Oct 29, 2007

Hello from the Chicago AME conference

This is AME’s big week in Chicago – the AME conference is the best lean conference there is, as far as I’m concerned.

Today I went on a bus trip and tour to TC Industries in Crystal Lake, IL. TCI is a family-owned firm that started out in the business of art pottery and terra cotta building ornament – thus the TC in the company name. During World War II, the company got involved in heat treating steel, with their core knowledge of how to fire pottery at 2000 degrees for hours on end. After the war, the company decided that they were more about thermal processing than pottery, and that the heat treating and metal processing businesses offered a lot more growth than terra cotta.

Besides commercial heat treating of very large flat and round bar materials, TCI makes cutting edges. Not the teeny, tiny tool inserts that machining companies use, but the giant blade edges that earthmoving, mining and construction equipment uses. As a supplier to companies like Caterpillar and John Deere, TCI found its customers were less and less forgiving of long lead times and late orders than they might have been in past decades. Having decided to focus all its marketing and sales on the heavy equipment OEMs, TCI had to respond to customer pull. And since key customers offered to help TCI become the kind of supplier they needed, change began to happen.

The first and hardest thing, as we learned today, was to see that the company was in a crisis and to get people to believe it. After all, we’d all rather think things are OK, or just about to get better, than that we really need to take serious action. But in 2004, some dedicated leaders at the company turned up the heat and started to learn about lean and continuous improvement. (Actually, they had started with Six Sigma and ISO 9000 the year before.)

Today was the first time TCI had hosted a tour like this one, and it was thorough. We started with an orientation and met some of the key lean leaders, including a member of the family that owns the company. The speakers shared what they did – and wished they had done – with absolute candor. In a post as short as this is going to be, I don’t want to single anyone out by name because there were just too many impressive people there.

Remember, they work with big pieces of material, big parts, and big machines, and because of the scale that steel mills operate at, they had no choice but to keep some big inventories of certain materials. They weren’t going to be able to make simple or quick layout changes. Yet they used “shock and awe” and moved six machines in a week in one memorable kaizen.

TCI has done quite a bit of work on 5S (or however many S’s you like to use) and were starting up a pretty robust idea system. Most of the workforce is Spanish-speaking, probably not unusual these days, and TCI has made a consistent practice of using bilingual labeling, standard work instructions, and other communication methods. Interestingly, TCI started working on lean accounting (and accounting for lean) right about when it started the rest of the journey. In my experience, that’s pretty unusual and I think they will see some significant benefits down the road as they don’t get roadblocked by standard cost and trying to explain what happened to P&L as they started looking at inventory as an expense rather than an asset.

I expect to be writing more about TCI in the future, so will make no attempt to tell anything like a full story. It was a great start to the week, and I want to thank TCI for hosting our group. (If you’re here at the conference, there will be another group going to TCI later this week, so check out the opportunity at the registration area.)

Oct 23, 2007

Don't till that field

Traveling from Colorado to Detroit on Route 24 instead of I-80 is a little like going to the gemba. In fact, if you really want to go to a gemba, try tent camping in an Idaho desert state park with the bathrooms closed for the winter or a Kansas campground in the pouring rain. I did a lot of thinking about our whole camping process -- maybe more on that in a future post.

At one stop for gas and restrooms, I found a lean recommendation in the Woodford County News Bulletin's column "RFD News and Views - For Central Illinois Farmers and Rural Dwellers" by Tim Alexander. Bob Frazee of the University of Illinois said that farmers don't need to till soybean fields in the fall after harvesting. In fact, the practice is causing soil erosion in some places.

Frazee said:

Data affirms this by documenting that yields of corn the following season are unaffected by either performing fall tillage or leaving the soybean stubble untouched. Leaving the soybean residue untouched on the soil surface throughout the fall and winter months provides valuable soil protection. Eliminating this fall tillage trip can cut crop production expenses and result in more profit.

He went on to say that this new philosophy adopted by Illinois soybean farmers has resulted in 60 to 75% of soybean fields being left untilled after harvest.

Think about it -- when you see massive equipment dwarfed by immense fields along miles and miles of highway, you can imagine how much fuel is saved by eliminating one pass in the annual process. Then you think about the wear and tear on the farmer's capital equipment. And the someone's time operating the machine along row after row of soybean stubble. (There's some work on running robotic tractors using GPS, but it hasn't reached the market yet.)

Questioning that one practice, conducting the experiments to determine that it amounted to waste -- that it even caused the waste of soil erosion -- can make a world of difference in an industry. Congratulations to Dr. Frazee and the Illinois soybean farmers who found a leaner way to produce a crop.

Oct 18, 2007

Lewis and Clark meet coal fly ash materials

Mandan, ND, was where Lewis and Clark spent their first winter, across the Missouri River from a town of native people. They visited back and forth, traded, and generally had as good a time as possible without cable TV, cellphones and WiFi. There were 45 guys – Sacagawea spent most of on the other side of the river – living in a space about the size of a large workcell.

