#139: Ethan Karp (MAGNET)

Ethan Karp (MAGNET) [00:00:00]:

Another woman that we knew. She drove a bus for drove a bus for 18 years. And then she saw a sign for a community college program that we were putting on local in our community land. It was an arc welding. She didn't end up arc welding. She got a production technician. She's gone back. She's gotten multiple certifications. She makes over double what she ever made as a bus driver. And I talked about that pride. She sees her kids and her kids just say, Boy, you look happy. You look like you're doing meaningful work on the people side. There's nothing like those stories. And this year alone, we put 500 net new people into manufacturing. 500 stories like that.

Jeffrey Stern [00:00:40]:

Let's discover what people are building in the greater Cleveland community. We are telling the stories of Northeast Ohio's entreprenuership builders and those supporting them. Welcome to the Lay of the Land podcast, where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host, Jeffrey Stern, and today I had the real pleasure of speaking with Ethan Carp, the President and CEO of Magnet. The Manufacturing Land Advocacy Growth Network, which founded in 1984, has been dedicated to foster local manufacturing and support local manufacturing businesses across technological innovation, workforce training, and improved management practices. Ethan joined as CEO of Magnet in 2013 after a consulting career at McKinsey and academic studies in biochemistry and physics, and ultimately a PhD in Chemical biology from Harvard. We cover a lot in our conversation today, from Ethan's Path to Magnet to Magnet's Blueprint for Manufacturing, and plan to fuel a true manufacturing revival throughout Northeast Ohio. We covered the rich, industrious land manufacturing history of Northeast Ohio, and the prominence of manufacturing in our local economy today. We covered the implications for automation on the future of manufacturing, the importance of apprenticeship programs, land making manufacturing cool again, showcasing career paths for younger talent to join the industry, reshoring upskilling, and workforce shortages. And we cover what this all looks like in practice land examples of companies that Magnet has worked with, including some whose stories we've been able to share on the podcast, like Tom Licks of Cleveland Whiskey. Ethan exudes a real passion for this work and is involved in community building outside of Magnet as well. Sitting on the boards of the Cleveland and Cuyahoga County Workforce Development, American Small Manufacturers Coalition, Cleveland Leadership Center, Midtown Cleveland, Cleveland Jewish Publication Company, and the Jewish Education Center of Cleveland. I really enjoyed learning more about the state of manufacturing in Northeast Ohio and magnet's role in helping to impact its future. So please enjoy my conversation with Ethan Carp after a brief message from our sponsor. Lay of the Land is brought to you by Impact Architects and by 90 as we share the stories of entrepreneurs building incredible organizations in Cleveland and throughout Northeast Ohio. Impact Architects has helped hundreds of those leaders, many of whom we have heard from as guests on this very podcast realize their own visions and build these great organizations. I believe in Impact Architects and the people behind it so much that I have actually joined them personally in their mission to help leaders gain focus, align together, and thrive by doing what they love. If you two are trying to build great, Impact Architects is offering to sit down with you for a free consultation or provide a free trial through 90, the software platform that helps teams build great companies. If you are interested in learning more about partnering with Impact Architects or by leveraging 90 to power your own business, please go to IA layoftheland FM. The link will also be in our show. Notes so one of the things that's always fascinated me about Cleveland Northeast Ohio, and actually I think Ohio at large is the history and evolution of manufacturing here. And I feel like I'm cheating a bit because you and I actually had the chance to discuss a bit this topic before on a panel a few months back. But I think it would be awesome to start with history here and just share that with a broader audience. So if you go back in the proverbial time machine to a time when, in the early 19 hundreds, you visit a northeast Ohio city like Akron, and that has just grown 600% in terms of industrial output over the early 19 hundreds to a period where Ohio is accounting for, I think, nearly like half of the world's total rubber production, you see Cleveland in a continuous growth from the 18th century until the 1970s, and you have the Goliath forces of Rockefeller and Carnegie operating at unprecedented scale over those years. And just overall, this kind of outperformance relative to the United States producing really a disproportionate amount of wealth, technology, invention, but ultimately tempered by what comes next. And seeing how innovation is somewhat ruthless in that it doesn't care about how things used to be land, it comes in waves and it completely obsoletes entire industries in its wake. And I know here we've had these major mills and plant closures and the loss of thousands and thousands of jobs with catastrophic consequences for local communities. From your perspective, as a starting point to set the stage here, how would you paint this history? What broad strokes would you outline and what aspects of what has transpired here do you think are most important to outline as it influences your work today?

Ethan Karp (MAGNET) [00:05:55]:

At Magnet, the history of all manufacturing, industrialization is around innovation. It's increasing technology, it's increasing automation, it's increasing productivity to produce all of the things we see much cheaper, much faster. At some point there's still labor involved, so some of that moves overseas because we can't take all the labor out, although today we're much closer to that than we were 40 years ago when those real declines in employment started. That arc still happens today. And frankly, the companies that are going to survive into the future are the ones that get behind increasing investment in their own technologies, be they shop, floor improvements, robots, AI, 3D printing, data monitoring, or new products and new services that future customers want to buy. Now, the funny thing about this is we make, depending upon the year, about the same, if not more stuff than we did as a Northeast Ohio region. At the height of what people would think of manufacturing employment, we do it with 80% fewer people because largely that automation. Even with stuff going overseas and we know a lot of stuff went overseas, there's still that much product being produced here, which means its criticality to the economy has just as much impact today as it did 50 years ago. Keeping in mind that your healthcare, education, some components of those industries pull money in from the outside and bring it in. Almost all of manufacturing does that. But the majority of education, the majority of health care is serving me and you and all of the families that perhaps have gained wealth through manufacturing or are currently supported through manufacturing and a few other industries. Manufacturing only drives half of our job. So insurance, the professional services, a lot of the other fields that you see around here, those are, of course, drivers as well. But manufacturing is as important as it ever was. But it looks entirely different because of that technology and innovation adoption.

Jeffrey Stern [00:08:05]:

Right? Well, half of our jobs is a significant amount of our jobs, is it not?

