Schindler, the leading U.S. manufacturer of escalators, uses a continuous-flow production process. By George Taninecz At A Glance
- U.S. market share up 24 points since 1991.
- WIP inventory reduced 46% since 1991.
- 100% on-time delivery since 1994.
- Productivity growth of 80% in last five years.
- Manufacturing cost reductions per unit of 36.3% in last five years.
- 80% cycle-time reductions in last five years.
- Sales increases of 250% since 1991.
- Plant output 63% above designed capacity in 1995.
- Absenteeism less than 1%.
- Order-to-shipment leadtimes reduced by 37.5% since 1991.
- 100% customer-retention rate for last five years.
In 1990 when Schindler Eleveator Corp. ramped up production in the middle of a cornfield in Clinton, N.C., the local county had already attained national notoriety as a leading producer of hogs. In less than six years Schindler has also put Sampson County on the map as a leading producer of escalators and now as a winner of an America's Best Plants award. Other than production location, there are very few similarities between escalators and hogs. For plant manager Richard Osborne that posed some unique challenges when in 1989 he spearheaded the siting and construction for the first Schindler facility outside of Europe for parent company Schindler Holding Ltd., Hergiswil NW, Switzerland. Logistically Clinton provided the ports and interstates necessary for the new facility. Welders and machinists, though, were not growing amid the tobacco fields and local slaughterhouses. Yet Osborne and Schindler executives recognized a local work ethic that, despite an agricultural emphasis, could be nurtured into the high-performance manufacturing workforce that exists today. "Not only does our company recognize that our stakeholders have been our employees and our customers, but also our community and our suppliers," says Edward Sherron Jr., manufacturing manager. "In turn, it's important for the community to understand that they have a role in helping us be successful for growth of employment and the tax base. I think that joint partnership of understanding who the various stakeholders are and their importance to each other is very important. We might not have been successful if we had gone into a community that didn't recognize that." In the fall of 1989 Osborne arranged for contractors and selected equipment for the rising facility, and Jim Carrier, manager of human-resources strategic processes, coordinated hiring efforts and employee-education programs that have since enabled the plant to hire more than 95% of its workforce from the local community. In September 1990, less than a year after starting construction, the 100,000-sq-ft plant pushed 22 escalators out its doors, two months ahead of schedule and at a profit, establishing a pattern of high performance in Schindler's new facility. "Our first unit had to be at the highest level of quality possible," says Osborne. "That standard was set for us by our sister plant in Vienna. They emphasized that everything must be at a 100%-plus accuracy with the very first unit. So setting that standard has given us the right attitude to continue and be able to show [Vienna] that now we're setting the standard." In 1994, 1995, and through August of 1996, on-time shipments from Clinton were 100%. "The significance of maintaining that 100% on-time is that it still continues to be achieved after great reductions in manufacturing cycle time [shortened by 80% in the last five years] and great reductions in total cycle time -- from the time our customer signs an order to the time the product is delivered," says Osborne. "In this type of business, as a supplier to the construction business, that was unheard of." Order fulfillment is to the date requested by customers -- building contractors, architects, and building owners in 15 countries stretching from Chile to Canada. "If we don't have the product on time when the customer needs it, it not only impacts that contractor but other contractors and possibly the ultimate building owner in terms of opening their facility on time," says Sherron. "So it's absolutely critical, and it's a high customer-satisfaction criterion for making sure that happens. Our employees understand that." Schindler's perfect delivery performance was achieved essentially without any staffing increases. Last year the plant topped its designed capacity by more than 60%, and units produced per employee have more than doubled. Later this year the plant will begin a 30,000-sq-ft expansion that is projected to boost capacity by 35% over 1995's output. "We were the first Schindler plant that the company put up in the United States, and now here we are, six years later, expanding this facility," says Osborne. "In our group you don't do that unless you're doing some things that are right. We're very proud of that. . . . This is going to be very good for us and the community." The plant uses a continuous-flow process within and across cells to move an escalator through production: Raw material arrives at saw operations, is cut, and then welded into escalator trusses. The trusses are then painted and sent to assembly for subassembly, steps, and a drive motor, and final assembly for balustrade material, wrapping, and shipping. Machine-shop, fabrication, electrical, and balustrade cells supply product to the weld and assembly departments. Probably 60% of the plant's processes require welding, although you wouldn't know it by the cleanliness of the operations. The plant credits an emphasis on welding training with improving quality: scrap/rework costs have been reduced by 33% since 1993, and the plant now boasts a 98% first-time yield rate. Warranty costs as a percentage of sales have fallen 84% in the last five years. Two shifts produce two escalator models in three widths -- 24-, 32-, and 48-in. -- but each escalator is built to customer requirements, such as surface finish or escalator length. The plant is preparing to add a third, high-end product model. Given the pace of productivity in Clinton, it may seem ironic to see some workstations quiet and vacant. Workforce flexibility is a key component of the plant's success, and associates hold and are rewarded for a variety of skills that they perform as needed within empowered work teams. Machine utilization is not part of the plant's mind-set -- workforce utilization is. "The associates are doing the little things," says Sherron. "I've always been