When demand dropped off a cliff -- only to bounce back dramatically a year later -- a lean overhaul helped the truck-trailer manufacturer diversify and create the flexibility it needed to survive.
As the No. 1 truck-trailer manufacturer in North America, Wabash National Corp. might be the ultimate leading indicator of the health of the economy.
"When the downturn occurs, we lead in," said Brent Yeagy, vice president and general manager of commercial trailer products for Lafayette, Ind.-based Wabash. "And when the GDP and the overall economy picks up, we lead out."
If Wabash indeed is a proxy for the overall economy, then there's good reason to believe that the Great Recession is in this nation's rearview mirror.
"Our business is very strong right now," Yeagy said during an April 23 IndustryWeek Best Plants tour of Wabash's Lafayette operations. "We can't hire enough people."
Wabash, which reported a $56 million year-over-year increase in first-quarter sales, has been the top North American manufacturer of truck trailers for two years straight, according to data from Trailer/Body Builders, a sister publication of IndustryWeek.
The company produced 46,526 trailers in 2011, according to Trailer/Body Builders, up from 24,822 in 2010 -- but a far cry from the industry's boom times of 2006, when Wabash cranked out 59,900 trailers.
As the numbers indicate, the last few years have been a roller-coaster ride for Wabash and other manufacturers of commercial-transportation products.
From 2008 to 2009, Wabash saw its core dry-van business -- which includes trailers, refrigerated vans and platforms -- drop 80%.
"When that thing shut off, it shut off," Yeagy said. "And clank -- nothing. We went from building 3,000 trailers in the month of December 2008 to 300 trailers in January of 2009. We didn't see that coming in our S&OP process when we set the budget in September."
To clarify: The company saw a slowdown coming.
"But we didn't see 300 trailers in January of 2009," Yeagy added.
When demand hit rock bottom, Wabash National cut nearly 800 full-time employees and some 2,200 temporary workers in a period of 60 days, according to Yeagy.
"It was bad," Yeagy said. "It was really bad."
For some companies, an 80% drop in volume might have been a haymaker. And if that wasn't a knockout blow, the 400% increase in volume that came during the next 18 months or so just might have been.
Wabash attributes its survival -- and its recent resurgence -- to a massive lean project that it launched in mid-2008 at its main manufacturing site in Lafayette, with the overarching goals of dramatically boosting flexibility, efficiency and velocity while reducing part variability.
The "Lafayette Transformation," as the company calls it, "allowed us to navigate 2009 on just a pittance of volume and still provide a basis to ramp up in 2010 and 2011," Yeagy asserted.
"When I mean ramp up, I don't just mean, 'Hey, let's add a shift."
When demand rebounded, Yeagy said, the company had to hire 2,500 people -- most of whom start out as temporaries -- in short order.
The centerpiece of the transformation at Wabash National has been the consolidation of the company's assembly lines and warehousing facilities at the Lafayette site.
Wabash National eliminated three of its lower-volume dry-van manufacturing lines, cutting the total number of assembly lines from six to three. By standardizing subassemblies, improving process flows and implementing mixed-model production, the plant has boosted its total velocity "by a factor of 2.5," according to Yeagy.
The consolidation of 10 outlying warehouses into one building on the Lafayette campus also has played a role in the improved velocity, Yeagy noted.
Coinciding with the warehouse consolidation, Wabash National implemented a first-in/first-out picking system and mapped its material-handling flows to determine the most efficient routes. Remapping its fork-truck routes has cut out more than 350 miles per day in fork-truck travel, according to the company.
Ultimately, the warehouse and assembly-line consolidations freed up 200,000 square feet of the 2.1 million square feet of overall manufacturing space at the Lafayette site, enabling Wabash National to accommodate new products such as portable storage containers and frac tanks.
"One of the challenges that we faced during the Great Recession was that our business wasn't as diverse as it needed to be to withstand an 80% drop in demand levels," said Wabash National President and CEO Dick Giromini. " ... We're proud that we made it through, but it reinforced the need to diversify our businesses even further."
Since the recession, the company has separated its manufacturing into two segments: commercial trailer products and diversified products, the latter of which includes its DuraPlate composite panels as well as the aforementioned frac tanks and portable storage containers.
Giromini noted that Wabash National's lean journey dates back to the early-2000s, when the company received the U.S. Senate Productivity Award for "our shop floor's implementation of lean methodologies."
"I like to say that there was such low-hanging fruit when we started our process that you had to bend over to reach it," Giromini said.See Also: