Manufacturing Readiness Grants making big impact on South Bend-Elkhart region
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From Smoker Craft’s robotic tube welding system to Indiana Carton’s robotic palletizing cells to Masterbilt’s flexible workpiece handling system with robotics, manufacturers in the South Bend-Elkhart region are taking full advantage of the state’s Manufacturing Readiness Grants.
Out of the state’s 92 counties, the three counties that make up the South Bend-Elkhart region are in the top ten for receiving the most MRG awards. Elkhart County takes the number one spot, with St. Joseph and Marshall counties taking up the third and 10th positions, respectively.
Launched in 2020 by the Indiana Economic Development Corp. and administered by Conexus Indiana, the MRG program helps local manufacturers make capital investments in smart manufacturing by leveraging advanced technologies and the Industrial Internet of Things revolution.
“Your region is very successful at this program, and there are a couple reasons for that. One, they are very manufacturing intensive. Fifty percent of your GDP in the region is manufacturing. So a program like this has a lot of applications in that region,” Conexus Vice President for Innovation and Digital Transformation Mitch Landess said. “Two, you have a really active community up there, and it’s centered around that LIFT Network, and specifically University of Notre Dame.”
Landess speaks about the region’s success with the MRG program.
The grant comes in the form of a reimbursement. Businesses have to execute their intended projects to the full amount and then submit receipts to claim the grant that usually pays for about 50% of the project cost. So while some projects awarded this year have been executed, most are still in progress.
Highlighting regional collaboration, Landess encouraged other regions to actively work on seeking out businesses that could take a technology leap and possibly help with applications.
“You’re very collaborative; that’s been very successful in St. Joseph, Elkhart, and Marshall counties,” Landess said. “I tell other regions, they ought to be working with their manufacturers. Don’t just count on them to know about this grant. Don’t just count on Conexus to let them know about it; make sure it’s very visible, enter dialog with them. Offer advice and suggest the types of projects they ought to apply for.”
And while job creation was never a specific focus when the state launched the program, Landess said manufacturers who have received MRG awards have added more jobs since 2020.
“There’s this narrative in the media about technology adoption leading to job cuts. What we have found is that the companies that invest in themselves through technology adoption, they become more productive, and they become more successful,” Landess said. “So even though the technology might eliminate some manual tasks, it frees up employees to do more interesting, challenging things that often gets them promoted. Now their volume has increased, and they actually need to hire more people.”
Much of the equipment that these companies are opting for have been around for decades, but new technology package add-ons really optimize the functionality of the existing machines. In the last four years, local manufacturers have invested in CNC lathes and mills featuring digital twin functions, cobots, pallet stackers, machine vision capabilities, and many more productivity-enhancing technologies.
“They’re upgrading their equipment to the next generation stuff, and they’re choosing the technology packages that they might not have otherwise chosen because they didn’t know if they would have the skills or the ability to do that,” he added. “Cobots are still very popular; anything that mechanically moves equipment around is still very popular.”
Anticipating the move towards more smart manufacturing technologies, the IEDC launched the MRG program to give small and medium manufacturers in the state a fighting chance. Thousands of manufacturers within the state fall under the 500-employee mark, making this program critical for technology adoption within their processes.
“When we review the applications, we try to assess whether they are taking a big enough innovation leap given their size and their level of maturity,” Landess said. “We want them to take a bigger swing than they would otherwise take given their level of sophistication and their resources.”
With the incoming administration, the IEDC, Conexus, regional partners, and thousands of Hoosier businesses are waiting to see if Governor-elect Mike Braun would hold the MRG program in the same regard as his predecessor, Gov. Eric Holcomb, did.
“$20 million a year in the state budget is a nice number, but I think there’s more demand out there. That’s why highlighting the impact is so important,” Landess said. “Because there’s not a lot of programs in Indiana or elsewhere in the economic development environment, specifically aimed at small to medium manufacturers. Indiana is way ahead of the curve, compared to the other states.”
Along with technology adoption, Conexus has partnered with different higher education institutions in the state to offer courses that help manufacturers that are awarded the grant upskill their workforce. Landess said education helps these companies reap the full benefits of the technology they have adopted.