Ethan Karp (MAGNET) [00:08:11]:

It's 20%, 17, 20% of the actual physical jobs themselves. But because one manufacturing job ends up supporting four other jobs in the economy, you get to about 50%. So it's absolutely huge and it's largely invisible. During the Pandemic, when our manufacturers stepped up in droves, thousands of them stepping up, hearing the call from the governor ourselves, we were helping those thousands figure out what could they make, how could they support? And suddenly you heard stories left land, right, of innovation. Innovation that, mind you, when we surveyed people prior to the Pandemic, was a really low priority for them. That innovation, its potential is still there. And I think people saw it. People started out of the blue. It was Lordstown facility closes down, this big plant closes down, this big plant closing down. And then it's like, oh wait, there's all these small companies. They're still here, they're still producing, they're still doing interesting things. The now are showing that the can be innovative. I think that sparked the imagination a little bit. And I hear far less often the misstatements around, oh yeah, manufacturing is dead, land dying. I don't think people have a clue how important it is, and they certainly don't know what it looks like because it's hidden in sort of invisible buildings in literally our backyards, primarily in small and medium sized companies. And since we don't have that many name brand companies. You got the Procter Gamble down in southern Ohio, and think of all the different consumer products that they make, and people are like, yeah, we know them well. Up here. I say Parker and Eaton and Lincoln electric. And if you're in manufacturing, you know those names, but if you're not, these are companies supplying electricity products, pipe fittings, welding supplies. I mean, these are not the first things that people think of in their everyday life. So it's not in their face. So that presence is not as loud in Northeast Ohio, but when you look in the economic drivers, it is.

Jeffrey Stern [00:10:12]:

So I think that's a perfect teaser for what we can come back to and talk about with regards to what this actually looks like today, how it works, and maybe the discrepancy between that and what people might imagine it looks like here today, as well as we make our way to that. How is it that you came to find yourself working on this stuff? Can you just kind of take us through your journey, which I think is pretty interesting, from the kind of orthogonal worlds of biochemistry and physics and then chemical biology to becoming the CEO of Magnet, what drew you to this world of manufacturing and community building and, yeah, your passion for this space.

Ethan Karp (MAGNET) [00:10:54]:

I'm going to go little Zen on you here, right? So it's taken a long time to figure that out myself. And where I am today is as a young person. Look, I've always wanted to do something for the world. You see suffering out there, you say, Boy, that sucks. There's hunger across the world. What am I to do about that? Maybe nothing, but you know what? Let me cure cancer. That was the path I went down, being like, all right, that's what I'm going to do. I'm going to apply myself. I'm going to do science, math, everything. And then you get to the pinnacle, you see all these scientists and you realize you don't get to just choose to solve something. It's discovery. I read all these textbooks. I love reading textbooks. So much information so fast. It's beautiful the way the world works. And then you get to actually do it yourself, and you're like, oh, I'm going to spend my entire life writing a sentence. Now, if I dug in the right place, maybe that sentence will be relevant to the world, but most likely it's going to be another piece in the puzzle. So somebody someday can put them all together, get lucky, and actually solve something noble, important, critical. I ran away from it. I said, you know what? I want to do something where I can feel the impact right away. So I went into business. I said, well, people. I like people. I also forgot along the way I liked people. So when I was finally in the lab by myself, every single day, I was, huh, maybe this isn't for know things you don't think about as a kid being like, oh, what do I actually want to do functionally with my life? All I saw was cure cancer. Chemistry is cool. Went into McKinsey, loved the experience. But again, big company stuff, little cogs, big impact in an even larger multibillion dollar enterprise. Land World said, I want to feel that impact. Was recruited to come to Magnet. Helped actually reform the organization a little bit, change around how it was. A 40 year old organization, nonprofit, had done a tremendous amount of good. Needed new direction in sort of the new ways that manufacturing works, and fell in love with the idea that what we do, on one hand, is work with startups, work with existing companies, help them roll up our sleeves and actually consult for them. Design equipment, design new products, help them with their value propositions, make them more efficient, help engage employees more recently, help improve culture. And then, on the other hand, create those thousands of jobs. You got to fill them well. There's a huge manufacturing shortage of, you know, we can tackle the real social problems that we have here in Northeast Ohio around equity and racial equity. We can tackle those in a very business centric fashion, get the manufacturers together, say, let's make the system, the education, the workforce system, the social service sector. Let's actually make them work together. So you get people, and those people can raise themselves out of poverty. Manufacturing can be that social elevator that it had been all those years. You started with 100 years of raising people into the middle class. It can still be that. We just have to figure out how to get people aware of and into those careers. So that's what I end up doing with my day job. It is very rewarding. And here's the Zen part, coming back to looking back at all those careers, be like, well, I could have had that impact in any of the careers that I'd chosen. I just had this idea that it had to be my own. It had to be unique. I had to feel it. Well, the reality is that I think at the end of the day, I only have impact on the sphere right around me. That's my team, and I love it. I love working with people and getting them excited, and then they go out and do amazing things, and they work with other people who do amazing things. And we're always part of a larger system, and it's just our own energy and desire to make a difference in wherever we choose that really matters. So I learned along the way a whole bunch of things, and I feel great that I get to apply it to Northeast Ohio now, build our communities.

Jeffrey Stern [00:14:51]:

So at a high level, what is Magnet?

Ethan Karp (MAGNET) [00:14:56]:

Nonprofit, mission driven organization with the goal of advancing our economy by truly rolling up our sleeves, create the jobs. On one hand, with consulting, fuel them, find people for them, particularly diverse individuals, so that the can rise in their wealth and change their family's trajectory. That's what we do. Half of it is very traditional nonprofit. We're acting the role of grant funding, county funding, going in and trying to make things better so people can get jobs. The other part is just a different type of nonprofit. We're solving the market gap that small companies don't land nonprofit and entrepreneurs. They don't get the resources that big companies do. So how are they supposed to adopt innovation and technology as fast as them? So we offer services that are lower fee in the case of entrepreneurs, much lower fee, but with the same quality that a big company could get. So those companies have just as good a chance of growing and being viable and creating the next great business as our big companies do.