Now there is a replica of the Fort Mandan with a grizzled historian who looks like Santa Claus in a checked shirt. What I really want to tell you about is the sustainable construction of the visitor center.

In fact, it is billed as “Headwaters Fort Mandan Visitor Center.” Headwaters Resources (NASDAQ:HDWR) says it is “America’s largest manager and marketer of coal combustion products, including fly ash, working with more than 110 power plants nationwide and marketing more than 6 million tons of coal ash annually.” It says it is “committed to sustainable business practices and sustainable products.” That can mean anything, of course, and I’m just looking at their brochure.

The visitor center is a showcase for the use of some of their products, but only incidentally. It does a pretty good job of illuminating the historical context of the fort and the Lewis and Clark expedition. It’s a nice looking building inside and out.

Coal fly ash is the material that goes up the chimney when coal is burned, that has to be captured somehow to keep it out of the air. So what do you do with it then? Headwaters uses it to replace up to 70% of the cement in the building’s concrete, saying it imparts more strength, durability and chemical resistance to the material. (How much of concrete’s volume is made up of the cement?)

The concrete that Headwaters used in Fort Mandan’s visitor center is called FlexCrete aerated concrete. It is one-fifth the weight of ordinary concrete. Air bubbles fill out the volume of the concrete and provide sound and thermal insulation. The brochure says coal fly ash comprises 70% of the volume of FlexCrete. I’m getting confused now about relative volumes of fly ash, other incredients of the cement, and the other ingredients of the concrete, but let’s just say that they’ve got a pretty interesting material that uses up an otherwise wasted combustion byproduct.

The ceiling tiles contain fly ash, as does the artificial stone that covers the exterior walls and the interior fireplace, and the stucco that covers the interior walls. Trails are constructed with a soil cement mixture containing 50% coal fly ash. They even got the carpet manufacturer to use the fly ash in the carpet backing. The concrete floors, sidewalks and parking lot surface are laid on a base layer of coal bottom ash. You might have guessed, but that’s the ash that doesn’t fly up the chimney and has to be shoveled out somehow.

I don’t know how many tons of coal byproducts were used at the visitor center to replace other materials, but ONE TON used conserves the equivalent of an average American’s solid waste landfill content for more than a year. It reduces CO2 emissions equal to two months of driving a car. And it saves enough electricity to power the average American home for 24 days. Considering that Headwaters claims to reuse 6 million tons of the material in a year, that’s better than doing nothing.

If you went deeply enough into the processes used throughout the coal mining, burning, waste disposal and reuse, you’d probably find that Headwaters is only providing a tiny bit of sustainability to the total system, but it’s better than nothing. And it’s a lesson that there are viable businesses to create out of unexpected resources.

Oct 7, 2007

Coeur d'Alene tribal leaders invest in manufacturing

The other day I speculated on ways for Billings MT to expand its economy. Then when the Wilhelm odyssey passed through Coeur D’Alene, ID, I found a story in that city’s local paper about a community that has the right idea.

Last year the Coeur d'Alene Tribe acquired Berg Integrated Systems, a manufacturing company that has earned itself a contract to produce collapsible fuel bladders that can hold up to 210,000 gallons of diesel or aircraft fuel. I never heard of fuel bladders and have no idea what they look like, but apparently they require some pretty high skill levels and technology to make. John Dickson, Berg’s general manager, told the Post Falls Press, "BIS has developed manufacturing technologies for the production of fuel bladders that exist nowhere else in the world." The tribe looks to be able to bring about $400 million to its local membership over the next five years.

Tribal leaders are fully aware that gaming revenues are not real wealth and do not provide the kind of employment that help their members best. Coeur d'Alene Tribe Chairman Chief Allan told the Post Falls Press, “It’s another opportunity for our people to control their own destiny. The Coeur d’Alene Tribe set out with a vision to make a real difference in the lives of our membership and the people of Northern Idaho.” Berg Integrated Systems has about 30 employees, but expects to open about 40 more jobs, paying $15 an hour.

In a February 13, 2007 article, Jack McNeel of “Indian Country Today” reported on the opening of the new Berg plant on the reservation. He said the tribe’s goal was to give workers high-end steel fabrication, welding, blueprint reading and practical application of basic math skills that would last a lifetime. North Idaho College is working with the tribe to train employees.

The main product produced at Berg is a remote-site, integrated expandable shelter platform. It’s a steel structure, 8 feet by 20 feet for easy transportation. The walls expand to 20 feet by 24 feet when positioned on the site. Units from Berg are used as mobile office space by the Oregon National Guard. Offices can include an air conditioning and window package, full lighting, and flooring. ESP systems can be used for medical facilities, water treatment units, executive offices, laboratory facilities, kitchen/dining facilities or security units, all ideal for deployment in emergencies.

