IW 50 Best: Production Moves Full Speed Ahead At General Dynamics

General Dynamics cuts production costs and time by retooling its manufacturing processes.

When defense contractor General Dynamics Corp. constructed a 308,000-square-foot plant in Savannah, Ga., to produce the Gulfstream G650 business jet, the company designed the building with lean manufacturing and precision assembly in mind.

All the electricity supplies at the plant, including compressors, are located in trenches underground so employees dont have to maneuver themselves or aircraft parts around obstacles such as wires or hoses, says Rob Doolittle, the company's vice president of communications. The trenches are equipped with plumbing and wiring specifically designed for each work station's job function.

President and CEO Jay Johnson cited the plant's production capability as one of the reasons hes bullish on long-term margins for the G650 during a July 28 earnings call. The company expects to make its first G650 deliveries in 2012, which will contribute to steady revenue growth in its aerospace sector, he says.

Revenue for the Falls Church, Va.-based maker of aircraft, naval ships and combat systems was flat in the second quarter at $8.1 billion. Earnings rose 5% to $651 million during the period.

While the company faced challenges in 2009, including the layoff of 1,200 Gulfstream workers and production cuts, North American markets have showed renewed interest in business jets after orders dropped during the financial crisis, said Johnson in the July earnings call. In addition, the aerospace and information system and technology sectors are showing fast near-term growth.

General Dynamics projects sales for its Information and Technology unit will increase 8% to 9% in 2010. Products in the group include communications technologies such as the Warfighter Information Network-Tactical, the Armys new tactical battlefield communications network.

In the aerospace market, the company expects the introduction of the G650 and its services business to contribute to growth. The company established its Aviation Services business in 2001 to provide maintenance for its business-jet owners. In 2008 the company closed its Minneapolis maintenance facility because of declining customer flight hours, but Johnson said he expects the business will grow again as the economy improves.

Johnson referred to the companys focus on "operational excellence" as a driving factor in its record second-quarter operating earnings of $985 million. At the Savannah facility operational excellence is exhibited not only in the facility's design for manufacturing but new structural features in the G650 fuselage that reduce assembly time and the need for extensive parts supply, Doolittle says. The G650s window design is 16% larger but uses 78% fewer parts. The streamlined design reduces manufacturing time by 57%, according to the company. Overall, the aircraft is constructed with 50% fewer parts than its predecessor large-cabin Gulfstream aircraft. The manufacturing process also consumes less energy, according to the company.

General Dynamics has embarked on projects throughout other businesses that have reduced production time, including a major process-improvement program at its Bath Iron Works shipyard in Bath, Maine. In 1998 General Dynamics began efforts to cut costs out of constructing its DDG-51-class destroyer. The most recent development in the improvement project became operational in February 2008.

That's when the company began building a large portion of the DDG-51 from the keel to the weather deck indoors. Building a large naval ship indoors is no small feat, considering the challenges inherent with transporting such a large structure to water.

Previously, Bath Iron Works built about 65% of the ship on land before launching it from an incline to a floating dry dock in the middle of the Kennebec River where it would be completed, says Tom Bowler, Bath Iron Works vice president of programs. In 1998 Bath Iron Works began a project to create a transfer facility where the ship could stay horizontal until it's about 85% complete. On an incline shipbuilders are limited in the amount of weight they can build into the vessel. Building more of the ship on land reduced construction costs by approximately 20% and production time by six weeks because its more challenging to work on a ship in water, Bowler says.

The company then conceived of a way to build the ship indoors by utilizing a self-propelled mobile transporter acquired from a sister shipyard to move large chunks of the vessel from the building to the shipway. A typical crane can move up to 600 tons. With the mobile transporter, Bath Iron Works was now able to move 1,400 tons, referred to as a mega unit, allowing the company to install more of the ship components indoors.

Building indoors improves quality and safety because workers are not exposed to the winter elements of Maine. Once the company realized it could move 1,400 tons, it decided to explore the possibility of building a 3,000-ton ultra unit. Bath used its sister shipyard Electric Boat's expertise in modular shipbuilding for nuclear submarines to make the leap to and from a mega unit.

The shipyard also utilized 3-D CAD modeling and simulation software to determine how big of a unit it could build indoors and still move. The first ultra unit was completed in the spring of 2009, Bowler says. Since Bath Iron Works began building the ships indoors, the shipyard has reduced its injury rate by more than 50%, cut production costs by more than one-third and reduced the ship-to-deliver time by 30%, Bowler says.

"We believe we have fundamentally transformed how complex surface combatants are constructed," Bowler says.


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