Jeffrey Stern [00:16:08]:

And you mentioned this kind of rich 40 year history, if we follow that back, puts us in the 80s somewhere, which I think is actually interesting because it comes in the wake of some of the I think at a state, and particularly here in Northeast Ohio, the tail end of that innovation obsolescence state where people were experiencing some of those challenges at that time. What was the origin of magnet? How did it come to be? And then how has it evolved over time?

Ethan Karp (MAGNET) [00:16:39]:

Our big industrials came together and said, japan's kicking our butt. We need to make sure that our supply chains get access to automation and technology. That was the genesis. And it's evolved with the industry's needs over the last few decades. So there was a long time when operations improvement and lean and the Toyota Way like that was something that was new. A lot of low hanging fruit. All right, how do you get that information out there? How do you do projects? How do you do all that? And then there wave of quality. We needed better quality products. Our cars, things like this, they were not getting quality products. So you had the ISO certification. Not every company, but most companies needed it. Where were they going to get it? Okay, so getting on the Internet to be able to sell and buy products, right? So there were just these waves of things that magnet camp at the time cleveland Adventure manufacturing program got involved in until I joined 2013 era. And what our companies need now is a whole series of things. There's not one thing every company I meet needs something different. So our services ended up being much more full service. Not, hey, what do I have to give you? It's what do you need and can I find it for you or can I provide it? More recently we've said, well, let's take a look at the future of the industry to be relevant. I keep mentioning these themes, but really our blueprint for the future of manufacturing. A place where you have a diverse workforce that looks like our communities, a place where we are leading the rest of the country in technology adoption and we have investments flowing into land from our small companies and to our entreprenuership making physical products. Something pretty hard to fund. All of this can be realized if we look for the talent that's the first pillar in new places and realize that we really have to work together and solve systemic problems, not point solutions of oh look, if I just had the best education class, everything would be fine. Well, no, if you can't get the people there and they can't stick with the company and they don't have childcare and they don't have mentorship, I mean, you need everything because you can't get people 95% of the way to a job. And these are the things you have to think about when you're looking for populations of people that you don't have in the workforce today as much. Second is technology adoption. This is collaborative robots, things you don't need to shield people. Think of robots and if they're not thinking of the little robot dogs and jetsons of which we actually have a magnet, we show this to kids when they come in. Then you're thinking of like the big yellow robots. Land car factories, which are great and still very useful, but a small machine shop, you know what they need? They didn't need a robot to open and close their machines land take the parts out and put them in a box and do that boring work. Those are collaborative robots. They can work right beside you because they stop when they get near you. Innovation, innovation hasn't changed all that much. We still need new products. We still need to understand our customers, validate our value propositions and put money into that. In fact, it's probably the riskiest thing to do because it's really costly, highest payout, but it's really costly. And our manufacturers who have worked for decades successfully are many times very slow to take on that risk. That's why we look to spin outs and startups say, well, you all have the gumption to do that, you're an entrepreneur, go get it. But nobody wants to fund you because you're going to be a million dollars in before you've gotten your prototypes, been able to produce enough of it, gotten your marketing plan to actually go out and try your minimum viable product. I mean, it's exceedingly expensive so it's hard to do, but we need more of that. And even if that means a company buys that product, sooner or later we need more of it. Land lastly, leadership, risk taking, investing in your culture and your people, investing in that new technology, it's all risk taking. It's all being a leader. And then collectively, groups like Magnet and our chambers of commerce and our region can do things like we did to make all that personal protective equipment. So during COVID we ended up making with local companies 50 million pieces of personal protective equipment. We have partner organizations across the country. No state got its act together to do anything like that. Why? Because we were willing to collaborate and actually primed to collaborate across the system. Does it always work? No. Do we have a ton of different organizations, and does it feel fractured? Sure. But there's also a lot of raw material under the right circumstances to be brought together, and that's leadership to make big things happen in the ecosystem. Those four pillars are our vision for really increasing by billions and billions of dollars the economy through manufacturing land, physical products over the next ten years.

Jeffrey Stern [00:21:26]:

The blueprint for manufacturing. It's pivotal. I want to give it adequate time and go through those pillars in a bit more depth, just briefly on the history piece of Magnet, because I just found a kind of fun historical bit that I was curious about because it's not something I had ever heard of before in kind of a niche of your website. But the Manufacturing Extension Partnerships, it kind of outlines there that I believe Magnet was the pilot site for this whole realm of partnerships, and now all 50 states and Puerto Rico have this as well. So I'd love to hear the story of what this is and how it's shaped Magnet's growth land mission at that onset.

Ethan Karp (MAGNET) [00:22:11]:

So you have Cleveland tomorrow, right? Precursor of GC Greater Cleveland Partnership. It's funny, they're in our building right now downstairs. So those partnerships have continued for the last 40 years, but they actually spawned Magnet. That was the industrial titans working together and CEOs saying, we want to do this thing for the small manufacturers. Well, that was ahead of its time. And so a couple of years later, federal government said, we need to really support our small manufacturers. And we were the pilot to say, interestingly, we were serving the entire Great Lakes region. Crazy, if you think about it. Money was far less than they give us even today. Crazy amounts of land. But they said, hey, look, this works. We can support small manufacturers. Again. There was a lot of tech transfer, but there was a lot of lean. There was a lot of operations, transformation things to make plants more efficient. And so after that, they just added states and states and states. And now this manufacturing extension partnership, MEP is a fairly small line item on the federal budget, but it's the only national manufacturing outreach program that exists. We have the Manufacturing USA Institutes, things like which also fun. We and others here in the region got the first one here in Youngstown as well. Those are more research and development oriented, right? Money, facilitating money, getting into new technology development, which I love in a fairly practical way, but really the on the ground, how do we actually help our manufacturers? How do we connect to them? How do we connect to supply chains that's MEP across the country.

Jeffrey Stern [00:23:49]:

Awesome. Thank you for indulging my detour there.

