John H. Sheridan
At A Glance
- Average shipments of 220,000 tons/month of flat-rolled steel coils.
- USWA-represented production workers engaged in self-directed teams.
- Employee teams helped save $25 million at customer plant sites in two years.
- Cost of quality reduced 43% in two years.
- In-plant rejects slashed 66% in 3 years.
- Cast-slab-conversion cost reduced 22%.
- Slab caster "breakouts" reduced by 65%.
- Cold-roll cycle time reduced 36% in two years.
- Cycle time on hot-rolled sheet reduced 60%.
- With help from suppliers, BOP shop vessel life increased 180% -- setting a "world record" of 11,165 heats.
- Overall productivity up 29% in five years; sales per employee up 56%.
- Injury/illness frequency rate reduced 55% in three years.
- WIP inventory reduced 21%.
- On-time delivery improved from 88% to 95.6%.
- Earned Governor of Pennsylvania's "waste minimization" award.
Driving along the highway that parallels the Monongahela River, Keith Lowery serves up a commentary on the string of deserted steelmaking facilities that stand as stark reminders of more prosperous times -- and of the economic woes that descended on Pittsburgh's Mon Valley beginning in the late 1970s. U.S. Steel's Homestead Works and Duquesne Works are among the abandoned complexes in the valley, once hailed as the cradle of American steelmaking. It is a region that produced generations of proud steelworkers. "There are the ghosts of all the other steel mills," Lowery says sadly. "Those ghosts will be with us forever." Lowery is manager of APEX programs and special projects for the lone surviving integrated steelmaking operation in the region -- U.S. Steel's Mon Valley Works. The fact that it continues to be a competitive force in the sheet-steel market has several explanations, including enlightened management, a workforce dedicated to continuous improvement and customer satisfaction, and the willingness of local United Steelworkers of America (USWA) leaders and hourly workers to put old adversarial relationships aside and forge a partnership for the future. It didn't happen overnight. And the bonds of partnership are still evolving. But, clearly, the atmosphere has changed dramatically at the Mon Valley Works during the last 15 years. Lines of communication are more open. There is a common understanding that this is a new era of competition in which the key to survival lies in paying close attention to meeting customer needs. And there is a fierce determination to avoid becoming yet another of the valley's "ghosts" -- to keep alive the area's rich steelmaking tradition. It is a tradition that dates back to 1875, when Andrew Carnegie built his first mill -- the Edgar Thomson Works -- in the Pittsburgh suburb of Braddock to supply steel rails for the burgeoning U.S. railroad industry. (Displaying a touch of marketing genius, Carnegie named the Thomson Works after the president of the Pennsylvania Railroad Co., his primary customer.) Though the plant and equipment have been replaced several times in its 121-year history, the Thomson Works -- generally referred to simply as "E.T." -- is still in business today as the hot steelmaking end of the Mon Valley Works. The other half of the complex, the Irvin plant, is a rolling mill and finishing operation in Dravosburg, about a six-mile trip uphill by rail from E.T. Together, the two sites provide employment for 2,500 people -- the only integrated-steelmaking jobs remaining in a region that, just two decades ago, boasted 40,000 steelworkers. Where the state of Pennsylvania once claimed 74 blast furnaces, only two remain in operation -- furnaces No. 1 and No. 3 at E.T. "If you are looking for blast furnaces in Pennsylvania today, I know where both of them are," quips John F. Kaloski, general manager of the Mon Valley Works. A third-generation steelman, like many of his colleagues and employees, Kaloski gives most of the credit for the success and survival of the complex to a workforce of "really good, talented, professional steelworkers." Now in his fourth year as general manager, he is clearly proud to be part of a team dedicated to continuous improvement. "They are getting better all the time," Kaloski says. "The things we measure today as the parameters of our business -- quality, efficiencies in manhours/ton, safety, customer service, environmental protection -- are literally better than ever. A lot of it has to do with the investments we are making in plant and equipment. But more of it is the people." The most significant investments at the site in recent years were the $250 million spent on a continuous slab caster at E.T., which brought the Mon Valley Works into the modern era of steelmaking, and $36 million for a new vacuum degasser to produce low-carbon steels for automotive applications. A key reason the Mon Valley Works managed to stay in business long enough to see its caster project become a reality is the APEX quality program, which dates back to 1984. Originally, the acronym stood for "appliance product excellence," a campaign to meet the rigorous quality demands of the appliance industry, the plant's major market segment. The program was later expanded to include automotive steels, and today, APEX stands for "all people, all process, all product excellence." Initially, the approach relied on multifunctional teams that attacked and resolved specific quality issues and then disbanded. But APEX has since evolved into an ongoing, comprehensive effort that stresses continuous improvement in many areas -- including initiatives to help customers reduce their production-related costs. In the last two years alone, employee teams have helped customer plants to identify and achieve more than $25 million in cost savings. When a Whirlpool Corp. plant in Marion, Ohio, requested help with its annual cost-reduction program, two Mon Valley hourly employees -- temper-mill roller John Prestia and recoiler operator Roger Arison -- were assigned to work with Whirlpool's cost-reduction engineers. One of the issues they tackled was a recurring problem with dents in the exterior layers (or "wraps") of the coiled steel, which meant that the first 20 to 30 feet of each coil had to be scrapped. To determine the cause, the two employees followed four coils during shipment to find out what happened to them after they left the U.S. Steel plant wrapped in protective packaging. En route, the steel was diverted to a processing firm for slitting. "We discovered that this company removed our cardboard packaging at its plant," Prestia says. "Then it shipped the coils to Whirlpool without the protection, causing damage along the way." Subsequently, U.S. Steel modified its packaging so that it could remain on the coils during all stages of shipping. Such close involvement with customers is a natural outgrowth