and Economic Development, Broadband Initiatives, http://www.newpa.com/community/broadband-initiatives 24

symmetrical 1Gbps connectivity at its anchor institutions (universities, hospitals and/or public institutions). During this same timeline, every American is to have access to broadband connectivity, broadcasters are to open up their unused spectrum for wireless broadband access and significant investments are to be made in emergency response networks and emerging smart grid technologies.19 Chattanooga, Tennessee - the “Gig City” as a success story for municipal fiber Chattanooga, Tennessee is the first city to offer symmetrical 1Gbps fiber Internet connectivity to all of its residents and businesses. The infrastructure that permits the 1Gbps service was installed by Chattanooga's publicly owned electric power system, EPB. At 20 to 200 times the maximum speed available in other communities, the network opens the door to innovative ways to learn, play and conduct business.20 This infrastructure is also attractive to companies looking to invest in building out new capabilities or expanding existing operations. Volkswagen has invested $1 billion in the local economy for the Chattanooga plant and created more than 2,200 direct jobs in the region. According to independent studies, the new Volkswagen plant is expected to generate $12 billion in income growth and an additional 9,500 jobs related to the project. In January 2012, Amazon.com announced an expansion to their existing distribution and logistics centers in the middle Tennessee area, investing $139 million dollars and expecting to create over 1,300 jobs.21 GigTank is Chattanooga’s incubator for companies building products and applications that leverage the city’s fiber network.22 In 2013, the program funded HutGrip, a cloud-based software-as-a-service platform that helps manufacturers better understand, manage and handle production downtime and improve their processes; clearly establishing advanced manufacturing as a sustainable and relevant application of broadband connectivity.23 Gig.U - from 100Mbps to 1Gbps The University Community Next Generation Innovation Project, or Gig.U was born out of the National Broadband Plan, but focuses specifically on growing or using the existing ultra-highspeed networks of universities and public research institutions to provide broadband connectivity not 10 times faster (as is the case for the National Broadband Plan), but in upwards of 100 times faster - 1Gbps. Improvements to these networks drive economic growth and stimulate a new generation of innovations that address critical needs, such as health care and education. Penn State University is one of the 30 leading research universities that comprise Gig.U.24

19

Connecting America: The National Broadband Plan, Executive Summary, http://www.broadband.gov/plan/executive-summary/ 20 The GigCity, Summary - http://thegigcity.com/resources/logos/summary.pdf 21 Wotapka, Dawn, Chattanooga Reinvents Itself, at Its Own Pace, WSJ Online, http://online.wsj.com/news/articles/SB10001424052702303624004577341932764696276 22 The Gig City, GigTank 2013 Teams, http://www.thegigcity.com/gigtank/gigtank-2013 23 HutGrip - Predictive and Preventive Manufacturing Solution, http://www.hutgrip.com 24 Downes, Larry, On One Year Anniversary, Gig.U Delivers Impressive Results and Valuable Lessons for Gigabit Internet, Forbes, http://www.forbes.com/sites/larrydownes/2012/08/06/on-one-year-anniversary-gig-u-deliversimpressive-results-and-valuable-lessons-for-gigabit-internet/

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US Ignite - National Effort to Drive 1Gbps Connectivity and Applications Organized by the Office of Science and Technology Policy and the National Science Foundation in June 2012, the US Ignite program aims to promote the development and deployment of nextgeneration applications running on ultra-high-speed networks (often time equal to or greater than 1Gbps). The program will leverage existing networks within the Global Environment for Networking Innovation (GENI) at academic campuses, national research backbone networks and broadband cities across the country. Unlike most public initiatives, the effort is organized by the government, but supported through funding and investment from private partners such as Juniper, Cisco, Verizon and Comcast.25 Mozilla Ignite Challenge - Competition and Funding for Next-Generation Applications In partnership with US Ignite, the Mozilla Foundation invited designers, developers and entrepreneurs to consider and build applications that take advantage of next-generation networks up to 250 times faster than the average connection speed, in areas that benefit the public such as education, healthcare, transportation, manufacturing, public safety and clean energy. In addition to offering up to $500,000 in awards, participants will also gain access to advanced technologies developed through the National Science Foundation’s GENI program.26 In 2013, three winners in the Advanced Manufacturing context emerged: 1. Cloud Computing for Collaborative Advanced Manufacturing This project focuses on the resources needed to enable remote collaboration in advanced manufacturing, particularly in the emerging domain of “micro devices assembly.” Applications like this will be critical to enabling the distributed, virtual manufacturing enterprise.27 2. Simulation-as-a-Service for Advanced Manufacturing This project aims to use PC over IP technology to provide a thin client for manufacturers to use computationally-intensive simulation and analysis tools through cloud-based remote computing resources. This application will create a more financially feasible product for small and medium-sized manufacturing enterprises.28 3. Remote Process Control using Reliable Communication Protocol This project is an attempt to use software-defined networking to create a robust protocol for monitoring and controlling advanced manufacturing processes with a higher reliability and lower latency than is currently possible with TCP/IP. This and similar efforts will be critical for enabling a smart shop floor.29