Ethan Karp (MAGNET) [00:23:54]:

It's one of these programs that nobody really knows. I I will always introduce the topic, but you get lost in the acronyms. Goodness, if I went down the trail of where the federal program is actually located, you guys would be like, holy moly, it's federal government, department of Commerce, national Institutes of Standards and Technologies all the way down there. Now you have the MEP program under that heading. It's very funny. Every year when there's leadership changes at the federal government, the MEPs are often called upon to go talk to the senior people in the government to remind them that they have this program and it's really good and they should like it, right, their own programs, because our federal government's so big. But it's been really cool. Biden actually referenced it in some of his executive orders and he's mentioned it a few times, which is more than has happened in a very long time. Although Obama actually visited us before a City Club speech back in 2015 when he was talking about manufacturing. So it's not off their radar, but it's not something that's so far on it. And today, as we think about the supply chains, as we think about reshoring, as we think about the criticality of our defense, supply chains, land the Chips Act, figuring out how to tap all those manufacturing, all those small manufacturers, has been very much on the top of politicians'minds, on the top of Washington's minds. So it's a very interesting time to be in the space of physical products.

Jeffrey Stern [00:25:22]:

So let's talk about the blueprint for manufacturing. So I was thinking about the pillars, and you've introduced a lot of themes here, but I kind of have per pillar just some thoughts and questions about them that I think would be fun to unpack. So you just mentioned upskilling and reshoring, workforce development under that kind of umbrella. So in the fallout of the Pandemic I don't know, anecdotally it feels like to me there's been this resurgence of a narrative around reshoring and the importance of restoring the knowledge, skills, resources that can and would make the United States and its allies more self sufficient and bolster our infrastructure and usher in this new era of manufacturing competency. How do you feel this narrative is playing out? How do you see the role of Entreprenuership in this? And given that we don't necessarily have the workforce right now, how do we need to think about upskilling our workforce?

Ethan Karp (MAGNET) [00:26:28]:

I will answer all of that and also throw in how does equity play a role in this? Always in manufacturing, upskilling has been required. It's a fancy word, right? We had apprenticeships that was upskilling, and we're trying to bring that back. We run a program that is modeled after Germany. It's a first of its kind in the country, called it early college, early career. It takes students from non career tech high schools. I love career tech high schools. In fact, the state just put a ton of money into career tech high schools. This is great. But they do not produce at the cost of building buildings to train people. They do not produce coming out of high school nearly enough people. So we go into high schools, we get anybody that's interested. They get paid, they get mentorship, they get transportation. They hopefully take a job in manufacturing. When they're done at the companies that they've been interning with, helps them graduate. They get certification that's upskilling and that's innovative upskilling. Then there's colleges. They can upskill in many different ways. They can upskill in engineering, and you can go part time, and they pay for that sidebar. I love college. I think everybody should go to college. I think most people should do it part time while being paid by an employer to sustain their families if they need to not have any debt land have a degree directly related to what they're doing. Mind you, community colleges have degrees in pretty much everything manufacturing related around here. We have an abundance of riches in terms of abilities of our community colleges to train in relevant manufacturing fields. But again, best done while working. So upskilling is kind of all of that. I think the question we have to ask is what does the shortage mean? And how does that relate, especially in terms of reshoring to what the future might hold? And people like to do the same things over and over again, right? I'm just going to post, see who shows up. People don't show up, and then you hear things like, oh, well, they all have drug problems. There's no work ethic, which is when you dig deeper, you just recycling the same people. And when you do get somebody and they quit after 90 days, it could be that you have a crappy culture and they don't like it, but it's more likely that they had something come into their way, like they had a beater of a car because you're likely not in walking distance, because you're probably in a suburb somewhere and it broke down and they can't get there. As an example of a life barrier. So we have to think in terms of those individuals. And first of all, what sort of life supports are we giving those individuals? How are companies participating in that? We got a robust economic workforce ecosystem that can help support that. But as I said earlier, they're not connected one piece. You go and you get your support for your car. Okay, well, what about finding the company? What about getting training? You don't need the training to start. We run a three week boot camp, which is training paid $14 an hour called Access to manufacturing. We take a lot of people that are coming with criminal backgrounds, and we give them all the soft skills and. Some of the hard skills they need, but this is just a leg up so that they can really integrate into the culture of these manufacturers. The actual skills are still taught on the job. So upskilling a lot of that in the apprenticeship model. It's a lot of what goes on in the shop to bring people up. So I actually don't think that upskilling is the barrier. It's getting people excited and barriers removed to get them into manufacturing the first place. That shortage has prompted our companies to come together, do things like, I'm sitting in a building right now listening to kids on tours every single day. In the last four months, we've had 1700 kids, primarily from Cleveland Metropolitan School District, but from all over. Come land. Get a hands on Great Lake Science Center satellite experience of building an electric car. Soon they'll be able to create their own paint color meeting that electric robot dog I said we had, getting a drink served by a collaborative robot drink robot being exposed to careers in manufacturing in a very hands on way so that they can be excited about going into manufacturing. This problem is not going to be solved soon. It's a 20 year old problem, if not more so. Manufacturers are doing what they should have been doing all along, which is automating. They are absolutely upgrading their tech because they can't find people. And that's a great thing, too. We need both. We need people to go into manufacturing. We need the automation, which then makes the manufacturing jobs better. More high tech. Yes, it does require more upskilling, but I would contend that either part time or on the job, they will get the skills that they need if they're excited about going in. And mind you, we cannot have the bottom 10% going in. This cannot be the employment of last resort because these technologies require you to be talented in your career. And that's why you get paid. These are not sort of dead end jobs. Do those exist? Yeah, they exist. But increasingly, even now, they go away to China. And you talk about reshoring to the extent it happens. And it is happening, albeit slowly, much faster in chip manufacturing, of course. Land intel, where there's huge investments from the government. A lot of it, by the way, the reshoring is actually near Shoring, so it's Mexico, but it's happening where companies can take it back. They're taking it back in a very highly automated way, just increasing the demand for people that can really hack that technology, people that can learn on the job and grow with technology over time.