“We want to make sure that these companies are investing in digital skills for their people as much as they’re investing in technology. And frankly, we’re seeing a bit of a lag there,” Landess said. “The companies are used to making capital investment in equipment, but we want to see them be more aggressive in investing in the skills of their people.”
Manufacturing is the largest sector in Indiana, making up about a third of the state’s GDP, and accounting for at least one in five jobs. Those numbers are even higher in the South Bend-Elkhart region, especially with Elkhart being the RV capital of the world.
Since inception, the region has received almost $14 million in MRG awards—about a quarter of all awards made so far—powering almost $100 million in manufacturing innovation across 130 projects. That translates into $7 of private investment for every dollar of state funding, Conexus said.
“This is not a grant where we say, “Here’s free money, go do something great with it.” They have to invest their dollars first. They have to tell us about a project they want to do, and that they’re willing to invest in,” Landess said. “And if they’re going to invest like that, the state will be there to support them.”
The program has awarded over $65 million in matching grants for more than 600 awards in 79 counties. That means statewide, manufacturers have invested an additional $13 of private funding for every MRG dollar received.
iNDustry Labs
As one of the region’s Labs for Industry Futures and Transformation (LIFT) initiatives, iNDustry Labs has played an active role in ensuring the area’s success with applying for and receiving the Manufacturing Readiness Grants.
Billed as the University of Notre Dame’s platform for collaboration with local industry, iNDustry Labs is hyper-focused on increasing the resiliency, productivity, and skill of the workforce within the three-county area.
“Elkhart has the highest concentration of manufacturing in the country,” iNDustry Labs Director of Industry Advancement Michael Shoemaker said. “So it’s only natural that we’d be hyper focused on manufacturing.”
After hearing a radio jingle announcing the program in 2020, Shoemaker said he reckoned this was the opportunity manufacturers in the region needed to make the technological leap they desperately needed.
“The partners we had, we already knew what their pain points were, and in previous projects, we had already identified opportunities, and this was just a way for us to extend our services,” Shoemaker said. “Our first grant was back in 2020, we submitted six applications. Our goal was really to help regional manufacturers, and our region get a competitive advantage.”
Since then, iNDustry Labs has helped regional manufacturers submit 34 MRG applications for projects worth over $11 million. The organization works with over 70 businesses and has partnered with them on more than 170 projects as part of its regular programming.
“We’re boots on the ground in their plant, understanding some of their toughest problems and trying to address that with resources that we have access to, or point them in that direction,” Shoemaker added. “Maybe some of those would have already happened, maybe they wouldn’t, but I know there’s quite a few of those projects that if it was not for these grants, they would not have existed.”
Being tied to Notre Dame, Shoemaker said his organization has “untapped potential for regional businesses.” Focused on industry advancement services around automation, and digitalization, he said his team is working to help companies better utilize the data to make better business decisions.
Shoemaker and his team also saw an opportunity to help manufacturers, many of whom had never applied for a grant before, navigate the MRG application process.
“Conexus has done a great job making it really approachable, but it’s just a different language, and it was intimidating to some folks,” Shoemaker said. “There was a huge opportunity for iNDustry Labs to jump in. We already understood the companies, we understood the pain points, and we were already recommending solutions. So we help them put the best version of themselves down on paper.”
Helping regional manufacturers deploy “flexible automation” is one of the strategies iNDustry Labs is focused on as they continue to assist companies with their applications. Responding to the region’s MRG success, Shoemaker and his team launched the South Bend Elkhart Manufacturing Accelerator, where companies can come to demo technology before deciding on whether to adopt it.
“When I talk about flexible automation, I’m talking specifically about having a piece of automation that can do most tasks within the same cell,” Shoemaker said. “There’s a huge need and desire to continue the Manufacturing Readiness Grants, and we would love to see that continue.”
Masterbilt
Rob Michalak, CEO of Masterbilt Inc., first heard about the MRG in conversation with folks at Conexus, and then it came up again at iNDustry Labs. The company had never applied for a grant before then and was glad for the support from Shoemaker and his team.
“We’ve applied for different kinds of tax benefits, but never grant funding. It’s not something we’re generally out looking for,” Michalak said. “The Innovation Lab held our hand along that process.”
