In his book "Execution: The Discipline of Getting Things Done," Larry Bossidy recalls being shocked by the "malaise" he encountered when joining AlliedSignal Inc. as chairman and CEO in 1991.
"The company had lots of hard-working, bright people, but they weren't effective, and they didn't place a premium on getting things done," Bossidy wrote, adding that the manufacturer of aerospace and automotive products and engineered materials "had no productivity culture."
Bossidy came to Allied Signal from General Electric Co., where he had been vice chairman and executive officer -- Jack Welch's second in command -- since 1984. Applying what he learned from Welch and from his 34-year career at GE, Bossidy cleaned house at AlliedSignal, trimming the workforce, shedding poorly performing businesses, restructuring the organization and implementing Six Sigma and lean, among other measures.
The results were dramatic. During Bossidy's tenure at AlliedSignal, the company tripled its operating margins, achieved 31 consecutive quarters of earnings-per-share growth of 13% or more and outperformed the Dow Jones industrial average and the S&P 500.
After shepherding AlliedSignal through the December 1999 merger with Honeywell International Inc., Bossidy served as chairman of Honeywell until his scheduled retirement in April 2000. He returned to Honeywell as chairman and CEO in July 2001 in the wake of GE's failed bid to acquire the company. His second term, which ended when he retired in 2002, focused on stabilizing the company "through the execution of comprehensive Six Sigma- and digitization-based productivity initiatives," according to Honeywell, as well as mending a culture that had suffered from the turmoil of GE's prolonged acquisition attempt.
"When I came back, there were a lot of people with one foot out the door, because they didn't think that they would have a job when the [merger] occurred," Bossidy says. "So I spent a lot of time recruiting people to stay."
Bossidy was named CEO of the Year by Financial World magazine in 1994 and Chief Executive of the Year by CEO Magazine in 1998.
Making the Most of Make-to-Order
The story of Michael Dell is the stuff of corporate legend. He founded the company that became Dell Inc. in 1984 in his college dorm room, with $1,000 and a unique business model -- to sell computers directly to customers. The company leveraged a make-to-order approach, strong customer service and cheap prices to become the world's largest PC maker by 2001 (it ranks third today). The company reported nearly $53 billion in revenue in fiscal year 2010.
Dell stepped down as CEO of the Round Rock, Texas-based company in 2004 but returned in 2007. Although his place in manufacturing history isn't cemented yet, his impact -- particularly on supply chain and inventory management practices -- has been huge.
In IW contributing editor David Blanchard's book "Supply Chain Management Best Practices, Second Edition," Blanchard lauds Dell for pioneering "a make-to-order philosophy within an industry that was traditionally make-to-stock," asserting that "Dell's direct model has become legendary not just in the computer industry but throughout all of manufacturing."
Dell's company consistently appears on AMR Research's Supply Chain Top 25, ranking No. 5 in 2010. The 2010 report noted that Dell Inc., despite facing challenges stemming from shifts in the market, "remains a highly respected supply chain leader."
"Often companies will excel either with great product design or fantastic supplier management or the ability to sense market shifts in demand and plan accordingly," explains Matt Davis, principal research analyst for Gartner Supply Chain Research. "But the companies who make the top 25 are able to take those three skill sets and combine them together so that they are tapped into demand -- listening to what customers want -- driving that back into their product group and then making sure that their supply capabilities are aligned accordingly so that they're executing on all three of those factors. And Dell has absolutely been in that space for a very long time."
Fighting the Good Fight
Don Fites did a lot of good during his 42-year career at Caterpillar Inc. But he'll most likely be remembered as the man who led Caterpillar when it stood up to the United Auto Workers -- and won.
Fites was Caterpillar's chairman and CEO during a bitter six-and-a-half-year labor dispute with the UAW in the 1990s. Fites, who opposed the union's "pattern bargaining" strategy, was pushing for a revised pay structure and other contract provisions that he believed would make Caterpillar more competitive with foreign manufacturers such as Komatsu.
When the UAW pushed back with two lengthy strikes, Fites decided to utilize a temporary replacement workforce to keep Caterpillar's factories running. The bold move convinced the union that strikes couldn't stop production -- and it ultimately led to a negotiated labor agreement in 1998 that Caterpillar believed would enable it to be globally competitive.