Jeffrey Stern [00:32:00]:

Lot to unpack. There two threads that I'll pull on and maybe we'll revisit automation and stick with talent as a pillar for now. Because I think one of the things I was really curious to get your perspective on today is this challenge that manufacturers face, which is how do you make this exciting and attractive for younger talent? And I think many younger workers may have a negative opinion of working in skilled trades. Land I think you might have parents who perceive going to a vocational program or some kind of apprenticeship program as undesirable. And others, I think, as you mentioned, feel a certain societal pressure to go to a four year college to matter in American society. And I don't think that changing any of those mindsets is particularly easy or fast. And so it's clear that building the American workforce will require building a culture of helping young people find meaningful work. Because, as also you mentioned, everyone wants to feel good about what they're adding in value to society and positively contributing. But in some ways I don't know if this is the right framing, but it needs to be a culture where working with your hands in these critical industries becomes respected, desirable, cool, even.

Ethan Karp (MAGNET) [00:33:28]:

I would love that.

Jeffrey Stern [00:33:29]:

Yeah, I would love that.

Ethan Karp (MAGNET) [00:33:30]:

In my ten years, it's changed. I would have said ten years ago, people I talked to dark, dirty, dangerous. Everything you said when I was growing up, certainly in rural Pennsylvania, even though it was the lifeblood of my little small town, that's how people viewed it today. It's lack of awareness completely no idea that it exists and what it looks like, which you could say is a better starting point. I'm not trying to tell people that something they thought was bad is now good, but I got to get them first principles excited. Now, we've got a lot of tailwinds things, like our whole Cuyahoga County, and I know Akron did this, and others are looking and saying, you know what? We made a mistake by saying, college. College. Some of our districts, like Cleveland, half the kids don't even go to college. Goodness knows how many more don't graduate. We're setting people up for failure. So they switched their entire model and said, it's career, and college is a really good way to facilitate career. They've in fact, created a whole consortium called Pace, and that whole consortium is getting curriculum and employers involved at every level, k through twelve, to change that mindset needs places like Magnet where kids can go and see manufacturing hands on. We've spent decades as magnet figuring out how to try and change people's perspectives with advertising, marketing, PR. I mean, that doesn't work. You're totally right. People seeing it and saying, this is great, that's step one, step two. Look, kids I see are working at McDonald's. They're working at Taco Bell. Nobody's telling them, that's a great career. So when I can say, hey, look, this is what this career looks like, and by the way, you have a friend, the social proof that's it you have a friend. And they say, oh, I love working here, or somebody you look up to who graduated recently, there is a flywheel of people saying, no, this is a good career. I like it here. I like what I'm doing here. Same reason they probably got McDonald's in the first place. They needed some cash and somebody said, hey, come on over. So we need that social proof. We need at least we think we need people actually experiencing hands on doing a plant tour, which, again, they can do here. These things together, I'm hoping, starts to create that environment where maybe someday it's cool again. But at the very least, people say, this is good land. I want to do it, and I want to encourage my friends and my family to do it. The pride in manufacturing, that's one of the reasons we wrote The Blueprint, to reignite that pride. And if you're in manufacturing, guarantee it, you have a pride. You have a pride for making things. You have a pride for your job and what it means to you and what products end up getting in the world because of you. There's a pride for your company, and we just need people to see it in all of our communities. And they'll spread the word that this is a good place to be. I know people talk about working with their hands and these sorts of things, but there are so many careers in manufacturing that, yeah, you work with your hands, but if you're working on a programming, a CNC, you might not be working with your hands. You're working with computers. There's jobs across the board. When we have our experience here, we have kids actually create a little electric car, but they do it using robots. And rather than creating a robot itself, which there's many awesome programs to do that that trains future engineers, and we love that, but it doesn't really train you. The core skill of a manufacturer, which is problem solving. You're working with teams. You're working with people. You got to fix what's broken. You got to figure out how to improve it. And so our experience as they go through this in teams land, they're racing other cars, they're actually fixing problems as they go along, and they're getting that problem solving skill. And that's what we want to show them. Is the using your brain part of this. It's not just a skilled trade, although that's part of it. It's also using your brain, working in teams, and highly collaborative. And that's ignoring all the finance and marketing jobs and all those other things that manufacturers have too. And they also have a tough time finding them.

Jeffrey Stern [00:37:32]:

So if you then layer on top of that, which will bring in some of the other pillars, and we'll circle back to automation. But if you just think about the industrial robots that can do everything from assembly to machine maintenance in manufacturing land, packaging to logistics, the companies that are building those types of automated based solutions to these workforce challenges, I think they either tend to create a new kind of labor supply by I mean literally in the automation. You're getting rid of jobs that potentially inhospitable or undesirable working conditions, repetitive labor that you may not even want a human to do at you know, you're creating a new kind of labor demand. As I think you know, most automated systems will still require human oversight. Land amplify people's, right?

Ethan Karp (MAGNET) [00:38:37]:

