Each year, as I prepare for our annual Evolution of Manufacturing event, I embark on a deep dive into the issues affecting American manufacturers.
There’s little doubt we operate in a global economy, where the same basic economic factors of supply, demand and pricing affect all manufacturers, no matter their location. However, several elements that American manufacturers must deal with distinguish them from their global brethren.
First, American manufacturers are being squeezed at an accelerated pace never seen before. Prices are down. Service standards and customer expectations are up. And the demands of quicker turnaround times are on the rise as well. Further, American manufacturers must increase production levels using fewer employees and less overtime in order to effectively compete.
These new global realities extend beyond the manufacturing realm and are reflected in the slower-than-expected economic recovery — represented by lagging pace of employment growth and only gradual reduction of the national unemployment rate. Simply put, the future American manufacturing work force will look and operate much differently than it did just five years ago.
My deep dive included visits to manufacturing facilities in industries as diverse as snack foods, steel, personal care products and labels. Despite any obvious differences based on products and methodology, several commonalities stood out.
Chiefly among them is the pressure by customers for greater quality at a better price. Big-box retailers, such as Walmart and Target, have accumulated such immense purchasing power that they’re effectively able to dictate their own payment price. This has done little to help American manufacturers get their expenses in line.
Next, American manufacturers must be more agile in all aspects of operations. While forward-thinking activities like forecasting and planning will always remain, there will be more of an emphasis on quickly identifying quality problems, supply shortages and demand shifts. Manufacturers will no longer have the luxury of these being lagging indicators they can analyze after the fact. They must monitor them in near-real time and be able to act accordingly.
Finally, underlying all of this is the grim realization that the hangover from the Great Recession of 2008 will continue to linger far into the future. And that, it seems, means more changes are on the way. Those who understand and are willing and able to adapt will do well. The others will just simply fade away.
If the past few years are any indication, we’re probably in for more of the same: Tighter supply chains, leaner organizations, greater pressure from globalization, more emphasis on innovation and sustainability, and a focus on customer service.
However, competing today, as well as in the future, requires much more. It requires a systematic change in the mindset, which recognizes that the business models that worked yesterday may no longer be relevant and the operational and delivery systems currently in place should be constantly tested and re-evaluated for efficacy.
Customers today are looking wherever they can to find greater value in their business relationships, and anything manufacturers do to meet those goals will mean the difference between success and failure.
Only one thing is certain these days — if you’re not adapting to the changes, your business has probably begun its march toward obsolescence.
The 2012 Evolution of Manufacturing honorees, whose stories you will read below, have demonstrated the ability to navigate their organizations well and better position themselves to compete in a more challenging global economy.
Later this month, we invite you to join us at the 2012 Evolution of Manufacturing Conference at Hyland Software, where you can learn more from these companies as well as participate in a town-hall-style discussion with three dynamic business leaders from Pringles, Visual Marking Systems and L’Oreal USA. They will talk about big-picture ideas that will offer action-oriented advice that you can adapt within your own organization.
Read more about the honorees:
It was not looking good for PolyOne Corp. in March 2009. An equity research analyst, when asked to forecast the odds of PolyOne getting through the recession without having to file for bankruptcy, put the chances at slightly better than 50 percent.
It wasn’t for a lack of trying on PolyOne’s part. The provider of specialized polymer materials, services and solutions had launched a Lean Six Sigma program in late 2008. The goal was to ingrain the program into the company’s culture by addressing business process issues and performance strengths and flaws at every level of the organization.
Chairman, President and CEO Stephen Newlin relied heavily on Senior Vice President of Operations, Tom Kedrowski to identify opportunities for process improvement and to find ways to increase value to customers by benchmarking against the best of the best in manufacturing.
As these opportunities were identified, specific training and benefit targets were set and process improvement activities convened at PolyOne locations around the world.
One of the best examples occurred in the company’s performance products and solutions business unit. Current run quantities were leading to higher labor and changeover costs and the goal was to quantify the gap between optimal and current-run quantities and reduce it through better planning and scheduling.