"And that was almost a bet-the-company decision," Fites recalls. "But we had to do that if we were going to get a contract that would best position the company and our employees to win in the global marketplace."
The labor pact wasn't Fites' only win at Caterpillar. In the early 1990s, Fites orchestrated a major reorganization of the company, decentralizing Caterpillar into business units, automating and consolidating manufacturing processes, trimming the workforce and flattening the management hierarchy. During his tenure as Caterpillar's chairman and CEO from June 1990 until his retirement in February 1999, Caterpillar's revenue increased 83% and profit increased more than sevenfold.
"He guided our company through some very difficult times," Caterpillar Chairman and CEO Douglas Oberhelman said in November 2008, when Fites was inducted in the Association of Equipment Manufacturers Hall of Fame. "And because of it, we are a much more diverse, global company in a strong position to handle the current economic turmoil we're facing and any other challenge that comes our way."
'Johnny Appleseed of Lean'
Of the 12 companies that George Koenigsaecker placed on lean journeys, all are still traveling that path today. It's the sustainability of the system that he originally brought to Jake Brake back in the 1980s that has been his life's work.
As president of the Jacobs Vehicle Equipment Co. (Jake Brake) and group president of the Tool Group, which was the largest business unit of Danaher, he implemented the Danaher Business System. His next stop on the lean journey took him to HON, where he led its lean conversion from 1992 until 1999. Volume tripled.
His first exposure to lean, however, came while he worked at Deere & Co. in the 1970s and was charged with assisting in a strategic alliance with the Japanese company Yanmar Diesel. He discovered Yanmar Diesel's success was achieved by using Toyota's senseis in an early application of TPS. His furthered his education in Japanese production systems during his tenure at the automotive operations of Rockwell International, where he managed to visit 144 manufacturing facilities in Japan.
His success in bringing lean to the companies he managed, and now invests in, stems from his insistence that lean be viewed as a long-term investment. "Companies must be willing to go through their value streams many times to receive the most value. Until you have gone through your value-stream processes at least five times, you haven't really experienced lean," explains Koenigsaecker, who currently serves as president of Lean Investments LLC.
The ultimate secret to success, he explains, is how companies develop people during their lean journey. "Leaders must learn how to see waste. They must be humble. Above all they must be able to learn, for learning is how you design a culture that is sustainable through multiple generations."
Making Good on His Promise
Harry Moser has spent most of his career promising America's youth that skilled manufacturing careers are the way to go. He is planning to spend the next stage of his life keeping that promise.
Moser began his own manufacturing career at General Electric as an engineer. He worked at Disamatic Inc., Acme-Cleveland Corp. and then was president and general manager at Roto-Finish. In 1985, he joined Charmilles Technologies as president and currently serves its successor, GF AgieCharmilles, as chairman emeritus. GF AgieCharmilles is a supplier of machines, automation solutions and services to the tool and moldmaking industry as well as to manufacturers of precision parts and components.
Throughout his career, he implemented successful management techniques and process improvements. GF AgieCharmilles became the "company to emulate in the machine tool industry," asserts Moser.
He serves as president of the International Special Tooling and Machining Association as well as the Swiss Machine Tool Society.
His ties to the industry began before he was born. "My grandfather and father worked their entire careers at Singer Sewing Machine at the Elizabeth, N.J., factory," Moser recalls. "It was during the time when the U.S. dominated the field. Once the envy of the world, the Singer plant is now long gone and I don't want to see more U.S. manufacturing disappear."
Consequently, he is focusing his formidable energy on trying to convince manufacturers to return to the U.S. His passion has led him to travel the country, work with policymakers and offer manufacturers a total-cost-of-ownership (TCO) formula that helps them calculate the real impact of offshoring on their balance sheet.
"I won't stop until my reshoring initiative brings hundreds of thousands of job back to the U.S. and manufacturing becomes a career choice for the next generation," Moser vows.
Driving Change -- The Lean Way
As executive vice president of manufacturing for Chrysler in North America through much of the 1990s, Dennis Pawley played a key role in the automaker's second renaissance. Pawley was the architect of the Chrysler Operating System, which introduced lean tools into Chrysler's manufacturing operations at a time when the automaker was poised for a comeback.