25

US Ignite, Common Questions, http://us-ignite.org/what-is-us-ignite/common-questions/ Mozilla Ignite, About, https://mozillaignite.org/about/ 27 Mozilla Ignite, Cloud Computing for Collaborative Advanced Manufacturing, https://mozillaignite.org/apps/415/ 28 Mozilla Ignite, Simulation-as-a-Service for Advanced Manufacturing, https://mozillaignite.org/apps/443/ 29 Mozilla Ignite, Remote Process Control using Reliable Communication Protocol, https://mozillaignite.org/apps/418/ 26

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Google Fiber (Kansas City) In March 2011, Google announced that the Kansas City metropolitan area (Missouri and Kansas) would be the first community to receive the symmetric 1Gbps fiber network.30 In July 2012, after building the infrastructure of the network, Google announced pricing for Google Fiber. The service will offer three options: a free broadband Internet option, a 1 Gbps Internet option for $70 per month and a version that includes television service for $120 per month.31 At the time of this report, Google Fiber is available and contenting to rollout to 19 surrounding neighborhoods. Austin, Texas and Provo, Utah are slated to be the next two Google Fiber cities.32 National Digital Engineering and Manufacturing Consortium (NDEMC) In March 2011, the Economic Development Administration (EDA) awarded $2 million to the Council on Competitiveness, a non-partisan group of CEOs, university presidents and labor leaders, in order to advance growth and competitiveness in Midwestern small and medium-sized enterprises (SMEs). The EDA’s grant would also be matched by a $2.5 million grant from private-sector partners (including Deere and Company, Lockheed Martin, General Electric Company and Proctor and Gamble) and help to catalyze development and successful utilization of cutting edge technologies that accelerate the design process and increase the capabilities of manufacturing SMEs.33 A primary function of NDEMC will be to develop software, purchase time on supercomputers and train the employees of SMEs in the use of this technology, enabling them to design their own advanced manufacturing processes and products. This will be done in close collaboration with original equipment manufacturer (OEM) customers of these companies, ensuring that this cutting-edge technology will help both OEMs and their supply-chain partners in Ohio, Illinois, Indiana and Michigan.34 The success of NDEMC’s Midwest Pilot Project led to the need to expand its impact and deliver access to high-performance computing and software for modeling, simulation and analysis through a user-friendly web application. The Ohio Supercomputer Center’s AweSim program is a realization of this need.35

30

Google Fiber Blog, Ultra-high-speed broadband is coming to Kansas City, Kansas, http://googleblog.blogspot.com/2011/03/ultra-high-speed-broadband-is-coming-to.html 31 Google Fiber Support, Service plans and pricing, https://support.google.com/fiber/answer/2657118?hl=en&ref_topic=3034219/ 32 Google Fiber Blog, One Year of Fiber in Kansas City, http://googlefiberblog.blogspot.com/2013/11/one-year-offiber-in-kansas-city.html 33 U.S. Commerce Department, U.S. Commerce Department Invests in America’s Small- and Medium-Sized Manufacturers, http://www.commerce.gov/news/press-releases/2011/03/02/us-commerce-department-investsamerica’s-small-and-medium-sized-manuf 34 NDEMC, Overview, http://ndemc.ncms.org/index.php/details/ 35 Kirkly, John, NDEMC Update: Program to Bring HPC, Advanced Manufacturing Technology to Midwestern Companies Now Underway, http://www.digitalmanufacturingreport.com/dmr/2012-1119/ndemc_update:_program_to_bring_hpc_advanced_manufacturing_technology_to_midwestern_companies_now_ underway.html 27