Yeah, yeah. I'm on kicking it with Kenny, showing off my drink robot that we've built. And of course the damn thing misses a button and no drink comes out of the vending machine. And I'm sitting there on live television, I'm like, oh, man, got to think fast to go over. I press the button, I'm like, this is why we need people. And it was meant to be joking, but it's 100% true. I can't tell you how many times the stuff, even in our own building breaks. You got to have somebody with competence go over. I was in a manufacturer once. They had a bunch of those yellow robots. They weren't collaborative. It was a really nice cell. It was doing a lot of work. And there was a person tending them and he was holding a broom. I kid you not. It was a broom. And I just watched him for a while. And then the robot got stuck and he opened up the cage. He turned it off. He went I watched him. He whacked it in a very particular place. He closed it up, he turned it back on and boom, it started working again. I'm not saying that is the height of technology. Maybe it shouldn't be that way. But these things break technology. Heck, our computers, you try and hook them up, one day land they work and the next they don't. All the technology breaks, let alone the fact that you have to set it up and you have to change it when you get new products. And so there's a whole labor force of people required to do all these things. Is it fewer people? Yeah. But one can hope that the increased productivity might not actually drop it that much further and you can get a little reshoring to kind of supplement that. And you've seen that in the labor force. Trends in manufacturing. We bottomed a long time ago and our output has been increasing and our employment has stayed flat to slightly growing. So I'm not too concerned. And right now, while there's thousands of open jobs, it's going to be many years before any job actually goes away versus just being reassigned to the other side of the shop where there was nobody tending to a product that could have gotten out. That, to me, is what's going to happen for a while when these massive retirements think 40 years of not really hiring that many people because you could just skate by. Well, eventually you get to the point where you have a giant load of retirements, which is exactly what's been happening, and you got to replace a whole bunch of people. So this cycle will repeat itself. Maybe in ten years from now, we won't have that labor shortage because, well, fingers crossed, our sorts of efforts of bringing the community together will actually fill it, or the macroeconomics will be all the retirees left and we figured out how to plug all those holes and then we'll go on for a while and do this again in the next ten years. But my point is that the jobs are changing. We're not actually wiping away jobs that people had. We might decrease the need over time, and every job will become better. These collaborative robots, the cool thing is, if it can work next to you, it can do like, 20% of your work. It can sand the thing that was always the crappiest part and most boring part of your job while you do the thinking parts. It doesn't have to be an all or nothing thing, as robots used to be.

Jeffrey Stern [00:41:34]:

So I really love talking about all this stuff at a high level, but the blueprint, it's not ultimately theoretical. Otherwise, it'd just be intellectual exercise. Magnets worked with hundreds of manufacturing companies over the years, helped them grow through these pillars. Technology, innovation, talent. Can you share some stories that speak to and highlight the impact of what this looks like in practice? And when rubber hits the road, I'll.

Ethan Karp (MAGNET) [00:42:05]:

Start on the workforce side. One of our favorite speakers is from the inaugural class of this folks returning from criminal justice system into manufacturing. And he did this three week training. Had no idea, gentlemen, that he what, you know, what manufacturing was or why you should care. Somebody said, hey, join this program. They'll pay you. Three weeks later, he has a job. He's coming out of federal prison for 13 years, and this is a year and a half ago. He's been promoted twice. He's a shift supervisor. He's on his way to being in mid level management in the company. And that was just opening somebody's eyes, giving them a second chance, working with the employers to say, you should ban the box and actually hire some of these folks, they're incredibly devoted. That sort of thinking has promoted him. Another woman that we knew, she drove a bus for 18 years, and then she saw a sign for a community college program that we were putting on local in our community. And it was an arc welding. She didn't end up arc welding. She got a production technician. She's gone back. She's gotten multiple certifications. She makes over double what she ever made as a bus driver. Land I talked about that pride. She sees her kids, and her kids just say, boy, you look happy. You look like you're doing meaningful work. On the people side, there's nothing like those stories. Land this year alone, we put 500 net new people into manufacturing. 500 stories like that. The automation side, the technology adoption side. I don't know, whether you call this technology adoption or innovation, it kind of sits in the middle. There's this company in youngstown 40 person shop. Land beautiful story of Son coming back to save the family business as the steel mills were all going out. Devoted himself to revamping what they did. Land they actually got involved in reginding gearboxes. And so you go and you bring it in and high precision work. You want to fix up the internal mechanisms and make them new again. And so he said, well, we need to be a technology company. In ten years, we're going to be obsolete and we're not going to go through what my parents and my family went through. So he said, let's create a new way to measure. And so he found all the partners and some people from Lockheed Martin elsewhere, and basically they measure in situ, they measure inside your CNC machine or whatever's, making the part at the exact same time. So there's no taking it out and finally measuring it. Land bringing it back. This sounds pretty simple, but the implication is that you don't have rework, you don't have to check everything, the scrap rate reduction, the efficiency reduction for plants everywhere. But then you can take it a step further. If you think of 3D printing, 3D printing suffers because you all have a mental image, I'm sure, of 3D printing. And it's like a laser jet and it puts stuff down in layers. Well, then you got like little bumps between the layers. It's kind of rough. So if you really want a finished product, you got to actually shave it off. You actually have to grind it down. That's a lot of work. But if you have the same measurement technologies, and now you're talking artificial intelligence that can look at the part and say, oh, well, it needs to look like this. Thus, the finishing operation where you grind it down must move like this and angle like this. You can finish a 3D printed product at the same time, but why do that in small scale? So we actually ended up working with this company to build them one of the world's largest 3D printers and plastics. You can drive a truck bed inside of this thing. It's like the size of a room. And he's applying that technology. That's an example on the really high end, beyond collaborative robots of somebody doing it as a small company. On the innovation side, I'll highlight some startups. We actually have a physical product fund, advanced manufacturing fund, that can support physical product startups. And we have ones that are inventing new battery additives that should be more sustainable and people that are creating climbing boards, portable climbing boards. I mean, you name the product, there's a product that was looking for trying to figure out whether they could create a set of eyes that look like wolves and scare away coyotes on farms and things like this. Just crazy. Stuff like this Cleveland whiskey. We helped them develop all their technology, and they actually had physical space in our old building. So they're expanding rapidly and we're helping them with operations. But they age whiskey in a day old line industry. Total transformation. Very, very cool stuff. They had the idea, and we helped bring it to life. These are examples of what Magnet does, but they're also examples of really the types of innovations that are going on there. I already mentioned the COVID example of creating PPE as a collaborative leadership example. But I think you don't need to look that far from all the manufacturers here that are stepping up to work on these workforce issues to say, boy, there's a lot of folks that see beyond just their own needs. If they were just stuck on their own needs, not actually working together, not actually taking risk, not actually putting in the sweat equity, they would just take their toys and say, fine, I'll just do it better than everyone else. But they're not. They're banding together and saying, we might be competitors, but the end of the day, we all need people, so let's raise all boats. And that's incredibly encouraging to me to see that sort of leadership from our industry. These are just some of the examples that we share. A lot of these stories and more in the blueprint, by the way. You can see it@makeitbederohio.org. It's not just a Magnet thing. We had hundreds of people input from across the community, and it's a rallying point. Look, magnet's not doing the R D on sustainability case. Western is, and that's awesome. We're not the number one polymers experts in the world in school. That's Akron, University of Akron number one polymer school in the country. I mean, this is awesome. So there's a lot more going on in our community, and the blueprint kind of helps align all of those things. So we have a common vision rather than being a lot of little fractured kingdoms.