Incorporating concepts that Pawley learned from his time as vice president for manufacturing at Mazda and from his benchmarking of Toyota, the system helped Chrysler improve quality, productivity and efficiency in its plants and support the launches of several new-vehicle platforms, including the Neon and the LH sedans.
"[Pawley] certainly made huge improvements at Chrysler," says Michelle Krebs, senior analyst for Edmunds.com. "The unfortunate thing with Chrysler is it didn't get to finish what he started."
Before coming to Chrysler in 1989, Pawley's resume included 21 years in various manufacturing management positions at General Motors. As plant manager for GM's Fiero plant in Pontiac, Mich., Pawley was instrumental in negotiating a UAW labor pact that he calls "one of the first modern operating agreements in General Motors."
"[Pawley] was known as being skilled at managing the labor-management relationship," Krebs says.
Pawley retired from Chrysler in January 1999 -- soon after the merger with Daimler-Benz AG -- but he continues to spread the gospel of continuous improvement. In 2001, Pawley co-founded the Lean Learning Center in Novi, Mich., and in 2002, he provided a $1 million endowment to his alma mater, Oakland (Mich.) University, to establish the Pawley Lean Learning Institute.
Pawley, who earned a bachelor of science in human resource development at Oakland, hopes to be remembered as the consummate manufacturing educator.
"Because if you're teaching and you're driving change, I don't know what better value you can add to the human element of a company," Pawley says.
A Larger-than-Life Microchip Legend
Jerry Sanders has a reputation -- perhaps well-deserved -- for flash, flamboyance and being fond of the finer things in life. But his legacy is built on substance just as much as style.
Considered one of the founding fathers of Silicon Valley, Sanders launched Advanced Micro Devices Inc. (AMD) in 1969 and built it into one of the largest microprocessor manufacturers in the world. Although he is one of eight co-founders, Sanders led the Sunnyvale, Calif.-based company from the get-go, retiring as CEO in 2002 and as chairman in 2004.
Sanders' "crowning achievement" at AMD, as he describes it, came in 2003, when the company introduced the Opteron and Athlon 64 processors.
"That really ushered in the current 64-bit era of computing to the mainstream market," Sanders says. "Until then, 64-bit computing was just a niche market -- desirable but too expensive, too difficult. [The AMD64 platform] enabled us to really gain tremendous market share and knock our competitor [Intel] on its heels. I'm pretty proud of that."
Sanders has been rewarded handsomely for his success -- he makes no bones about the fact that he still owns a Ferrari, a Rolls-Royce, a Bentley and an Aston Martin -- but he also was known for rewarding his employees as part of his "people-first" philosophy. AMD was the first Bay Area company to implement profit sharing in the 1970s, and "I made sure that every employee had equity in the company." The Wall Street Transcript named Sanders the best CEO in the semiconductor industry for 1983, 1984 and 1985.
Looking back on his career, the University of Illinois distinguished alumnus says he is most proud of being a "shaping member" of the semiconductor industry. Sanders is a co-founder of the Semiconductor Industry Association -- which gave him its highest honor for leadership, the Robert N. Noyce Award, in 1998 -- and the Semiconductor Research Corp., among other industry groups.
"The microprocessor is arguably one of the most important inventions, if not in the history of the world, then certainly in the 20th century," Sanders says.
A Renaissance Man
Rajan Suri would like to be known as one of the people who led the renaissance of U.S. manufacturing competitiveness. And he has the system to do just that. He is the inventor of QRM -- quick-response manufacturing -- which is an enterprise-wide approach to lead-time reduction.
Suri, an emeritus professor of industrial engineering at the University of Wisconsin-Madison, is the founding director of the Center for Quick Response Manufacturing. The consortium is comprised of 300 companies that have worked with the university on understanding and implementing QRM strategies. His contribution to the field was recognized in 2006 when he received the Albert M. Sargent Award from the Society of Manufacturing Engineers. He also has received awards from the American Automatic Control Council, the Institute of Management Sciences and the IEEE. He received his bachelor's degree from Cambridge University and his M.S. and Ph.D. from Harvard University.
His latest book, "It's About Time: The Competitive Advantage of Quick Response Manufacturing," lays out the principles of the system. Created 15 years ago, QRM is designed to help companies making low-volume and custom-engineered products reduce both external and internal lead times. "The true value of the system is how it impacts the way people view time, which causes them to change how they work," explains Suri.