of the APEX program, which has been dispatching volunteer groups of employees to visit customer sites since 1986. Typically, the trips span two days, with transportation by company van, notes Mike Buckiso, APEX coordinator at Irvin. "The idea is to provide exposure to the customer," he says, "not neccessarily to work on a particular project." Donald Conn, president of USWA Local 2227, which represents the Irvin workers, asserts that the customer visits "have tremendously increased our people's awareness of what they need to do to satisfy that customer." "Having a better knowledge of the downstream things that go on with our product can be a real awakening," explains Kaloski, the general manager. "If there is an issue at a customer plant, they'll pick up the phone and call the guy at our rolling mill. They don't call me. They call the guy who can actually do something about it at the moment." Other APEX activities include training programs, employee recognition, monthly "quality breakfasts" featuring presentations on employee-involvement/continuous-improvement efforts, monthly quality audits, and weekly "no-holds-barred" meetings of the plant's APEX representatives. Each of the Mon Valley plants has an APEX program manager and an hourly APEX coordinator who devotes full-time to the activity for six months. In addition, there are 28 departmental APEX representatives, all hourly employees, who spend three months in the rotating post, then return to their production jobs. During their stints as APEX representatives, the employees "become more familiar with all facets of the plants," Kaloski points out, "and achieve a better understanding of the big picture." The monthly quality audits are week-long exercises conducted by teams of hourly and management personnel who examine paperwork and talk to production operators to ensure that quality and process procedures are followed. Fred Harnack, operations manager at the Edgar Thomson plant, offers a succinct rationale for involving hourly workers in the audits: "Who would do a better job than the folks who actually do the job?" The audit teams ensure compliance with ISO 9002 and QS 9000 standards. And when they find something amiss, they issue corrective/preventive action reports (CPARs) that assign responsibility for fixing the problem and set a compliance date. That ensures a "closed-loop" corrective-action system. "At first, APEX was top-driven," recalls Phil DeNunzio, president of USWA Local 4090, which represents clerical and office workers. "But eventually, it did flow into a partnership -- and we made a lot of progress from that point on." Over time, the APEX system has grown beyond its quality roots into a comprehensive effort to continuously improve in six areas: safety, quality, delivery, environmental protection, productivity, and financial performance. In 1992 a joint union/management committee spent a full year devising a plan to elevate APEX to a new level with a strong focus on the future. Those deliberations gave birth to the "Mon Valley Tomorrow" program that, thanks to changes negotiated in the union contract, is spurring a transition to a fully developed team environment. The emphasis is on teams of cross-trained workers in natural work groups. Initiated in 1993 with pilot projects in the basic-oxygen-process (BOP) shop at Thompson and the pickling line at Irvin, the natural work group teams tackle problems and continuous-improvement (CI) opportunities within their areas related to the six objectives. "We're trying to find a smarter way to work," says Chuck Jackson, the USWA CI coordinator for continuous-casting operations. Each natural work team has an hourly team leader, who oversees work operations, as well as a team captain, chosen by the team members, who focuses on continuous-improvement activities. The choice of team leaders and captains typically requires union concurrence. Team captains become members of a Senior Process Leader Team, which enhances communication between departments. "It's all linked," says Alex Rudolph, management CI coordinator for the pickling line. "They share ideas -- and success stories." Throughout the sprawling Mon Valley Works, there have been many success stories, from small improvements to significant quality and productivity gains stemming from the installation of the dual-strand continuous slab caster at E.T., along with a multiplatform computer system that provides precise closed-loop process control and quick access to data for management decision support. The caster experienced an extremely smooth startup in 1992, thanks to a highly successful "Design for Startup" methodology that seeks to identify and prevent possible startup problems -- and costly downtime -- well in advance of bringing new equipment on line. Among the Mon Valley Works' notable achievements have been: a 66% reduction in "diversions" (in-plant rejects) in three years, a 43% cost-of-quality improvement in two years, a 29% productivity gain in output/manhour over five years, a 65% reduction in frequency of slab-caster "breakouts" (molten steel leaking from the core of a casting through the cooling outer surface), and preferred-supplier recognition from companies such as Whirlpool and General Electric Co. In 1995 GE honored the Mon Valley Works with its "supplier of the year" award. Today, the plant leadership team, which sets overarching continuous-improvement objectives, includes the three union presidents. This team ensures that activities of the natural work teams are aligned with business-plan objectives. "The union leaders are invited to attend and participate in everything that we do," says Kaloski. One of the keys to a successful union/management partnership, he advises, has been mutual agreement that contract-related issues should not interfere with customer-related business issues. "We're bound and determined to keep them separate," Kaloski asserts. From top management to the operators in the mill, it is widely acknowledged that the unifying force that enabled the quality-oriented APEX program to grow into a real partnership was a common interest in economic survival. "I think management and labor realized that they had to work together, because everybody's jobs were in jeopardy," says Mickey Dello-Stritto, an hourly APEX coordinator at E.T. "Everybody realized that, to survive, we had to pull together." "I don't think there is any question that it started with the survival issue," says Richard Janicki, the Irvin plant manager. "But the real key to everything after that was in management and the union adopting a different style -- and I don't mean just in talk, but in doing. The union hierarchy and then our senior employees saw that we were sincere about working together -- and that we were going to listen to what they had to say."