Editor’s note: Welcome to So That Happened, our editors’ takes on things going on in the manufacturing world that deserve some extra attention. This will appear regularly in the Member’s Only section of the site.
Fun with Statistics: IW U.S. 500 Edition
Measuring the performance of America’s manufacturing sector by stock performance can be tricky, so we spend a lot of time and effort to generate the IW U.S. 500. One of the statistical weird points is that the list of companies changes every year. So, when we say sales on the 2024 list fell 3.2%, that means that the 500 companies that made the 2024 list had a 3.2% sales drop compared to 2023.
However, the companies that made up the 2024 list were healthier in many ways than the ones that made the 2023 list. Comparing this year’s top 500 to last year’s, sales were up 2%. More notably, the floor got a lot higher while the ceiling dropped.
The IW U.S. 500 ranks companies by revenue, and to make the 2024 list, the cutoff was pretzel maker Utz Brands with $1.438 billion in sales. Last year, Utz was No. 431. So, even with a $43 million increase in sales (2.1%). Utz barely made the cut. The No. 500 company in 2023, Phibro Animal Health Corp., had only $942 million in sales.
Going back to high school statistics class, the median number (the halfway point between the top and bottom performer), is instructive here. In 2024, the oil and gas companies that dominate the list had significantly lower sales, but the random assortment of industrial, food, technology, materials and minerals producers that make up the bottom portion of the list was significantly stronger. Median sales in 2024 were $9.7 billion, up 36% from 2023’s $7.1 billion.
The median was even more impressive in terms of earnings. Median net income in 2024 was $735 million, up 374% from 2023’s $155 million.
It’s a strange academic exercise because we’re comparing two very similar but different lists. There were 85 companies on the 2023 list that did not return for 2024—some due to mergers, going private, or splitting themselves into new entities, others for missing the sales cutoff and still others because we continue to tighten our definition of what a manufacturer is. For example, we shed several newspaper publishers from 2023 to 2024 as fewer of them continue to print their own products, and the bulk of their revenues are coming from digital news, not paper products.
—Robert Schoenberger
New Rootstock CEO Takes Office
Cloud enterprise resource planning (ERP) developer Rootstock Software on May 1 announced Richard Berger as its new CEO. Berger’s 25-year career spans the technology and software fields for companies including Infor and Oracle.
Prior to joining Rootstock, Berger served as the president of unified commerce platform developer NewStore, building the company’s relationship with Salesforce into the physical retail sector.
“Equipping manufacturers with the right infrastructure and cutting-edge technologies—including predictive analytics, generative AI, and IoT—we’re helping them to overcome past challenges and seize new opportunities for growth and digital advancement,” says Berger.
—IW Staff
The 301 on Intellectual Property Protection
Last month I wrote about intellectual property (Is Your Intellectual Property Under Attack?), where I mentioned the “Notorious Markets List,” (PDF download) a report put out annually by the Office of the U.S. Trade Representative that highlights online and physical marketplaces believed to facilitate or participate in IP infringement by way of trademark counterfeiting or copyright piracy. The latest list came out in January.
In late April, the USTR released what could be considered a companion piece on intellectual property. Rather than marketplaces, however, the annual Special 301 Report reviews U.S. trading partners to gauge the adequacy and effectiveness of their IP protection and enforcement.
So, what does the 2024 Special 301 Report (PDF download) tell us? Upon review of more than 100 trading partners, the USTR identified 27 countries of enough concern to place them on either the Priority Watch List, meaning they present the most serious concerns related to IP protection, or the Watch List.
Not surprisingly, China is on the Priority Watch List, a placement it also occupied last year.
“In 2023, the pace of reforms in China aimed at addressing intellectual property (IP) protection and enforcement remained slow,” despite some positive developments, the 2024 report stated. However, “Stakeholder concerns remain about long-standing issues including technology transfer, trade secrets, counterfeiting, online piracy, copyright law, and patent and related policies.
Six additional countries also made the Priority Watch List. They are Argentina, Chile, India, Indonesia, Russia and Venezuela.
Among the 20 countries on the Watch List is Mexico, one of the United States’ largest trading partners. While the country has undertaken some legislative action on intellectual property as part of USMCA commitments, implementing regulations have yet to follow, the Special 301 Report states. Moreover, “Mexico also continues to suffer from widespread importation, manufacture, sales, distribution, reexport, and transshipment of counterfeit goods.”
Mexico was on the 2023 Watch List as well as this 2024 report.
The complete 2024 Special 301 Report is here. It is 93 pages long and reviews each of the 27 countries on the watch lists.