His journey began while working on the shop floor trying to help improve lead times. The biggest obstacles were management principles that in his opinion were outdated and obsolete. So he brought his experience in engineering and control theory and combined it with management principles and created a new system. "The information was out there, I just connected the dots," explains Suri.
He has consulted with companies including 3M, Alcoa, Ford, Harley-Davidson and many smaller companies. As one company told IW, "QRM will change the face of manufacturing as we know it."
A Renaissance Man
When Rich Teerlink was named president and COO of Harley-Davidson's Motorcycle Division in 1987, Teerlink and a small group of executives partnered with organizational consultant Lee Ozley to build a new Harley -- driven by a fundamental principle.
"People are the only sustainable competitive advantage," Teerlink says. "And a leader's job is to create an operating environment for them to do great things."
Over the next decade, the group engaged in a sometimes-bumpy process of defining Harley's mission, values, philosophies, objectives and strategies. With input from union leaders and Harley employees at all levels of the organization, they created a roadmap for operational excellence that determined how Harley would handle everything from labor-management relations to communication to product development.
Perhaps most importantly, the process shifted Harley from a command-and-control management structure to a culture of collaboration, continuous improvement and shared responsibility.
An accountant by training, Teerlink says he always had an interest in manufacturing, thanks to his father, a Dutch tool-and-die maker who immigrated to the United States to start his own business. "Dad believed in people and that everybody should have an opportunity," Teerlink wrote in the book "More than a Motorcyle: The Leadership Journey at Harley-Davidson."
Teerlink joined Harley as CFO in August 1981 and went on to serve as president, CEO, COO and chairman in the 1980s and 1990s. In 1982, Harley posted an operating loss of $15.5 million on $210 million in revenue, and the company's share of the U.S. market for 651+cc (heavyweight) motorcycles was 15.2%. When he retired as chairman and CEO in 1999, the company posted an operating profit of nearly $416 million on $2.45 billion in revenue, and it commanded nearly 50% of the U.S. 651+cc market. It's safe to say that Teerlink steered Harley-Davidson in the right direction.
Over the past 20 years, Norm Bodek has worked tirelessly to bring the best of Japanese management theory to America. He is credited with discovering and publishing the works of Dr. Shigeo Shingo and Taiichi Ohno, the inventors of the Toyota Production System.
His knowledge has been gleaned from taking more than 70 trips to Japan and visiting 250 plants. Believing that you must see the process in action, Bodek has conducted 50 study missions for inquisitive executives.
He has published 100 Japanese management books on subjects including kaizen blitz, SMED, TPM, QFD, hoshin kanri, poka-yoke and visual factory, which have been indispensible tools in the continuous-improvement movement.
In 1988, he co-founded the Shingo Prize for Operational Excellence with professor Vern Buehler at Utah State University.
At 78, Bodek is president of the Vancouver, Wash.-based publishing, consulting and training firm PCS Press Inc., where he is working to broaden the implementation of lean from the production floor to the entire enterprise. "I see the evolution of lean from the factory floor to human development. My goal is to find the best ways to grow employees in a way that will make us more competitive," explains Bodek. "Every person at work should be empowered and involved in the improvement process through their own creative ideas to make their work easier, more interesting, build their skills and capabilities, while at the same time improving communications throughout the organization, improving customer service, improving quality, improving safety, improving productivity and bringing new excitement and joy into the workplace."
Bodek believes that lean again will come to the rescue of manufacturing in terms of providing a path to innovation. Developing the human side of lean will empower people to take the time to look both within and outside their organizations in an effort to create solutions that translate to new products and markets, he believes.
2010 Hall of Fame Inductees include names you'll recognize, and brief biographies that will inspire you. Take a look at this gallery of inspirational industrial leaders.
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This would be valid if only colleagues could interact. I have seen many workplaces in large organizations where only management can interact. All infomation must flow through managers. To make it worse the work layout does not support interactions. ... If you want the benefits of co-location you have to have the right management structure and the right physical structure!!!
California continues to be a strong manufacturing state.
Manufacturers in California account for 10.6% of the total output in the state, employing 8.3% of the workforce.
Total output from manufacturing as $213.3 billion in 2012.
In the 2013 IW US 500 ranking California was well represented.
Here are the top 10 companies based on revenue.