Richard Williams, a tribal member employed by BIS, told McNeel, ''It's meant a lot to me, both job- and security-wise.'' Compared to his job at the Coeur d'Alene Casino, Williams said, ''There are more opportunities for promotions here. I started as a laborer and they trained me to weld. I've never welded before except in high school. They recognized my hard work and willingness to stay late, and now are talking about moving me up again. I really like it here because it has room for expansion if you're willing to work.''

The company’s website says it is committed to lean management, and the president and lean manager appear from their published profiles to have just few years of experience. Darren Stuck, the general manager, has some depth of lean experience. He was introduced to lean in 1999, and has studied and practiced it with a passion since then. He co-founded and served as chair of the Inland Northwest Lean Manufacturing Consortium.

I give the leaders of the Coeur d’Alene tribe high marks for believing that high-tech manufacturing can be successful in unexpected places. Community resources like State job development offices and community colleges can be valuable partners in economic development so people can have good jobs without leaving family and friends to hunt for jobs in other places.

Oct 2, 2007

Manufacturers should look at Big Sky country for growth opportunities

Mike and I are on an extended cross-country driving trip, and this is written from the car, driving through Wheatland County, MT. We spent the night in Roundup, in a spacious, newly painted and carpeted room at the America’s Best Value Inn that cost us only $50. Our host assured us that there was working free wireless access. “How can anyone get anything done without it? The router is right across from your window,” she said. She was in touch with customer needs, and value pricing too. At the Busy Bee CafĂ© this morning, I picked up “The Billings Outpost” and caught up on the happenings there.

Billings is the largest city in Montana – or as Chuck Tooley, former Billings mayor, businessman, and the new director of the Urban Institute of the Montana State University Billings, says, the only true urban area in the state. Enrollment growth in the local university is stagnant, but the area vocational-technical colleges have seen 25% growth in the last ten years.

Billings doesn’t have a lot to work with when it comes to increasing employment opportunities. The strategy centers around healthcare, with an eye on the demand for nurses and other health services for aging baby boomers. Retailers like Wal-Mart are among the biggest employers in the town. Except for a mention of two local oil refineries, the awareness of manufacturing seems to be absent. In fact, manufacturing seems to be absent.

Maybe manufacturing presents an unexplored opportunity. What does Billings have to offer? How about a potential source of workers. Agriculture is big in Montana (isn’t everything big in Montana?). People with farming experience are often ideal for manufacturing employment – usually there’s not a farm machine they don’t have an intimate acquaintance with. They have the ability to improve processes with more mechanization. Long work days are also their norm. And family-owned farms don’t pay these days, unless someone has a job outside the farm to bring in some cash. Big agriculture can invest in the biggest most automated equipment, so they can use fewer and fewer people to run things, releasing people for other employment options.

Unemployment is low, but so are wages. That suggests to me that a manufacturing company could offer an improved way of life for people now in low-wage retail and service jobs. Besides that, Montana has gas, oil, and coal. And manufacturing requires power.

Logistics could a problem, however. Rail services are plentiful, built to take cattle and grain to Chicago and points east. I-90 and I-94 join up in Billings, so trucking is convenient. But customers are far away. The high cost of gasoline makes distance a concern when it comes to large heavy items. So you’d have to make high-value small things. Who needs those?

Aerospace OEMs, in boom times right now, need wire harnesses, connectors, fasteners, bathroom door handles and other assorted doodads and doohickeys. Companies like John Deere need parts. And where there’s drilling and digging, there’s a need to make and remanufacture parts in a hurry – just what job shops do.

North Dakota (or was it South Dakota?) started developing aerospace manufacturing a few years ago. Later, when one of the big aircraft companies held a job fair, they were so impressed with the quality of the workforce, they built some new plants locally.

Finding a manufacturing entrepreneur can be unexpected. By chance, I stopped in White Sulphur Springs, looking for warmer clothes, and met Sarah Calhoun at her store, Red Ant Pants – “finally work wear for women.” Sarah designs the pants – the one’s I looked at were olive green canvas -comparable to the tan material Carhartt uses – with red stitching. The workmanship was excellent. She has the pants made in Seattle. We chatted about the apparel industry, and I told her about Kathleen Fasanella’s blog, “Fashion Incubator.” When I said Kathleen’s expertise includes lean manufacturing, Sarah knew what lean was. She’d been to a seminar about it – I thought she said it had been held by the Montana Manufacturers Association, which I can’t find on the web.

She might have said the Montana Manufacturing Center, one of NIST’s Manufacturing Extension Partnership Centers, which seems like one of the more robust MEPs. They have some credible success stories on their website. But the MEPs can’t make manufacturing happen by itself.

As for Billings, I guess I’d suggest that the mayor get in touch with Mayor Graham Richard in Fort Wayne. He understands manufacturing as well as community development. And a tip to any lean manufacturers reading this – Montana offers the chance to bring people into a positive culture without the resistance and suspicion that holds back lean efforts in other places. Besides, it’s a beautiful place full of friendly people. I think you’d find Detroiters and Los Angelenos who’d trade an expensive and crowded place for Big Sky Country.
Copyright @ 2005-2014 by Karen Wilhelm