Ohio Supercomputer Center’s AweSim Initiative - providing modeling and simulation capabilities to SMEs In October 2013, the Ohio Supercomputer Center, in collaboration and partnership with Procter and Gamble, Intel, Nimbis Services, TotalSim USA, AltaSim Technologies and Kinetic Vision announced AweSim, a program that aims to provide SMEs with a suite of web-based, userfriendly advanced manufacturing applications. The primary goal of the initiative, which can be seen as the end result of the NDEMC Midwest Pilot Project (examples of Jeco Plastic Product and Rosenboom Machine and Tool are presented later in Section 1) is to lower the barriers to entry when using high-performance computing for modeling, simulation and analysis.36 The two major components of the initiative are an “app store” and support and training. The first apps to appear in AweSim will be for processing of advanced aerospace materials, thermal processing for food sterilization, a virtual wind tunnel, structural classics explorer to model classical design configurations and a virtual test rig, including pull, crush, drop and pressure tests. AweSim will work with Intel and Lorain County and Sinclair Community College in Ohio on designing the training and support component - also accessed through the web interface.37 National Network for Manufacturing Innovation The National Network for Manufacturing Innovation (NNMI) is a proposed network of up to 45 research institutes called Institutes for Manufacturing Innovation (IMI) driven by public-private partnerships working toward developing and commercializing advanced manufacturing technologies.38 The goal is to alleviate the gap between basic and applied research and development and commercialization.39 In May 2013, the United States government allocated $200 million of existing funding for the establishment of three new institutes, one of which is a Department of Defense-led IMI for digital manufacturing and design innovation. The focus of this IMI will be on developing novel model-based design methodologies, virtual manufacturing tools and sensor and robotics-based manufacturing networks.40 Currently, NNMI is focused on the success of its current pilot IMI, the National Additive Manufacturing Innovation Institute. National Additive Manufacturing Innovation Institute (Rebranded in October 2013 as America Makes) The first pilot institute within the NNMI is the National Additive Manufacturing Innovation Institute (NAMII) in Youngstown, Ohio and led by the National Center for Defense 36

The Ohio Supercomputer Center, Third Frontier Commission helps fund $6.4 million effort to boost Ohio businesses thru modeling & simulation, https://www.osc.edu/press/third_frontier_commission_helps_fund_64_million_effort_to_boost_ohio_businesses_thr u_modeling 37 AweSim, About, https://awesim.org/faq 38 NNMI, From Discovery to Scale-up: About the National Network for Manufacturing Innovation, http://manufacturing.gov/nnmi_overview.html 39 Manufacturing.gov, National Network for Manufacturing Innovation: A Preliminary Design, http://manufacturing.gov/docs/NNMI_prelim_design.pdf 40 The White House, Office of the Press Secretary, Obama Administration Launches Competition for Three New Manufacturing Innovation Institutes, http://www.whitehouse.gov/the-press-office/2013/05/09/obamaadministration-launches-competition-three-new-manufacturing-innova

28

Manufacturing in Blairsville, Pennsylvania. America Makes’ (formerly NAMII) mission is to accelerate the adoption of additive manufacturing processes and technologies within the domestic manufacturing sector. The Institute fosters open collaboration amongst its members, facilitates the development, evaluation and deployment of additive manufacturing technologies, as well as designs programs for educating students and training the existing workforce.41 Pennsylvania’s participation in America Makes is led by the National Center for Defense Manufacturing and Machining in Blairsville and includes the Commonwealth of Pennsylvania, Penn State University Applied Research Lab in State College, Carnegie Mellon University in Pittsburgh, Concurrent Technologies Corporation in Johnstown, ExOne Company in North Huntingdon, Allegheny Technologies Inc. in Pittsburgh, Kennametal in Latrobe and Catalyst Connection in Pittsburgh.42 America Makes has just closed its second round of projects and has allocated $9 million for multiple awards. The Institute has identified five technical topics of interest for this round: Design for Additive Manufacturing, Additive Manufacturing Materials, Process and Equipment, Qualification and Certification and Knowledgebase Development.43 Projects selected in the Design for Additive Manufacturing (“the focus of this technical topic is the development of modeling and simulation tools that enable the ability to virtually evaluate and optimize process and product alternatives for reduced cost, schedule risk reduction and performance improvements.”), Qualification and Certification and Knowledgebase Development categories will be relevant to initiatives involving broadband in manufacturing. 44

1.2 Broadband Connectivity and its Potential for Manufacturing, Particularly for Small to Medium-Sized Enterprises (SMEs) Access to broadband connectivity immediately opens the opportunity for manufacturing SMEs to consider a wide array of applications to support day-to-day engagement, collaboration and workflow, as well as tactical goals or strategic vision. The cloud-based and software-as-aservice solutions, powered by broadband connectivity, have the power to change the way products are made, accelerating the development lifecycle by enabling seamless collaboration and creating a smooth and agile supply chain. By lowering traditional barriers related to cost, time, location and organizational boundaries, these applications nurture a manufacturer’s innovative potential.

