Just In Time -- A Breath of Hot Air

Memo to President Obama: If lean works for manufacturing, it ought to work for government, too.

It never fails. Any time a politician schedules a speech to talk about how alternative energy can help us combat global warming, it ends up being the coldest day of the year. And so it was that on the last business day before his inauguration, Barack Obama braved the minus-12 degree temperatures of northeast Ohio to talk about new sources of clean energy in a manufacturing plant that relied on old-fashioned heat to keep the listeners from freezing.

Obama delivered his energy speech at Cardinal Fastener & Specialty, as archetypal a "nuts and bolts" manufacturer as you're likely to find because Cardinal does indeed make bolts -- specifically, the type of fasteners that are used in the construction of wind turbines. In explaining why he was visiting a $10 million industrial plant in suburban Cleveland, Obama described Cardinal as an example of how traditional U.S. manufacturers are reinventing themselves by focusing on alternative energy.

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"The story of this company," he observed, "which began building wind turbine parts just two years ago and is now poised to make half its earnings that way, is that a renewable energy economy isn't some pie-in-the-sky, far-off future. It's happening all across America right now. It's providing alternatives to foreign oil now. It can create millions of additional jobs and entire new industries if we act right now."

That's not just typical political bombast, either. According to statistics compiled by the American Wind Energy Association (AWEA), 85,000 U.S. workers are employed in the wind industry, which is a net gain of 35,000 workers in just one year. More than 50 wind industry manufacturing facilities have opened, expanded or been announced since 2007. What's more, the share of domestically manufactured wind turbine components, according to the AWEA, has doubled over the past three years, from 25% in 2005 to 50% in 2008.

While Obama chose Cardinal because of its connection with the wind industry, he completely missed the real secret to the company's success, even though it was staring him right in the face. Cardinal was able to capitalize on the opportunities that the fledgling wind turbine industry is offering for one simple reason: its adoption of continuous improvement practices. Cardinal instituted lean manufacturing concepts, based on the Toyota Production System, back in 1998, and has stuck to its lean approach ever since. As John Grabner, president of Cardinal Fastener as well as a consultant on lean thinking, explains it, the company's lean initiative and emphasis on cross-training have led to increased efficiencies, decreased costs, and better and faster service to its customers.

Thanks to its adoption of lean principles, as well as increased interest in its products from the wind industry, Cardinal has become the largest manufacturer of American-made large-scale threaded fasteners, primarily used for clamping wind turbine towers to their foundations. Cardinal expects to add as many as 40 full-time employees in 2009, according to Grabner, which would be a significant increase from its current roster of 65 employees. The company also forecasts a 50% increase in revenues in 2009, growing from $10 million to roughly $15 million.

And yet, despite Cardinal's obvious success -- both as a lean shop and as a participant in the wind energy market -- Obama's focus that day was on drumming up support for his economic stimulus plan, whereby taxpayer money would be used to fund new and existing infrastructure projects, including alternative energy initiatives. While he eloquently argued in favor of cleaner sources of energy, I was left thinking he failed to address an obvious question: If wind energy and other renewables are such, pardon the expression, hot technologies, why should it be necessary to artificially prop them up with governmental aid?

I realize that's a rhetorical question, so instead of waiting for an answer, I'll pose this challenge instead to President Obama: Now that you've seen lean manufacturing up close and personal, I would urge you to share with your new administration and especially with the U.S. Congress the idea that lean thinking -- reducing waste and improving efficiencies -- is the surest path to an American renaissance.

David Blanchard is IW's editor-in-chief. He is based in Cleveland. Also see Chain Reactions: David Blanchard's blog about supply chain management.

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