A standardized tool with clear work instructions and operational definitions was developed through intensive work and the company achieved substantial reductions in operating costs.
Through efforts such as this initiative, when the calendar turned to August 2009, the same analyst who had expressed serious concerns about the future of PolyOne had changed his opinion and issued a buy recommendation for the company.
The company has continued its effort to streamline its operations and identify efficiencies and the result is an organization that is poised to achieve success well into the future.
How to reach: PolyOne Corp., (440) 930-1000 or www.polyone.com
When H.C. Starck was facing the recession three years ago, it improved its manufacturing efficiencies, boosted the quality of its products and made management changes ? all which allowed the company to remain profitable.
In fact, as part of the improvements, the operation of the company’s Fabricated Products Business Unit in Euclid under CEO Dmitry Shashkov has become very efficient and streamlined. It produces specialty metal products used in industries such as aerospace and medical. With continuous improvement as the goal, employees have been working on optimizing production and business processes. They are using a variety of techniques based on the Japanese kaizen philosophy. More than 1,000 measures play a key role in increasing the facility’s competitive ability.
In 2011, H.C. Starck began implementing lean manufacturing procedures across the corporation. Many key employees were trained to become green belts in the Six Sigma program. A number of supervisors and engineers went on to reach the black belt level. Production efficiency, product quality and on-time delivery all improved, and the company became a Tier I supplier to corporations such as Siemens, Sikorsky, ABB and Boeing.
Along with the enhancements achieved through lean manufacturing, H.C. Starck realized benefits from going “green.” Beyond just regulatory compliance, the company introduced environmental systems to assure consistency and the ability to make continuous improvements.
The company recycles 100 percent of its waste metals and oils. But the efforts don’t stop there. A product safety department has been established to make sure that the materials and products do not harm either the environment or those who purchase and use the products.
In addition, company management encourages employees to speak up and contribute improvements within their respective departments. Employees are committed to do their individual part to make the “whole” a better place to live in and work in throughout the world.
How to reach: H.C. Stark, (216) 692-3990 or www.hcstarck.com
The process of die casting aluminum is energy intensive. Thermal energy is required to melt solid aluminum inventory and distribute molten aluminum to casting machines and maintain a supply of molten aluminum at each machine. The current aluminum melt shop at Empire Die Casting Co. Inc., a manufacturer of high pressure zinc and die castings, is not energy-efficient. CEO Richard Rogel knew something had to change to make the process better.
The current system at Empire uses natural gas to help maintain temperature throughout the process. Even under no melt flow conditions, the system requires a constant energy input. The energy requirement is in excess of 32 billion BTU a year and the combined melting, metal distribution and holding systems consume an estimated 51.5 billion BTU a year for every 3 million pounds of aluminum produced.
Empire melts predominantly on-grade aluminum charge using two gas-fired melters. Molten metal is batch transferred from these melters by gravity into metal delivery ladles of roughly 800 pounds capacity. These ladles are heated by direct flame impingement using 400,000 BTU an hour burners. This method is extremely undesirable because of low thermal efficiency, a ladle high temperature decay rate, and high metal loss due to oxidation from direct burner flame contact.
Thermal efficiency improvements have been incremental over many decades. The new technology being implemented by Empire is not incremental, but a quantum shift in process capability and performance. Empire will replace two natural gas fired batch melters, two of the transfer ladles used for metal delivery and five gas fired holding furnaces with the proposed new showcase systems as a package under the Melt Shop Modernization Comparative Showcase project.
The new systems for Empire are all electric, lead the market in efficiency and will position Empire as precedent setting in the industry. The new systems replace inefficient equipment, eliminate in-plant greenhouse gas emissions, improve the work environment, create a technology benchmark for other die casting operations and give insight into the advantages of electric versus gas processes all while saving money, too.
HOW TO REACH: Empire Die Casting Co. Inc., (330) 467-0750 or www.empiredie.com
In 2008, Cobra Plastics Inc., led by President Kent A. Houser moved from a 33,000-square-foot plant in Twinsburg Township to a 100,000-square-foot facility in Macedonia. In 2010, Operations Manager Jerry Bialko joined the team, and since then, the aerosol overcap manufacturer has taken advantage of the extra space to transform its production processes, management system and culture to fully embrace lean manufacturing.