41

NAMII, Home, http://namii.org/ America Makes, Community, https://americamakes.us/community 43 NAMII, RFP Scope, http://namii.org/rfp-scope/ 44 NAMII, Project Call to Members of the National Additive Manufacturing Innovation Institute for Applied Research Projects, http://namii.org/wp-content/uploads/2013/09/NAMII-Project-Call-2-Final.pdf 42

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Broadband technologies only enhance competitive advantage when a company is using these technologies to communicate faster or more effectively. Internal company-based, hard-wired activities benefit little from broadband technology unless the company is using wireless devices to access remote data or to control operations. Thus, a key theme in broadband effectiveness is tied to the company’s approach to its data management and communication flows. In order to promote the sustainable adoption of broadband connectivity across a region, manufacturing SMEs, each with their own unique needs and challenges, must find explicit value in the costs associated with use of broadband connectivity and infrastructure. A broad portfolio of applications, enabled by broadband connectivity, ranging from simple yet effective businessto-business collaboration products, to complex modeling and simulation tools, to even radical business transformation through service-oriented manufacturing practices exists to support an equally broad spectrum of organizational needs. Figure 11 highlights the range of ways that broadband connectivity is enhancing product development innovation and business process innovation, ranging from simple to complex technologies and solutions. The uses noted in Figure 11 are extracted from TSIG’s interviews and from secondary resources. Innovation is a critical component to differentiate an enterprise and its products and services in the modern manufacturing industry. Manufacturers striving to gain a leading edge are turning to cloud-based and service-oriented solutions for the several advantages it offers. Computer-aided manufacturing, computer-aided process planning, production execution, virtual manufacturing systems, integration of manufacturing data into the design process and additive manufacturing processes are all potential opportunities for growth enabled by broadband connectivity.

Figure 11: Information Technology Enabled Product and Process Innovation

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1.3

Driving Manufacturing Innovation through Broadband Connectivity - In the Office

Broadband technologies enable companies to expand their capabilities to run their business. Within the office environment, this might include customer relationship management (CRM), enterprise resource planning or materials resource planning (ERP and MRP, respectively) and supply chain management (SCM). Broadband technologies also enable a nontraditional distributed office environment. Below, we highlight several company uses of broadband for their internal or business operations. Drexel Metals, Inc. - a distributed manufacturing network45 In 1985, Drexel Metals, headquartered in Ivyland, Pennsylvania, was a steel supplier making everything from lighting fixtures to ceiling ribs for the construction industry. But its customers began asking for metal roofing products, where traditional go-to-market factories selling prefabricated roof panels ready for installation dominate 80 percent of the market. According to company President Brian Partyka, “a challenge with pre-fabricated metal roofing is that when you ship it, you’re shipping unwieldy sections that require a lot of packaging to protect them during transport.”46 Instead, Drexel Metals decided that the best way to get its product to both residential and commercial customers was through a network of specialty installers who could fabricate the “standing-seam” metal roofs onsite. This eliminated expensive shipping and also reduced the lead time necessary for contractors and installers. Now Drexel Metals sells one to two-ton coiled metal rolls in 36 colors and it offers installers the ability to buy or lease-to-buy a portable rollforming machine that can transform these rolls into the specific standing-seam roof desired by the customer. But the company did not stop there. As a way to support remote fabrication, Drexel developed cloud-based tools and services that enhance their customers’ ability to plan for, bid and win sophisticated roofing jobs. In short, through a network of regional manufacturers, Drexel Metals now orchestrates a supply chain that runs from the steel manufacturer to the installed roof. The Drexel Metals Association of Regional Manufacturers provides these machine owners with everything they need to compete with the much larger, traditional, fixed-in-place manufacturers. Drexel’s distributed-manufacturing and installation model relies heavily on the Internet to provide technical and engineering support. The members of its association are supported by a wiki — a website that allows its users to access, add to and edit its content — that contains more than 2,000 searchable documents describing everything about the product, its installation and the onsite forming of roof sections. In addition, cloud-based costing and bidding tools help potential installers estimate material needs and designs. The design support relies on images captured by Pictometry, a company that uses aerial images to provide precision measurements that are fed to installers via the cloud.

45 46

Adapted from Petrick’s The Future of Manufacturing Brian Partyka, personal conversation, 2012. 31