Incorporated in 1961, South Bend-based Masterbilt is an aerospace, and medical implants, and device machining business. With decades of experience operating machines, the company just bought its first robot to automate its processes.
“We bought a new machine, then we bought the robot, and then the package to update the machine to be able to interact with the robot. In the end, we maxed out the one-for-one grant opportunity through automation,” Michalak said. “Just the automation portion was $200,000. The machine was an additional cost that we covered.”
Before their MRG award, Michalak said the company had looked at several quotes to adopt the tech that the company eventually deployed, but sticker shock always kept them from taking the plunge.
“We had looked at machine automation, but when it came down to it, the incremental cost was difficult. That was the benefit of the grant, it dramatically lowered the cost to us for the automation,” Michalak continued. “This is the first and only robot right now, but we are very interested in additional automation because of the benefits we’ve realized with this one.”
With the grant, Michalak said Masterbilt was able to test out the automation waters, and that the company was now confident enough to get a return on investment, sooner than they did with the first robot.
“Masterbilt has a big opportunity to benefit with the support of a grant like this. I think the biggest challenge for a business like ours is the awareness and the help in navigating the application process,” Michalak said. “I’m hopeful that this is just the first step of our automation journey as a small manufacturer.”
Like Landess hopes, Masterbilt trained a few existing machinists to operate the automation system, providing the employees with not only learning opportunities, but also earning opportunities. Overall, the productivity has been more than he expected.
“We’ve increased the amount of hours of run time for that machine by about 43%. One thing we didn’t anticipate was being able to improve the process of machining that part to operate unattended,” Michalak said. “That’s been a big benefit that we hadn’t considered. There’s a complete mentality switch as far as developing more robust processes so that it can operate unattended.”
Importin’ Joe’s
A 2023 MRG recipient, Importin’ Joe’s Ethiopian Coffee, manufacturers of Ethiopian-sourced coffee, applied for the grants to invest in automated production equipment, including roasters and weigh and fill systems, to scale production capacity while maintaining product quality.
“We had the opportunity to continue to grow, we had a lot of momentum, and we needed the assistance. There isn’t always a huge pool of economic opportunity available for individuals in the manufacturing space,” Importin’ Joe’s Founder Jo Luten said. “With us being a minority, and pursuing our own manufacturing, we knew that it would be critical for us to apply.”
Unlike many other manufacturers in the region, Luten said he had prior experience applying for and receiving grants from organizations like Facebook, the Indiana Black Expo, and the City of South Bend.
While Importin’ Joe’s received $28,000 in MRG funds, they could only access about $21,000 because of the matching grant requirement. Luten credits the grant for the company’s expansion into 35 Meijer, and 16 Fresh Thyme grocery stores.
“We needed the equipment to finish out our renovations, so it was about a good $20,000. We still have some money left over in the grant, but I don’t have $7,000 to spend right now to access the money in the grant,” Luten said. “Those pieces of equipment allowed us to go into all of the grocery stores that we’re in now throughout the entire state. Being able to manufacture smarter, more efficiently and in an expedited manner has literally changed the ball game for us.”
Pre-grant, Luten and his wife did all the work, now they have added three jobs. Luten said the company needs the rest of the grant money, but that he couldn’t afford to spend the $14,000 upfront that it would take to access the money.
“That’s the challenge with matching grants,” Luten said. “With coffee prices at a 20-year high, it’s just really, really hard with cash flow for smaller businesses. Especially with consumers being a little more intentional with their purchasing, and so it’s been a challenge.”
Without the equipment upgrade, Luten said he would still be doing a lot of the coffee-making process manually, tying up time that could be better spent securing new contracts.
“We would have probably had to continue to nickel and dime our way to get to where we are, and we would ultimately have missed out on the supermarket opportunity,” Luten said. “Not only did it give us credibility, it gave us flexibility, it gave us opportunity, it gave us foresight into the future.”
With continued high demand for the program across the state, Conexus has stopped accepting applications for the 2024-2025 budget year, as the organization estimates that they have received enough applications to max out the rest of their budget.
Applications received since July 2024, are being considered in order of receipt. If funds are left over after reviewing all current applications, Conexus will reopen the application portal.