2012 Northwest Ohio Manufacturing Forum and Expo Re-Shoring America with Robotics and Flexible Automation Tim Ellenberger Vice President MCRI 1984 GMF

Who is MCRI Located in Fremont Incorporated 1995 47 employees 500+ installed base 45+ per annually since 2009 $10M sales FANUC exclusive

Robot Manufacturers ABB FANUC Kuka Motoman Adept DENSO Epson Kawasaki Nachi Okura Reis Staubli MCRI is fanuc exclusive…other manufacturers Big 4 Others None manufactured in North America

Save Your Factory Manufacturing Paradigm – We need to off-shore to low-cost labor markets to be competative Facing the challenge to re-shore What steps can be taken to enable North American manufactures to be globally competitive

Importance of Manufacturing in America Leads in GDP Growth & Productivity Leads in Innovation: 70% of Total Private Sector R&D 90% of Patents U.S. Manufacturers have added 495,000 American jobs since 2010 Workers earn pay and benefits about 17% higher than other workers Backbone of Defense Industrial-Technology Base Workers earn pay and benefits about 17% higher than other workers US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants Between 2002 and 2006 China created 11 M manufacturing jobs…as many as exist in America

Why Invest in Robotics? Robots Create Jobs: "In world terms three to five million of jobs would not exist if automation and robotics had not been developed to enable cost effective production of millions of electronic products, from Phones to Playstations." - "Positive Impact of Industrial Robots on Employment" by Metra Martech November 2011 Robots Improve Work Conditions: RIA estimates that some 225,000 robots are now at use in United States factories, placing the US second only to Japan in robot use.  “Many observers believe that only about 10% of the US companies that could benefit from robots have installed any so far,” Burnstein said, “and among those that have the most to gain from robots are small and medium sized companies.” Studies suggest that for every robot deployed it creates 3.1 jobs in the industry robots carry out work in areas that would be unsafe for humans robots carry out work that would not be economically viable in a high wage economy robots carry out work that would be impossible for humans.

Re-Shoring Paradigms N.A. - Higher costs - Labor - Healthcare Legal - Tax Rates Environmental laws Offshore - Low cost labor

Traditional Cost Comparison Start with the piece part cost for a domestic product Compare this with the piece part cost for the same item in China or India (It will almost always be lower) Add the cost of freight to get it to your customer

Realistic Cost Comparison Shipping Inventory Insurance Quality Travel Vendor Selection Infrastructure Risk Material Labor Other

Other Considerations Legal Issues Theft/Piracy Cost of additional paperwork Cost of employee morale Cultural/Communication difficulties Loss of manufacturing control and flexibility Training costs Lead Time, QC, Inventory Underestimation of startup costs Increasing labor costs once a vendor relationship is established Cost of transition Cost of layoffs and severance Cost of inventory carry due to shipping Cost of managing offshore Cost of bringing a project back to the U.S.

Using the North American Option The Real Long Term Winner? North America Offshore Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today Lean Manufacturing Robots & Automation Quality Programs Just in time Inventory Capitalize on culture, laws & standards

Keys to Manufacturing Success Manufacturing will go to the countries whose companies Embrace automation Use lean manufacturing processes Reduce production costs while improving quality North America is in the best position to win the race Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Case Study Re-shore Packaging Operation Considerations Labor cost rising Quality concerns Damage during shipping Inventory regulation Changing packaging/product Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Case Study Re-shore Packaging Operation Challenges Running multiple sku’s simultaneously Floor space Amount of equipment required Available labor Throughput Varying product and production needs Changing inventory Maintenance Ability to grow Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Case Study Re-shore Packaging Operation Packing/lidding area Challenges Erect 3 sizes of case Random sizes can be processed Traffic control Maintenance Data acquisition 3 case erectors, conveying, controls, integration 700 to 900k 1 robot 4 magazines all capabilities of hard automation with simple product changes <300k

Case Erecting Lidding Development Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Case Erecting Lidding Development Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Case Erecting Lidding Development Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Installed System By 2020: 30M gap of available workers ! Workers earn pay and benefits about 17% higher than other workers Japan and India automating at near the highest rates US robots per worker among the lowest of indurtrialized nations. Fanuc at 10 per employee in their plants By 2020: 70M baby boomers will retire 40M new workers will enter the workforce 30M gap of available workers ! Only 15M people are employed in manufacturing in the U.S. today

Re-Shoring Results Successes Flexibility for scheduling 2 operators for packaging Future automation of RF sealing Reduced inventory Total inventory tracking Data gathering Remote diagnostics Local support Shipping cost Damaged product New product additions Future efficiency Reliability Currently adding new line to double through put

Questions and Contact Information Motion Controls Robotics, Inc. 1500 Walter Ave Fremont, Ohio 43420 www.motioncontrolsrobotics.com Tim Ellenberger VP (419) 334-5886