Jeffrey Stern [00:48:08]:

So with that framing, and I imagine it ties back to the pillars and the blueprint in some regard, what are the metrics that matter to Magnet? What is success? And then in parallel with that, how do you hold Magnet accountable to those?

Ethan Karp (MAGNET) [00:48:30]:

I'm a big believer that you've got to set a very big vision and measure it. And if you are not the only ones doing that vision, which is always the case in civic leadership and economic development, you have to do real value adding things that are ever expanding, continuously improving. So for ourselves, we hold ourselves accountable. How many jobs are reported by the companies that are being created or saved because of the work we do? Hands on stuff they pay for, mind you. Secondly, how many jobs net new are we filling with people that wouldn't have otherwise gotten a manufacturing job? There's a lot of other metrics, amount of cost saved, investments made, et cetera. But those are the biggest ones. At the community level, you have those same ones. How's our GRP increasing? How is our number of jobs increasing? We've got those, but you've also got things like diversity metrics. So equity, which I forgot in the original question, has to be the answer. Not just because it's the right thing to do, but because labor force participation rate, if you're not familiar with that, it's the idea that unemployment is just people looking for jobs. Labor force participation is what percent of your eligible workers are actually eligible people are actually working. Our suburbs to our city, there could be a 15 percentage point difference. That means 15 absolute value. 15% of people theoretically could be working who aren't looking for a job. That's a lot of hidden talent. That's a lot of people to go after. That's why we have to go after those places. And typically those places are cities. Typically those places are people of color. We have to think of equity. We have to think of what does it mean if you take somebody into an all white environment? What does that mean for retention? What does that mean for the culture? How do you change yourself in that way? And so equity and making sure that our companies look like our communities is the imperative to say stop ignoring a bunch of talent. So that's another metric at the global scale, another key performance indicator that we hold ourselves to. And then we have a lot more underneath it, where we're looking at how many new products are being created, how much is the adoption of technologies like cobots, collaborative, robots that we think everyone should have? We're looking at things as much as we can measure. It's hard to measure a lot of this stuff, right? Culture, how many manufacturers are getting best places to work awards, and they're actually really investing in that culture. We're thinking about things like innovation, how many startups are actually getting invested, and of course, the standard metrics around how much money is being invested in them. These are all metrics that kind of support those high level things around equity, GRP growth, job growth, and around the talent piece. The best thing we could come up with as a community is that basically there's normal amounts of people going in and out of manufacturing. There's not this giant gap. There's always churn. So you can't say, oh no, there's nobody. And I don't really want lines out the door of people waiting for manufacturing jobs. I mean, I would love it psychologically, like they're the hot ticket. Everybody wants one. But I also don't want the idea that there's so many people looking for jobs and unemployment is so high, I think that everybody else could lay. I just want it to be normalized. When you have a job posting, you fill a job posting. And so that is another metric that we look at, is, can we get to the point where we don't have this massive shortage of people all the time.

Jeffrey Stern [00:51:52]:

So I think you've hinted at what the answer to this might be through talking about those criteria. But if you could wave a magic wand to affect change in Northeast Ohio's manufacturing ecosystem, what would you change? And maybe a secondary way of thinking about that question is what are the biggest barriers that Magnet and the overall ecosystem faces that are standing in the way of making the kind of progress against those pillars?

Ethan Karp (MAGNET) [00:52:24]:

Investment in technology, innovation, talent. It's investment. If I could wave a magic wand and say, all right, everybody out there. Every 65 year old owner that's given their lifeblood to building this business and is earning a great amount of money now that their family is three generations in. I want you to either put all your money continuously back in for the next ten years or sell your business so that the next owner can do that and please sell it to somebody who wants to keep it here and wants to invest their money here and has enough money or enough banking that they can actually invest land. Not just starve the business, not a PE firm that's going to go and strip it of value. Not all PE firms do that. But that's a risk. That would be the number one thing I guarantee. If you put money in technology, it will pay off. And if you put money in innovation, it won't pay off for everyone, but it'll pay off for this region. Talent is an even interesting one because self awareness as a leader, I know this sounds again a little soft. It's a big deal having investing in culture, making yourself a good place to work, which yes, includes paying people more because it's a good thing to do. And by the way, it's probably a competitive thing you need to do. But also if you care about your people, you'd want to do that at your lowest range if you can afford to do it, which most going concerns can afford a couple of dollars for their 10% of labor, of which five very small percentage is your frontline lowest paid people. If you have that self awareness and you're thinking about, well, what's best for not just me, what's best for the company, what's best for my people, what's best for the next ten years? Well, you'll probably end up doing that. There is a leadership component baked into this, which is what do I as a leader really want to leave behind as a legacy? A bunch more money that is sitting with my family on a boat or a smaller boat and a company that's going to exist in ten years and supply even more livelihoods? That is the biggest risk facing our entire region is that lack of risk taking. And I'm sure you hear it when you talk to people about well, why isn't money going into Startups. Why aren't entrepreneurs starting? I mean, they're all just different phases of risk taking. We just have a lot of people for whom, if they took more risks, they would have the immediate dollars to do so, because they're running profitable enterprises today.

Jeffrey Stern [00:54:40]:

So if playing out a hypothetical 20 years from now, our region is not where you would like it to be from a manufacturing perspective, is that the thing that will have gone wrong?

Ethan Karp (MAGNET) [00:54:57]:

Yeah, we'll have a bunch of businesses that are pretty much obsolete. And then you have just people swooping in and saying, buying them and saying, boy, you have a bunch of junky equipment here. I'm just going to take your book of business and your customers and I'm going to move them wherever the heck I am. And if it's down the street, great. If it's across the country, not so good. If it's Mexico, really not so good. That's the biggest risk is that these folks get picked off and they're not here. Meanwhile, it's the opposite. If we truly have the most advanced companies, well, then the other companies elsewhere are going to be picked off and moved here. And that's great. Now, that's a very local view, very parochial to sort of Northeast Ohio, and I care about it. But you can extend this to America rather than thinking of, well, what happens in between? If we have industries that go obsolete, china is going to pick them up. Germany is going to pick them up. And that's no good for us either.