You may not be able to stop bad actors in their tracks but reports like the Special 301 Report and the Notorious Markets List arm you with intelligence in the battle against IP infringement.
—Jill Jusko
Smaller Auto Suppliers Get an EV Boost
Small to medium-sized automotive manufacturers that keep U.S. industry humming are seeing federal EV dollars sent specifically in their direction. On May 6, the White House announced $10 million in funding for small- and medium-sized auto parts manufacturers to expand or retool manufacturing facilities.
The grants include:
- $50 million for retooling to help with the transition to election vehicle manufacturing.
- $50 million in grants of up to $300,000 each for manufacturers that have received a free Industrial Assessment Center assessment to improve energy usage, material efficiency, cybersecurity and productivity or reduce greenhouse gas emissions.
- Partnerships with industry experts to develop a Small Supplier EV Transition Playbook to help internal combustion engine suppliers transition their business models to EV and EV-adjacent markets. The Department of Energy playbook will cover adaptation of existing manufacturing capabilities to new products, workforce and technical changes needed to succeed and how to access federal resources. Applications for the partnership are open through May 23.
A full cataloging of these new programs is available on the White House website.
—Laura Putre
IT and OT Continue the Cybersecurity Battle
Which is worse: Cyberattackers blackmailing you with stolen data or holding your plants hostage to stop production dead in its tracks until you forklift over the ransom?
ABI Research and Palo Alto networks in late April released a new state of OT cybersecurity report. I have to wonder if the concept of “OT cybersecurity” confuses people. I still need to refresh my memory sometimes and I cover this stuff regularly.
According to the National Institute of Standards and Technology (NIST), operational technology in a manufacturing-specific context means “industrial control systems (ICS).” That includes supervisory control and data acquisition (SCADA) systems, programmable logic controllers (PLCs) and distributed control systems (DCS). Read: computer systems that supervise and/or control machines on the floor.
Good OT cybersecurity means adding beneath security that protects larger computer networks against system intrusions another layer of protection specifically for OT. Think about it as bad actors forcing open the door to a room and then having two hallways to walk down. Most of them walk down the hallway that leads to your servers. Some of them walk down the hall that leads to your factory floor.
According to the report, “7 out of 10 industrial attacks originate in Informational Technology (IT) environments,” i.e. system intrusions, which to me is what makes OT cybersecurity strange because what’s the difference? Proper IT cybersecurity therefore is OT cybersecurity, right?
If we’re talking about what’s unique to OT cybersecurity concerns, aren’t we talking about direct access to physical assets, like what bad actors can do right there on the shop floor with a misplaced laptop or access to a PLC? The report doesn’t go into that, though.
Common types of attacks against OT—malware and ransomware—are the same as those launched at IT systems. 25% of respondents said they had to shut down industrial operations due to cyberattacks targeting OT.
More interesting to me than any of that is what the report has to say about IT/OT convergence (getting these departments to stop arguing about what to do and start cooperating on doing it). The conflict in a nutshell: IT is in charge of the whole company’s cybersecurity, with no particular focus on OT, and the OT teams focus on industrial operations, not cybersecurity.
Only 40% of respondents said their IT and OT teams share responsibility for OT cybersecurity and 57% say the relationship is frictional or completely siloed. However, 70% of respondents say they intend to consolidate IT and OT cybersecurity from the same vendor—like Palo Alto networks—so maybe that will help things along.
—Dennis Scimeca
A New Additive Ambition
After the Great Additive Manufacturing Merger Drama of 2023 ended with everyone essentially being sent to their rooms to think about what they’d done, it’s been relatively quiet this year in the world of 3D printing. But, as we previewed at the start of the year, development and refinement activity continues apace.
The latest news nugget comes out of Medford, Massachusetts, where a company based on ideas conceived at the Massachusetts Institute of Technology has snagged $19 million in funding to expand its efforts to revamp the product design and testing process using 3D printing.
The consortium backing Inkbit Corp. features several big names, including Stratasys Inc. and Ingersoll Rand Inc. They and a handful of venture capital funds are betting that Inkbit can follow through on its promise of speeding up the development and production of complex products by combining the various steps of additive manufacturing—think material jetting, curing, cooling and more—into a fluid process.
For Ingersoll Rand, part of Inkbit’s appeal lies in quickly making parts that could be used in its vast product lineup. But the longer-term goal is broader in ambition, as evidenced by the addition of Henry Ford III to the company’s board of directors.
"A century ago, my great-great-grandfather developed the moving assembly line—a production method that revolutionized the automotive industry and manufacturing in general,” Ford said in a statement. “I am delighted to join Inkbit and contribute to reinventing the assembly line for the factories of the future.”
—Geert De Lombaerde
