Nov 14, 2007

Lean manufacturing moves to the cornfields of Illinois

One thing we noticed while driving along the highways of Kansas and Illinois is that there are a lot of new ethanol plants and grain elevators rising among the cornfields. Corn producers are looking at the alternative energy future as an opportunity to get more money selling their crops than they paid to put them in the ground. That prospect is stimulating capital investment on the ground.

Ed Zdrojewski, Grain Journal editor, reported October 30, 2007, that one grain storage manufacturer is gearing up to bring lean manufacturing methods to respond to the rapidly growing market. Scott Clawson joined GSI Group, Assumption, IL, as president and CEO in August. Since then the company has hired a flock of new managers made a number of promotions from within. Many are engineers.

Clawson cut his lean manufacturing teeth at Danaher Corp., an early adopter of the Toyota Production System. Before joining GSI, he was CEO of Iowa-based RYKO Enterprises, a vehicle wash system manufacturer, that was transformed, according to Zdrojewski, “into a growth-oriented, market-focused organization by strengthening its distribution, sales, and marketing team and by implementing lean manufacturing practices.”

There are a number of forces at work making the grain storage and handling business poised for growth, Clawson told a meeting of the AgCafe in Decatur, IL:

* A record production of more than 13 billion bushels of corn is forecasted for the United States in 2007. Growth in corn production increases demand for GSI's grain storage and handling systems.

* As farms consolidate, more are investing in on-farm storage, and buying new equipment.

* Genetically modified crops, while controversial, are nonetheless being grown and produce higher yields. Because they require separation at commercial grain elevators, there’s a need for more storage bins.

* Ethanol production currently consumes about 25% of the U.S. corn crop, and GSI produces equipment for that fast-growing industry.

The company’s annual sales have increased from $272 million to $485 million over the last five years. GSI employs about 3,000 people worldwide and 2,000 in the United States,

While Clawson wants to boost international sales, particularly to Asia and Eastern Europe, and currently ships equipment to Latin America, Eastern Europe, and Asia, he says there are no plans to relocate any manufacturing operations overseas. He said GSI’s product is primarily sold in the Midwest and manufacturing will stay in the Midwest.

GSI is rapidly introducing lean into its operations. Training is underway, in the form of monthly workshops involving eight to 15 employees focusing on specific projects. More than 925 employees, 46% of GSI's U.S. workforce, have participated in workshops so far. Clawson said each workshop has improved productivity in its focus area by about 25%. Rising steel prices are putting pressure on the costs of building GSI’s products, so cutting production costs is doubly important.

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