Ron Kirscht is celebrating the 30th anniversary of Donnelly Custom Manufacturing, a contract manufacturer with a 108,000-square-foot facility in Alexandria, Minn.

These are good times for Donnelly in many ways. The plastic-molding company hit the $32 million mark in annual sales for the first this past September. Donnelly has a skilled workforce, modern equipment, progressive management processes and a cadre of excellent clients.

But there is one thing that is “taking the fun out of the business,” says Kirscht, the company’s president, and that is regulation. “They are definitely adding cost and complexity to the business,” he says.

For example, Kirscht says his firm repeatedly is asked by customers about the possible presence of conflict minerals, regulated under the Dodd-Frank Act, in its products.  While Donnelly doesn’t use much metal, its does have some metal inserts for fastening and rigidity that go into clients’ products.

“Each account requires days of research to fill out the complex templates that we are being given,” he said, estimating that one month of people time is going into compliance with this law. And Kirscht notes that compliance currently is focused on materials coming from the Republic of the Congo. What if it is expanded to other countries? “There is no limit to where this could go in terms of compliance,” he says.

Kirscht and his team are no strangers to complexity when it comes to the production floor. Donnelly operates 34 machines for the injection molding of thermoplastic resins. The 24/7 operation has 230 employees working on five shifts. The company specializes in short-run jobs and offers customers a variety of value-added services, from designing and decorating parts to parts joining and machining. Industrial customers are OEMs who manufacture hydraulic components, electronics, agricultural machinery and a host of other products.

“Our customers are typically leaders in their chosen industries but they don’t necessarily sell hundreds of thousands or millions of units a year,” Kirscht explains. Donnelly decided to focus on industrial customers with short-run needs because they offer more stable product lifecycles of 5 to 25 years. While most of the company’s customers are located in North America, Donnelly does export about 10% of its production, to countries such as Mexico, Brazil, China and India. That fills the needs of global companies where volumes don’t justify local sourcing of certain parts.

Why pick Donnelly as a supplier? Kirscht offers the example of manufacturing an industrial paint sprayer which might have 25 different parts that come out of 20 to 25 different injection molds.

“You don’t want to multi-source that because of stack tolerance and cosmetic issues,” he said. “You need a partner who has the capability to design and manage the build of a lot of molds.” Donnelly has supervised the build of over 5,000 molds in its history, Kirscht notes.

Currently, Donnelly produces 2,000 parts for 50 customers. Parts are made from more than 500 different resins. Producing all these different parts requires a sophisticated production system and expertise in managing large tooling programs. In the past fiscal year, for example, Donnelly did over 14,000 mold changeovers, the riskiest part of the business.

“The greatest risks to tool damage and quality is at the end of a run and the beginning of the next run,” Kirscht observes. “Everything has to be lined up with an almost symphonic consonance – right material, right mold, right process on the machine.“ In just one week, he adds, Donnelly may do 300 mold changes, more “than almost any other company on the face of the planet.”

Kirscht said Donnelly has to add about 100 new injection molds in order to grow $1 million in business. The company has a proprietary process to help ensure that the new tooling projects go smoothly. “We use project engineers that are sourced at the customer. We have a manufacturing launch team that is located in the plant to help translate those needs and requirements of the customer as we launch the tool into production.”

To “achieve perfection in a somewhat chaotic environment,” as Kirscht describes it,  Donnelly utilizes daily review and planning meetings in a “manufacturing war room.” A cross-functional team made up of service, quality, production, maintenance, purchasing and other functions examines daily performance measures such as quality and utilization, reviews plant activities during the past 24 hours, identifies what went wrong and assigns a person the responsibility for resolving the issue on a permanent basis. Another 15-minute meeting looks forward to the next 24 hours and tries to identify risk points that could make jobs late.

Since starting the review process in April 1997, the company has assigned and closed over 5,000 corrective actions. The goal is to permanently solve them within 48 hours, and they are reviewed daily. Longer-term issues are also assigned to a person and reviewed weekly.

Kirscht says this process of continuous review and improvement is vital in Donnelly’s operation. “If you don’t have a process for managing the complexity of short run, you burn your people out” he states. “People want task interference and motivational inhibitors removed.“

To help ensure employees can work in this demanding environment, Donnelly implemented an internal training program in 1991. Kirscht says workers entering the company often lack manufacturing skills. “We have internal training programs to move them from beginning operator to advanced operator to certified molding operator so that they can do a wide array of value-added activities including mold changeovers, mold startups and processing when you have issues with the material or the parts,” he explains.