Among the lean manufacturing initiatives Cobra has undertaken are a “Six S” sorting program (the six S’s stand for sort, set in order, shine, standardize, sustain and safety), a continuous improvement employee training and development program, a monthly kaizen manufacturing improvement event, a “Supermarket” inventory replenishment system, visual controls to heighten the company’s focus on accountability and process, and a biweekly health and safety audit.
The monthly kaizen event, based on the Japanese kaizen philosophy of continuous improvement, involves multiple groups crossing functional lines, according to the company. One result of these events has been the creation of what Cobra calls a “crash cart,” based on the concept of the similarly named emergency resuscitation units used in hospitals. Cobra’s crash cart contains virtually everything a mold setter needs to change a mold, including hoses and fitting straps, numbered and coded by color. Mold setters at Cobra no longer need to leave their station because they have everything they need nearby, neatly organized, and easy to monitor and maintain. As a result, the amount of time needed for a mold change has been reduced from as much as six hours to less than two hours, according to the company.
Cobra has undertaken all of these initiatives and the sizable investments they entail during a tough economic downturn. Cobra’s employees take great pride in their achievements, and “What else can I do?” has become a company motto, popping up on signs around the facility.
HOW TO REACH: Cobra Plastics Inc., (330) 425-4260 or www.cobraplastics.com
With the manufacturing industry in flux from the economic downturn, Thogus Products Cos. had to let go 33 percent of its work force. But what seemed like an overwhelming task — finding a way to do the same amount of work with a third less people — challenged the company to evolve and make changes that have transformed the business for the better.
The goal was to find a way to maintain quality production but to do it with what was now a much smaller work force. Under the leadership of Matthew K. Hlavin, president of Thogus, the first step was working with the Manufacturers Association for Plastics Processors (MAPP) to find consultants that could help the company reduce costs in production processes. Partnering with the consultants, Thogus developed new metrics to drive decision-making and focused on value-added rather than non-value-added areas for customers.
Using time studies to monitor operations, which involved setting up videos at each press, the company was able to identify the right people and the right lean manufacturing processes and programs that could reduce waste for the business. For example, instead of having 12 people for 12 machines, evaluation of operations proved that with better training and automation 12 employees could actually run 25 machines.
The culmination of these efforts has been substantial. The result was throughput growing from $43 to $130, up-time percentage increasing from 33 percent to 60 percent, and on-time percentage improving from 83 percent to 98 percent. It’s no surprise that within just two years, the company’s sales have more than doubled from $7 million to $16 million. Today, Thogus continues to work with MAPP and similar organizations to find new ways to improve operational processes and production efficiency. Recently, the leadership team implemented a documentation processes called “Thoganomics” in which members record how they spend their time each day, allowing the company to pinpoint wasteful activities and inefficiencies.
How to reach: Thogus Products Cos., (440) 933-8850 or www.thogus.com
State Industrial Products Corp. had opened what was to be its flagship manufacturing facility in 2009, but as the months passed, it just wasn’t being used like it could be. Under the leadership of CEO Hal Uhrman and Eric Kowalewski, the chemical manufacturing company’s vice president of operations, that was about to change.
The infrastructure was in place to grow and take advantage of all that the facility offered. With that and the vision, determination and guidance of Kowalewski, a new division was formed called State Contract Manufacturing. The goal of this division was to apply the lean principles and platforms that were in place and put them toward new ventures for contract manufacturing.
The effort paid off as a very large contract was secured with a major chemical company to manufacture industrial-grade floor wax. The key to making this happen was State’s ability to achieve efficiencies that would allow chemicals to be processed at greater speeds.
Work and material handling needed to be minimized in order to reach this ambitious goal. A capital investment was made that allowed for the design and construction of a floor wax focus factory where all aspects of this new operation could be centrally located.
