Ready For Recovery

Dec. 21, 2004
In the slow economy, some manufacturers invest for a (hopefully) faster-paced future.

Even as hundreds of U.S.-based companies continue to cut people and lower operating costs to improve their short-term financials, a fair number of manufacturers are challenging conventional wisdom and using the current economic downturn to invest in their longer-term performance. At its main plant in Euclid, Ohio, near Cleveland, for example, Lincoln Electric Co. is revamping the sheet-metal-fabrication section and installing new equipment. And that's just one of the investments to improve efficiency and productivity the $1 billion manufacturer of arc-welding equipment is making. Lincoln Electric plants in Mexico and Brazil are using downtime and periods of low demand to boost production workers' skills and to improve manufacturing and maintenance processes. Also in Mexico, some manufacturing personnel are accompanying salespeople on calls to gain a better understanding of customer needs and requirements. "We are also using this time to make further improvements to our IT systems in both Latin America and Europe," relates company spokesman Roy L. Morrow. Meanwhile at MKS Instruments Inc.'s plant in Methuen, Mass., production workers are getting additional cross-training during downtimes. "We consider people an investment, and we're very concerned about labor availability during the next [market] ramp [up]," says Gerald G. Colella, vice president for global business operations. "When you're going great guns it's difficult to train people to be multifunctional, because there's so much work in the plant." In the Lone Star State, Dallas-based American Leather Inc., a $36 million home-furnishings producer, just last month used the downturn to change the layout of its factory, moving the woodshop and bringing one production line into air-conditioned comfort for the first time. "Morale in that group on Line 6 has done a 180 [degree turn] and now [the plant] has a much better flow," reports Cary Benson, the company's vice president for sales and marketing. In Morganton, N.C., privately held Environmental Inks & Coatings Corp., a $40 million producer of water-based and ultraviolet-cured inks, is seeking ways to improve production planning to increase profitability and improve customer service, indicates president Edward G. Redman. While it may seem counterintuitive, "What we're finding is that it really isn't costing us any more inventory dollars to make the larger batches and have them ready to go out" than the previous practice of waiting for orders for repeat business to arrive. Other manufacturers are putting employees through lean-manufacturing programs and doing value-stream mapping. Pro-Fab Inc., a 130-employee aerospace-industry supplier in Oklahoma City, also is picking up energy-systems work, producing oil-field drill heads. Anand Sharma, president and CEO of TBM Consulting Group Inc., Durham, N.C., speaks approvingly of a short list of companies that in recent months have capitalized on lean manufacturing practices to develop new products, fill a sudden supplier gap, and increase market share. But at least in a relative sense Salt Lake City-based Groen Brothers Aviation Inc. may well be making one of the bigger investments for the future. It is currently flight-testing and seeking FAA certification for a gyroplane, a type of aircraft that flies like an airplane, takes off and lands like a helicopter, and hasn't had soaring commercial success since its development in the 1920s. However, David Groen, the company's president and CEO, believes his Hawk 4 turbine-powered gyroplane has a market among pipeline patrollers, electronic news gatherers, and other people with a need for a relatively affordable eye-in-the-sky. Indeed, he says, the company has cash deposits on more than 140 gyroplanes for delivery in the U.S. "When the economy is booming, we'll do well," Groen predicts. "But when the economy is in a downturn, like it is now, we'll do even better because helicopters are so expensive to run . . . and to own."

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