a believer that improvement is not a great big idea that someone comes up with, but true improvement is all the small ideas, the day-to-day operations that the people closest to the operation do that really make the big improvement." Teams handle scheduling, housekeeping, safety, quality, prehire screening, equipment purchases, and plant layout. Since the plant's startup the employee-to-supervisor ratio has risen from 12:1 to 30:1. All team members are eligible for a plantwide pay-for-teamperformance plan, which allots equal dollar amounts to associates (except the plant manager) based on quality, housekeeping, productivity, and safety measurements. In addition, associates participate in a multilevel, multitier pay-progression system. One tier awards salary increases based solely on an associate's inventory of on-the-job skills, such as welding-certification criteria, the electrical team's efficiency at blueprint reading, the material group's ability to coordinate shipments, or an operator's demonstration of problem-solving techniques. A pay-for-knowledge tier supplements the skills tier for associates who pursue and receive classroom credits. Although the workforce has been significantly empowered in its six years in Clinton, Osborne believes the production workforce is just beginning to assert itself. He wants the empowerment efforts to mature to the point where even his position isn't needed, moving leadership responsibilities that have been the domain of management entirely to the associates. New empowerment initiatives -- being taught first to management and team leaders -- will supplement associates' technical and process-teaming skills with managerial skills, enabling them to deal with issues of communication, discipline, and compensation, and bring a commonality of team structure and interaction into Schindler. "That's going to be the next big kick," says Osborne. "We've squeezed a lot out of these processes as far as taking out time that's not necessary. We've squeezed them for cycle time. We've done a lot there. Now what we need to do is provide the employees with another tool. Get it out of the managers' hands, get it out of the engineers' hands, get that tool into the production associates' hands where they're doing these things. I want them to be the risk takers of tomorrow."
Creating A Workforce
Schindler Elevator Corp. reached down to the cultural roots of an agricultural community and pulled out a world-class manufacturing workforce. All that was needed was the appropriate mix of training and hiring programs to bring technical and team talents to the surface. "The original analysis when looking at site location said that it wasn't so much unemployment in this area as it was underemployment," says Jim Carrier, manager of human-resources strategic processes. "The work ethic here is phenomenal. People's attitude toward learning is phenomenal." Clinton employees receive 10 or more days of training per year. The first dose of Schindler education comes as a prospective employee in the 60-hour prehire program. After spending time with associates on the plant floor -- who screen for viability -- job candidates enter training that exposes them to safety, team-building, quality, policies and procedures, shop math, and blueprint reading. "The intent of the training is not so much to make them experts -- additional training takes place once they get hired -- but more from a standpoint of continuing the screening process, seeing that they can demonstrate the ability to learn," says Edward Sherron Jr., manufacturing manager. After candidates are hired, continuous workplace-training programs, taught by management, supply additional technical and team-building skills. Schindler also provides the means to help employees acquire offsite university degrees and certifications, and in 1994 it implemented its own apprenticeship program. "We needed to do something to elevate the expertise in the workplace," says Richard Osborne, plant manager. "Hiring additional engineers was not the answer. It was just going to add too much cost, and it was going to take away the opportunity for growth within the associate ranks. So we came up with this idea of an apprenticeship program, much like they had back in the '40s and the '50s in the United States." The plant's apprenticeship program is accredited and partially funded though the state of North Carolina. Sampson Community College administers parts of the program and helps to locate the appropriate training venues in the state or country to meet the remainder of Schindler's needs. Employees test into the apprenticeship program, in which they acquire skills such as CNC programming, tool-and-die making, and welding robotics. About a dozen employees are now in the program as three-and four-year apprentices. In addition to knowledge gained, apprentices share the information with associates on the job, acting as facilitators and trainers, as well as motivators. Other associates "see the type of training the apprentices are receiving, they see how the apprentices are applying that and the challenges the apprentices are being afforded," says Osborne. "A lot of people out there aspire to these types of challenges." The youngest of Schindler's training programs is also the one that looks the farthest into the future. In 1995 the plant began a high-school apprenticeship partnership starting with nearby Hobbton High School. Schindler donated $14,000 worth of welding equipment, rewired its shop, and loans managers and associates to instruct students (as well as teachers) in how to operate the equipment in an environment that parallels activities at the plant. Students spend time in the shop, co-op at the plant, and work during summer vacations at Schindler. The first two apprenticeship students graduated this spring and are employed at Schindler as certified welders. "Everyone we bring through that process we certainly know will be of the highest quality, and I believe they'll have an interest in Schindler because of the opportunity we've provided them," says Osborne. "You now have their interest and to some degree their dedication. Even if we lose them to some other organization in the community, or outside the community, they're going to take those skills with them and help train others in the community who may some day come to Schindler for a job. That investment is good while it stays here and even if it moves from within our four walls."