Today, Drexel Metals supports its customers with an anywhere-anytime access strategy that leverages mobile technology. In addition to its wiki, it has a YouTube channel, a LinkedIn group and it also communicates via Facebook and Twitter. The result of this approach has been phenomenal growth. Revenue went from $24.2 million in 2008 to $51.3 million in 2011, with a three-year overall growth figure of 112 percent. In 2012, Drexel Metals reached number 2,260 on the Inc. Magazine 5000 and number 67 on the publication’s list of the top 100 manufacturing companies.47 DDB Unlimited, Inc. - financial and productivity gains from cloud-based ERP systems Based in Wynnewood, Oklahoma and with another plant in Pauls Valley, Oklahoma, DDB Unlimited is a 140-person OEM of rugged outdoor cabinet enclosures for electrical and communications equipment. In April 2010, DDB Unlimited invested $235,000 in an in-house ERP system. The company hoped to gather information from its disparate accounting, inventory and manufacturing departments into a central database for a real-time view of its manufacturing processes. Unfortunately, even with a successful rollout and integration into its legacy systems, the adjustment and maintenance proved difficult and detrimental to business.48 In January 2011, DDB Unlimited switched to a cloud-based ERP system from another provider, Acumatica. Acumatica handles software upgrades, patches and backup, freeing DDB Unlimited's IT department to focus on its production facilities. Employees can use the system to track manufacturing costs, view accounts receivables, enter purchase orders, review inventory and clear checks. The system has helped DDB Unlimited whittle its order-processing cycle from 2 hours to 45 minutes. Employees can access the system from a remote computer for real-time information such as a customer's purchasing history. It cost DDB Unlimited about $100,000 to transfer data and take the other steps necessary to implement Acumatica’s cloud-based ERP system, which costs $35,000 per year. However, the transition from an in-house ERP system to a cloud-based ERP solution will cut $80,000 in annual expenses.49 Hiawatha Rubber Company - utilizing modern ERP systems to help drive detailed business insight and analysis Based in Minneapolis, Minnesota the Hiawatha Rubber Company is a family-owned designer and manufacturer of custom-molded rubber parts and assemblies for OEMs. Hiawatha recently replaced an aging, in-house ERP system with a cloud-based ERP solution from Plex Systems, an independent software vendor specializing in cloud-based manufacturing software. While their old system could provide basic information, it lacked the ability to provide the detailed, real-time and accurate financial and manufacturing information that company decision makers needed. This was particularly challenging when they were trying to integrate production data with costing and quality data.

47

Inc. Magazine, 2012, http://www.inc.com/profile/drexel-metals ERP Software Gets a Second Life in the Cloud - http://www.technologyreview.com/news/424675/erp-softwaregets-a-second-life-in-the-cloud/ 49 Acumatica, Enclosure Manufacturer Uses Cloud ERP to Replace Sage MAS 90, http://www.acumatica.com/images/uploads/Acumatica_Case_Study_DDB_Unlimited.pdf 48

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Following a three-month implementation — about half the time it took to install the original inhouse system — Hiawatha managers were able to see the value of real-time visibility. According to Tim Carlson, a company manufacturing manager, “the plant-floor employees now see upcoming jobs and where materials are located in real time, enabling them to make quicker and better decisions. Now when a customer calls for a rush order, we can tell them in minutes when their order will be ready, compared with several hours and a significant amount of manual effort when we had our previous system in place.”50 The company’s website proudly advertises this capability, saying: “Our extensive and sophisticated enterprise resource planning system lives in the cloud, giving us a platform that’s typically only found at Fortune 500 companies.”51 Videon Central, Inc. - controlling the pace of development with cloud-based project tracking applications (this example is expanded in Section 2.3) Based in State College, Pennsylvania, Videon Central, Inc. is a 65-person developer and producer of high-performance digital video solutions and consumer electronics goods. Videon uses managed infrastructure and many cloud-based applications for resource planning and project tracking. In a recent interview, Videon CTO Jim Condon cited one of the biggest advantages to employing a cloud-based solution is being able to expose critical business information to its customers and suppliers. Because Videon is a small manufacturer, it is often [in the eyes of a large OEM] grouped in with other small companies that in some cases supply or sell things as simple as a screw. Videon, which sells much more sophisticated software and/or hardware would like more control over the pace of communication and project development and stand its ground against large bureaucracies. By using a hosted instance of Jira by Atlassian Software Systems, Videon’s suppliers and customers can integrate their project tracking systems with Videon’s for real-time project and product updates.52 Local Motors - crowdsourcing open-source automobile design and production Founded in 2007 and located in Phoenix, Arizona, Local Motors is a 45-person manufacturer of automobiles that uses crowd-sourced design and advanced manufacturing and technology to create unique, game-changing vehicles. The company’s online co-creation platform enables its 36,000 enthusiasts and engineers to leverage Local Motors’ distributed manufacturing and supplier network to imagine and design one-of-a-kind vehicles, which are then assembled by the customer and Local Motors’ engineers at one of the company’s three “Micro Factories.”53 The platform is currently hosting almost 5,000 designs and 1,000 ideas across 336 active projects with contributors from over 130 countries.54 Local Motors’ first commercially available product is the Rally Fighter, an open-source, street-legal, off-road desert racing-inspired vehicle that costs $99,000.55 The company is currently working on a crowd sourced, open motorbike design,

