Agusta december 4th

Delaware Valley Industrial Resource Center2905 Southampton RoadPhiladelphia, PA 19154

Tel: (215) 464-8550Fax: (215) 464-8570

www.dvirc.org

Where to Focus Now in Manufacturing

December 4, 2008

November 20082

Who We Are

DVIRC is an economic development organization established in 1988 focusing exclusively on the Small - Mid-size Manufacturing Enterprise (SME) community to grow business value in three key areas:

• Consulting Services • Talent Development • Financial Services / Growth Capital

November 20083

The DVIRC Vision

Our Vision:

To see our region become an internationally recognized leader in manufacturing competitiveness.

Our Mission:

The DVIRC focuses exclusively on the region’s manufacturing community to grow business value through consulting services, talent development and corporate finance/growth capital. We believe growing business value improves the standard of living and quality of life for those who live and/or work in the region.

November 20084

Measurement of Success

• Completed over 2500 projects with over 1200 manufacturers

• Consult with 175 manufacturers each year

• ISO Certified 9001:2000

• Last year alone, we assisted our clients generate over $113,000,000*

• 4.8 out of a 5.0 ranking in Customer Satisfaction*

• Over 1,000 Lean Certification/Lean Champion Graduates

*survey conducted and produced by Synovate - a leading market research company

November 20085

Our Market

• Pennsylvania has the 17th largest economy in the world representing $510 billion in Gross State Product in 2006.

• Pennsylvania’s manufacturing represents over $70 billion in Gross State Product in 2006.

• Our market consists of approximately 4,700 companies employing over 160,000 people, primarily in Southeastern Pennsylvania.

• We have worked with clients on 3 different continents.

November 20086

Our Focus: Growing Business Value

Business Value• The most important business metric - the value someone is

willing to pay for a business, even if your not currently selling your business

• A metric ALL owners should focus their limited resources / investment dollars on toward value building activities

Components of Business Value

• Management, Management, Management

• Quality and Sustainability of Revenues and Earnings

• Market Position and Environment

• Capital Requirements Relative to Cash Flow

• Quality of Systems and Controls

November 20087

Our Focus: Growing Business Value

DVIRC believes Business Value is achieved through:

Top Line Growth• Actions taken to increase a company’s gross

sales revenue

Bottom Line Improvement• Actions taken to reduce costs by improving

operating efficiencies

Trusted Resource• Actions taken to connect enterprises with the

right network and/or information

November 20088

Manufacturing Current State

Business Outlook Survey by Federal Reserve Bank (November 20th):

• Decrease: Employment, Shipments and New Orders • Decrease: Input Prices & Output Prices • Decline: Continued Business Conditions

DVIRC State of Manufacturing Survey (November 14th vs. October 14th ):

• Decrease: Projected Sales Growth (44% respondents vs. 27%)

• Increased: Account Receivables Days Outstanding (72% respondents vs. 61%)

Decline: Cost of Raw Materials (44% respondents vs. 28%)

DVIRC’s December 12th State of Manufacturing Survey is now open for participation?

November 20089


Top Line Growth: Short term activities.

• Increasing customer and prospective customer touches immediately – all hands on deck

• Step up precision on sales reporting activities – weekly contact by contact reports by sales force etc.

• Pricing/overhead allocation – make sure your pricing model is accurate and you know how much you can give to keep a customer or gain a new one

• Refresh all staffs understanding of your brand, products and your value equation for your customers

Create sense of urgency and communicate effectively to your employees what is at stake and how you need all of them to help during this time.

November 200810


Top Line Growth: Mid to Long term activities.

• Exporting – if currently doing it, do more of it, if not, start. Fact: those companies exporting are growing faster, are more profitable and innovative.

Annual demand increase for manufactured goods: 10 – 15% World Market 3 – 5% US Market

• Government Procurement – the largest buyer in the world is the US government.

• Perform a marketing analysis to assess your current markets, potential markets, competitive challenges, and new product opportunities.

November 200811


Bottom Line Impact: Short term activities.

• Split all planned expenditures into two groups, essential and non-essential – shelve the non-essential for now to reduce expenses and conserve cash

• Step up activities collecting accounts receivables

• Promote slow moving inventory to convert to cash

• Lean methodologies

• Establish Key Performance Indicators – vital signs

Create sense of urgency and communicate effectively to your employees what is at stake and how you need all of them to help during this time.

November 200812


Bottom Line Impact: Mid to long activities.

• Establish a formal lean team effort to systematically reduce waste in your organization

• Determine areas of weakness in the components of your business value and focus your limited resources on improving those weaknesses. Business value is your most important metric, after all is it what someone would be willing to pay for your business.

November 200813

• Strategic Action Plan

• Succession Planning – Leadership Transition

• Lean

• Human Resources

• Business Process / Information Technology

• Quality / ISO

• Market / Sales / New Product Development

• Internet Marketing, Search Engine Optimization

• Institute for World Class Manufacturing, Education, On-site Training, Certification, Plant Tours

• Network Groups: Manufacturers Executive Council; CEO Forum

Consulting Services That Drive Business Value

November 200814

Industry Partnerships

• Rotorcraft

• Industrial Systems Technology

November 200815

DVIRC Clients

November 200816

DVIRC Staff Experience