A new customized computer system was developed to streamline the mixing process and an effort was made to create efficiency in the packaging and delivery processes, as well.
The new client and resulting volume has changed the manufacturing landscape at State Industrial Products. The floor wax focus factory increased annual manufacturing tonnage from 14 million pounds to 130 million pounds.
It’s just one of the areas where State has made great strides in the way it does business. Company leaders expect more of the same as the focus remains centered on continual improvement.
How to reach: State Industrial Products Corp, (216) 374-6320 or www.stateindustrial.com
Under the leadership of President Tom Kinisky, Saint-Gobain Performance Plastics Corp. first introduced lean to its Ravenna, Ohio, site in 2005. As a designer and manufacturer of RF transparent aircraft radomes and sustainable engineered stone products for use in habitat markets, the company was seeing rapid sales growth as the site’s sales increased as much as 18 percent each year. To manage this fast growth, it realized the importance of increasing efficiency and maximizing the use of the facility.
In 2008, WCM black belt Sue Lamb took over the lean program at Ravenna and held a lean event that combined the problem-solving techniques of Six Sigma with lean waste elimination tools. This event brought to light some sources of inefficiency in the site’s layout as well as numerous opportunities to reduce waste in manufacturing operations. Armed with this knowledge, the company was able to create a Lean Macro Plan for future production that has significantly improved factory efficiency over the last five years.
A key problem was that the production processes in the division weren’t linked together and the site layout didn’t support linear product flow. Since implementing the plan Saint-Gobain has reduced people and product travel distances by as much as 70 percent, improved environmental controls to lower product contamination, eliminated logistics issues by combining operations, and delivered more than $700,000 in annualized savings due to productivity and quality improvements. The resulting shorter lead times and on-time delivery performance have also created a better experience for the company’s customers, which, in turn, has helped the company grow its bottom line and weather the economic downturn.
Since the first lean project in 2005, the lean program has generated more than $2.6 million in benefits to the organization. Recently, the Ravenna site sponsored another four-day lean event to improve workstation cycle times and overall product costs. The event recognized 77 new opportunities for improvements in areas including safety, production output and labor efficiencies.
How to reach: Saint-Gobain Performance Plastics Corp., (330) 296-9948 or www.plastics.saint-gobain.com
It has always been the goal of Majestic Steel USA Inc. and Todd Leebow, managing partner, to position the galvanized steel distributor to continuously drive innovation and streamline operations in the manufacturing sector.
Driving continuous improvements in operational efficiency and quality, adopting new sustainability initiatives and integrating emerging communications and data technology have evolved Majestic Steel’s business operations and raised the bar for innovation in both the steel and manufacturing industries.
Operational efficiency can be seen in the company’s processing lines. In collaboration with equipment manufacturers, Majestic’s service center implemented a customized upgrade of a new stacker/exit system on the cut-to-length (CTL) processing line in 2010. The upgrade significantly improved efficiency, accuracy and consistency of cut-to-length products and has contributed to product quality performance and reduction in claims and product returns.
The company also takes sustainability initiatives seriously and views environmental responsibility as both an ethical obligation and a logical cost-reduction measure that enhances efficiencies. Over the years Majestic has invested in the assimilation of such practices into the business including 100 percent recyclable packaging and low-energy ways to control the temperature of its service center. The cost savings are reinvested in other areas of the business.
Majestic doesn’t stop there. The company also looks to improve communication and technology throughout the business with innovation that is backed by associate-level support and often inspired by them. The company’s IT department’s philosophy focuses on developing centralized, dynamic, and flexible systems that support company growth.
Majestic’s continuous enhancements to processing, quality assurance, energy efficiency and technology converge to improve operational and sales success. While manufacturing is an industry steeped in tradition, Majestic sees a great opportunity to transform the way people communicate, share information, make decisions and run their businesses. Whether it’s developing faster processes, making workflows more efficient, or leading the way in social media, the main purpose is to help the business and its customers operate successfully while evolving the manufacturing sector.
HOW TO REACH: Majestic Steel USA Inc., (800) 321-5590 or www.majesticsteel.com