50

Baker Tilly, Success in the Cloud: Manufacturers are switching to cloud computing systems to achieve improved business performance, http://www.bakertilly.com/Manufacturers-Switching-to-Cloud-Computing 51 Hiawatha Rubber, Capabilities, http://www.hiawatharubber.com/#!/capabilities/data-systems-cloud-computing/ 52 Jim Condon, personal interview, June 2013 53 Local Motors, About, http://localmotors.com/about 54 Local Motors, Co-Create, https://localmotors.com/cocreate/ 55 Gastelu, Gary, Local Motors Going Global, Fox News, http://www.foxnews.com/leisure/2011/12/09/localmotors-going-global/

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The Cruiser, which is a gas and electric hybrid, but also complies with bike lane regulations for cities.56 Quirky - crowdsourcing and partnering for product design and development Founded in 2009 by 23-year-old Ben Kaufman and located in New York City, Quirky is a 120person designer and manufacturer of consumer products that is powered by an online platform for crowdsourcing and refining new product ideas.57 The process that Quirky has developed is that users (of which there are currently more than 625,000) submit ideas (through the web or the company’s iPhone app) for new products that are voted on by the community. The Quirky product team, along with its network of external industry experts, evaluates the leading products and chooses the next product for production. Quirky engages its user base to further refine the design before it is readied for manufacturing. Currently, the company has produced 403 successful products.58 Because of Quirky’s success in quickly filling market gaps with new products, General Electric has chosen to invest $30 million in a partnership to develop “playful consumer products.”59 The goal is to collaborate on six new projects each year for the next five years, particularly ones that leverage Quirky’s WINK, a platform for developing Internet-ready devices.

1.4

Driving Manufacturing Innovation through Broadband Connectivity – In the Shop

Manufacturing operations can be supported using broadband for Internet-based design collaboration, digital modeling, simulation and analysis – much of which is supported by highspeed computing that requires fast data transmission rates with networked computing power. Below are examples of some of these methods and the companies that have successfully deployed them. M.G. Bryan Equipment Company - using cloud-based applications and services to create transformative products Located in Grand Prairie, Texas, M.G. Bryan Equipment Company is a heavy equipment and machinery OEM for the oil and gas industry. M.G. Bryan partnered with Rockwell Automation and Microsoft to create a cloud-based asset performance management system. Designed and integrated with Rockwell’s sensors and devices, M.G. Bryan’s new equipment control and information system leverages Microsoft’s Windows Azure cloud-computing platform to help provide secure remote access to real-time information, automated maintenance alerts and service and parts delivery requests.60 Along with sensor integration, Rockwell also helped M.G. Bryan

56

Local Motors, The Cruiser, https://localmotors.com/cruiser/ Boutin, Paul, Quirky’s 23-year-old CEO finds love with the supply chain, Venture Beat, http://venturebeat.com/2010/04/27/quirky-ben-kaufman/ 58 Quirky, How Quirky Works, http://www.quirky.com/how-it-works 59 Brustein, Joshua, Why GE Sees Big Things in Quirky's Little Inventions, Business Week, http://www.businessweek.com/articles/2013-11-13/why-ge-sees-big-things-in-quirkys-little-inventions 60 Microsoft, M.G. Bryan Pioneers First-of-its-Kind Cloud Computing Performance Asset Management http://www.microsoft.com/en-us/news/Press/2012/Jun12/06-12RockwellPR.aspx 57

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design a simple, user-friendly application that can be accessed across multiple devices from the cloud in order to improve access to business information.61 M.G. Bryan focused on its hydraulic fracturing vehicles in the first release of its cloud-based asset management system. Leveraging their new platform, the company can remotely track the vehicle’s performance and maintenance schedule—oil filters need changed every 200 hours and engines need rebuilt ever 4,000 to 5,000 hours—and optimize and increase their fleet’s uptime. Die-Tech, Inc. - using digital simulation and analysis to improve tool and die development62 Based in York Haven, Pennsylvania, Die-Tech is a 50-person precision metal stamper for a variety of industries. In a recent interview, Director Ronay Wolaver described the productivity gains in tool and die development (historically the costliest—in terms of time and money— process for the business) from the use of digital simulation and analysis. In the past year, DieTech has invested in four PCs (total hardware investment of about $32,000) running highperformance technical computing software (total software investment of about $15,000) in order to be able to digitally design a new tool or die and digitally test its performance over an expected lifetime. Before the addition of the PCs and simulation and analysis software, Wolaver estimated that the time to design, test and create a tool or die took about 18 to 20 months mostly due to costly and time-consuming physical prototyping and destructive testing. In February 2013, Die-Tech began development of four new dies and had completed two of them at the time of the interview (June 2013). She estimates that because of the strategic advantage created by shorter time-to-market and the money saved in tool and die development, Die-Tech has saved “hundreds of thousands of dollars.”63 Jeco Plastic Products - using remote high-performance computing resources to test innovative product designs Based in Plainfield, Indiana, Jeco Plastic Products is a 25-person custom-mold manufacturer of large, complex and high-tolerance products for large OEMs in the automotive, aerospace, printing and defense industries. The company uses rotational molding and twin-sheet pressureforming processes and employs materials ranging from commodity thermoplastic resins to highly complex resins with continuous unidirectional carbon fibers. Recently, Jeco received a last-minute design change for a custom pallet that it was designing for a large German automobile manufacturer—part of a multimillion dollar export contract. Jeco was able to access high-performance computing resources through a partnership between Purdue University’s Manufacturing Extension Program and the Ohio Supercomputer Center through the National Digital Engineering and Manufacturing Consortium (NDEMC). Using an instance of Ohio Supercomputer Center’s SIMULIA Abaqus Unified Finite Element Analysis software suite from Dassault Systèmes and the knowledge, expertise and training from Purdue University, Jeco performed rigorous simulation and analysis and was able to quickly validate the last-minute design changes.