Jeffrey Stern [00:55:49]:

So how ultimately optimistic are you about this whole endeavor? And how do you envision Magnet's role, continuing to evolve over and into this future landscape?

Ethan Karp (MAGNET) [00:56:01]:

I'm really optimistic because things are changing. Those owners will not own this when they're 95. Well, most of the Won't they are giving them over every single transition. I see I see people coming in land being, making those investments and that's exciting. I see this wave of people making investments because they're frustrated with the labor force. Maybe not the greatest reason why, but they're doing it. They're making the investment. I see a lot more entrepreneurs thinking of physical products. I see people ponying up money. All those ex manufacturers who made their fortune in manufacturing coming back and saying, yeah, I'll invest in the next startup. I see a lot of that positive momentum. It's the same positive momentum I see when people in our communities are starting to say, hey, manufacturing is cool. Why don't you go that playground over at Magnet? Why Magnet? What do they do? Oh, it's manufacturing. Cool. Those little comments go a long way. So I'm seeing it change. We have a lot of work to do as a community. And I think things like intel change the psyche. I would never say LeBron James changed the fortunes of our region. But since I've been here and winning that championship native Clevelanders, native Northeast Ohioans, don't crap on. Themselves nearly as much. Me not being one. I was always like, this is the greatest community I've ever been in. Folks I meet, they're like, oh really? You think that way? Well now I get far less of that. Things do change, and that's very exciting to me. And I know we have problems, the equity problems, they're huge. They're not going away anytime soon. But I am hopeful that things do change over time.

Jeffrey Stern [00:57:35]:

So I think it will, in its entirety, have been impossible. That we covered all the important topics here with the scope of work that you're doing. What are the things unsaid that you think are important to your story? Magnet's story, the overall ecosystem that we haven't talked about.

Ethan Karp (MAGNET) [00:57:55]:

It's been a decade since I've been doing this work, not a tremendously long time, but everybody talks of all the leadership change that's going on, and you're seeing millennials start to really come into their own, starting to lead things. There is a certain glorious naivete of going at hard problems, thinking you know better and just going at them. Sometimes you get the same result. Sometimes you do things just slightly different in ways that somebody who's seen it before wouldn't have done it, and you get a different outcome. And I would just say to everyone, my experience has been you got to keep that optimism, even if you see things again and again and again. That's why I say millennials, we are starting to see things again and again, land again. You got to keep that optimism and you got to keep that you know what? It didn't work before. I'll try it a little differently. I don't know if that'll work, but you know what? It might. And even if it doesn't work exactly as you had planned, maybe you're bringing other people around with you who themselves will go out and do it differently and get a different outcome. Now, I'm speaking from a civic kind of economic development place, but I think the same thing works in entrepreneurship. The winding roads that are led. I think this is one of the coolest thing about Entreprenuership is that they are undaunted by seeing the failure left and right. I would not be so undaunted, but I've realized that that is actually really a key to a lot of people's early success. It certainly has been some of mine. And I want to keep that optimism and say, yeah, it looks impossible. Yeah, it looks like I've tried it and other people have tried it ten times. But you know what, if it's important enough, try it eleven. So that's my last comment, and I think the history of manufacturing also bears that out, that you think, oh yeah, it's gone. It's not. It's just very different. And it is our driver industry, and those of you out there thinking, oh well, physical products, maybe I should go into do it, figure it out, make the next procter and gamble right here.

Jeffrey Stern [00:59:55]:

I love that. I appreciate your perspective and thoughts on all this. It really is fascinating. I think it is exciting. I share your optimism, but, yeah, it'll be fun to see 20 years from now what this actually looks like. So I'll ask my traditional closing question, which is not very related to any of this, but is for a hidden gem in Cleveland, for something that people should know about that they likely I.

Ethan Karp (MAGNET) [01:00:27]:

This isn't maybe a favorite spot. I like art festivals. I always try to drag my kids and my wife's like, Ethan, normal kids don't like going to art festivals. I'm like, I got one daughter, she's okay with it, or at least she humors me. This is the Boston Mills Art Festival, and I love it. Every year there's two weekends. Really interesting artwork. The other day, walk into the conference room of our nice new facility and there's some cutesy little robots with little lights up things. They're not actually robots, they're just like old cans put together to look like robots. And everybody's kind of staring at me. They're like, Ethan, did you go to an art like yes. Yes, I did. There's just clever art land living in the world of manufacturing, and there's a great deal of creativity in manufacturing, but it's not necessarily just artistry. So I love going to this every year and I make it a real point to go.

Jeffrey Stern [01:01:24]:

That's perfect. So I know earlier you had mentioned the Blueprints website, but if folks had anything that they wanted to follow up with you about, learn more about Magnet, what's the best destinations for them to do that?

Ethan Karp (MAGNET) [01:01:38]:

Absolutely go to our website. I believe my email is on there. If it's not Ecarpet Manufacturingsuccess.org. It's funny, when I designed that website name, I thought it was pretty clever. And you know what? That website name is clever for right now, because you can all grab that email really quickly when it's not good for us filling out forms. It's a very long name. It's a very long name, but Ecarpetmanufacturingsuccess.org. If anybody wants to reach out to me and learn more, come see our facility or play on our seesaw side.

Jeffrey Stern [01:02:06]:

Awesome. Well, thank you, Ethan. This was awesome.

Ethan Karp (MAGNET) [01:02:10]:

Very welcome. Glad to be invited.

Jeffrey Stern [01:02:14]:

That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show, so if you have any feedback, please send over an email to Jeffrey at layoftheland FM or find us on Twitter at podlayoftheland or at @sternjefe J-E-F-E. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on itunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we love having on the show. We'll be back here next week at the same time to map more of the land.