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Aging Assets: Rebuilding U.S. Manufacturing

Manufacturers coping with aging plants and sagging performance have to decide whether to repair or relocate.

By John S. McClenahen

Nov. 1, 2006

With some financial help from the local economic development folks, on Sept. 8, Brunton, a Riverton, Wyo.-based outdoor equipment manufacturer, began moving into a new facility in the city of 10,000. But the company might not have. Dissatisfied with the aging digs it had occupied since 1972, Brunton, one of the most recognizable business names in the country's least-populous state, considered moving out of Wyoming altogether.

The situation isn't unique and indeed could intensify dramatically, given the graying of America's factories.

Nearly three-quarters of U.S. plants surveyed this year by IndustryWeek and the Manufacturing Performance Institute (MPI) are more than 20 years old. Just 3.4% are less than five years old. Among plants with 250 to 499 full-time employees, the data are even starker. None of the plants is less than five years old, and 76.4% are more than 20 years old, according to the 2006 IW/MPI Census of Manufacturers.

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Where Age Isn't An Issue

How Old Are America's Plants?
Other than shut down such plants completely and get out of the business, operating managers at aging facilities are left with this stark choice: repair or relocate.

Repair, on a massive scale, was Ford Motor Co.'s approach at its River Rouge manufacturing complex, which founder Henry Ford built in Dearborn, Mich., between 1917 and 1925. The $2 billion Rouge renovation project, begun in November 2000, was designed to include a "factory of the future" with assembly lines that could handle three different vehicle platforms and nine different models. The facility also went "green," with, among other things, an ecologically friendly roof of about 500,000 square feet that affects the surrounding watershed by holding several inches of rainfall.

ABB Inc. relocated high-voltage circuit breaker production to this greenfield plant in Mt. Pleasant, Pa.
Relocation was the choice that ABB Inc. made five years ago for its Greensburg, Pa., high-voltage circuit breaker factory. The plant had a good quality record, but customer concerns about the cleanliness of the manufacturing process persisted, a not-insignificant matter since reliability once the circuit breakers are installed in power distribution networks is critical. The building, built in 1914, was never intended to support a circuit breaker manufacturing operation, and the layout limited production efficiency.

The decision to disconnect from the facility and decamp to a new factory came in 2001, as a surge of orders from customers, mostly utilities, dramatically increased cycle times by 50% to 100%, relates Aftab Khan, vice president and general manager of the new facility. Lead times of 12 to 24 weeks went to as many as 30 weeks to about one year, depending upon the product, he says.

The new facility, which cost more than $10 million, is in Mt. Pleasant, 10 miles from Greensburg, and it's filled with improvements aimed at reducing cycle times and increasing quality. For example, a computer-controlled gas handling system significantly reduces the risk of moisture or other contaminants getting into the sealed environment of a breaker assembly.

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