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Rockwell Automation, M.G. Bryan Pioneers First-of-its-Kind Cloud Computing Performance Asset Management - http://oilandgas.rockwellautomation.com/mg-bryan-pioneers-first-of-its-kind-cloud-computing-asset-performancemanagement 62 Derived from one-on-one interviews as part of this study. 63 Ronay Wolaver, personal interview, June 2013 35

Because of the success of Jeco’s custom pallet, the client has signed an additional contract worth $2.5 million annually for the next five to ten years. Along with the increased revenue, Jeco plans to hire 15 additional employees for these new advanced manufacturing capabilities. Jeco also plans to spend an additional $500,000 on building out their simulation and analysis competency after their success with the NDEMC helped the company secure additional projects with major aerospace and automobile clientele.64 Rosenboom Machine and Tool, Inc. - using remote high-performance computing resources to radically improve product quality Based in Sheldon, Iowa and with plants in Spirit Lake, Iowa and Bowling Green, Ohio, Rosenboom Machine and Tool is a designer and manufacturer of custom hydraulic cylinders. Across these three locations, Rosenboom produces about 2,500 hydraulic cylinders each day. As part of a partnership with NDEMC and global agricultural machine manufacturer Deere and Company, Rosenboom would leverage Deere’s high-performance computing resources and engineering expertise to solve complex design and engineering problems.65 In its current operations and given its current technical computing capacity, if simulations took more than a week to complete, Rosenboom opted for the more expensive and time-consuming physical prototyping and testing. Rosenboom’s optimal design cycle is between three and seven days. If a project cannot be completed in this timeframe, Rosenboom must move on to other projects. The first problem Deere experts helped Rosenboom solve was with a high-pressure weld joint on a cylinder product that had been experiencing root cracks and failure that could not be reliably or consistently explained by Rosenboom’s engineers. Using Deere’s resources and expertise, Rosenboom engineers could use finer meshes to reliably solve the problem and correct the design. The knowledge obtained in this exercise was also quickly applied to another cylinder in an entirely different product line that was also experiencing premature failure. After redesigning and optimizing the joint, the product’s lifetime expectancy grew 20-fold. The second problem Rosenboom was interested in solving was testing large hydraulic shock absorbers, a problem plaguing Rosenboom engineers because without sufficient in-house computing capacity, engineers were forced to build physical prototypes, test and iterate—not only an expensive and time-consuming process but also extremely challenging as each cylinder is about 30 feet long. Deere’s engineers trained and assisted Rosenboom engineers in creating a digital model of the prototype that engineers could then simulate, test and validate before building a physical prototype. Based on these successes, Rosenboom’s next step is leveraging more powerful systems and more complex software to run full assembly simulation of its cylinders and move away from its current practice of physical assembly tests.66

64

NDEMC, Case Study: NDEMC Helps Jeco to Exceed Growth and Financial Expectations, http://www.compete.org/publications/detail/2485/case-study-ndemc-helps-jeco-to-exceed-growth-and-financialexpectations/ 65 McIntyre, Cynthia, How a New Partnership Can Help Smaller Firms Win, Harvard Business Review Blog Network, http://blogs.hbr.org/2012/03/how-a-new-partnership-can-help/ 66 SC12 Panel Session, HPC's Role In The Future of American Manufacturing, http://sc12.supercomputing.org/schedule/event_detail.php?evid=pan110 36

1.5 Summary The programs and manufacturers included in this section demonstrate the breadth of impact that broadband can and has had in improving competitive advantage. Broadband connectivity has proven to be a draw for companies seeking new locations for facilities, has enabled existing companies to expand their operations, enhance their offerings and establish themselves as key partners in their supply chains. But all of these uses require new ways of thinking. Successfully leveraging broadband often results in new business models and an expanded view of digitally enhanced production, sales and services.

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APPENDIX 2: Web-based Survey Content Question Information Technology Use In your company, what types of information technology do you use?

Format

Options

Select all that apply

o o o o

In what ways do you use information technology for general business support?

Select all that apply, but only presented if respondent indicated general business support in an earlier question

In what ways do you use information technology in manufacturing planning or operations?

Select all that apply, but only presented if respondent indicated manufacturing planning or operations in an earlier question

o o o o o o o o o o o o o o

In what ways do you use information technology for internet sales or support?

Select all that apply, but only if presented if respondent indicated internet sales or support in an earlier question

o o o o o o o o o o o o

Motivation What motivates your company to use information technology?

Select one

o o

We don’t use any information technology We use information technology for general business support We use information technology in our manufacturing planning or operations We use information technology for internet sales or support E-mail Accounting Human resources Word processing (documents) Customer Relationship Management (CRM) Sales and marketing Other: Computer Aided Design (CAD) Computer Aided Manufacturing (CAM) Computer Aided Engineering (CAE) Material handling Purchasing (supply chain management) Inventory management/warehouse management (WMS) Shop floor data collection of materials and labor hours Scheduling Simulation 3D manufacturing design 3d manufacturing production Other: Website Internet catalog Online ordering Online product customization Online product/sales tracing of shipping and delivery Social media (Facebook, Twitter, LinkedIn, Blogs, etc.) Other: We are motivated by internal people and/or needs We have adopted IT to support our customers and suppliers

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Question You indicated that internal people and/or needs have motivated your company’s use of information technology.

Format Select all that apply

Options o We wanted to reduce costs o We wanted to reduce headcount o Information technology is a strategic resource that promotes internal collaboration and coordination o Information technology is a strategic research that supports external collaboration and coordination o We are using IT to expand to new, often global markets o Other: You indicated that you adopted Select all that apply o One or more customers required us to adopt information technology to support information technology solutions to your company’s customers and participate in bids or sales opportunities suppliers. o One or more customers required us to adopt information technology solutions to develop designs, co-design/innovate, test or simulate o One or more suppliers required us to adopt information technology o Other: Internet Connection, Broadband Familiarity & Effective Use What type of internet connection do Select all that apply o ADSL (Asymmetrical Digital Subscriber you currently use? Line) o Cable (e.g. Comcast, Time Warner, Blue Ridge Communications, etc.) o Satellite o Wireless broadband o High speed leased line o 3G/4G/LTE mobile phone Is your company familiar with Select one o No, I don’t know why broadband would be Broadband? useful o Yes, my company is aware of broadband, but we’ve chosen not to use it o Yes, my company tried broadband, but has since stopped using it o Yes, my company is using broadband for some or all of our internet communication needs Your company has chosen not to Open ended question presented only if respondent indicated this answer in use broadband. Why? a previous question Your company tried using Open ended question presented only if respondent indicated this answer in broadband, but has since stopped a previous question using it. Why? Opinion Questions Five point scale Strongly Disagree to Strongly Agree (including a neutral position) My company has been able to more effectively serve existing customers’ needs due to broadband connectivity My company has been able to add new customers due to broadband connectivity My company has been able to more effectively serve existing suppliers’ needs or find new suppliers due to broadband connectivity My company has realized cost savings due to broadband connectivity Effective use of broadband requires specialized IT experts Broadband has enabled my company to more effectively use the internet for sales and support Broadband has enabled my company to design, develop and/or test new products for customers Broadband is critical for my business to succeed

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Question Format Perceived Benefits of Broadband & Future Expectations What, if any, do you perceive to be Select all that apply the benefits of a broadband internet connection for your business?

Within the next 5 years, do you think your business will be pressured to conduct business that requires a fast internet connection such as Broadband? Where do you think that pressure Select one will come from

Company & Respondent Demographics Approximately how many Select one employees does your company have? What is the approximate gross revenue of your company? What type of manufacturing industry is your company in? What is your position/title within the company Willingness to participate in a face- Yes/No to-face interview as a follow-up to this web-based survey

Options o Increased sales o Reduced operational costs o More efficient procurement process o Improved business productivity o Better access to e-learning o Other: Yes/No o o o o o

Customers Suppliers Engineering/design staff Purchasing/sourcing staff Sales staff for lead generation

o 1-50 o 50-250 o 250-500 o 500+ Open ended Open ended Open ended Open ended name and contact information

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