America’s New Factory Building Frenzy

June 15, 2018
A flurry of new manufacturing facilities has begun popping up across the U.S. In this environment of low unemployment, skills deficits and shifting corporate paradigms, this abundance is rife with challenge and potential. We spoke with several manufacturers in the thick of this building boom, both to learn of progress with their plans and to share best practices.

Foxconn Technology Group commanded headlines last summer in the U.S. when it announced plans to invest $10 billion to build an enormous manufacturing technology campus in Wisconsin. It’s easy to see why—the project, which is expected to break ground later this month, includes a factory to produce LCD display panels and a commitment to create a whopping 13,000 jobs.

It is a gigantic, exciting project. But it’s hardly the only major U.S. manufacturing project in the works.

Earlier this year Mazda and Toyota announced plans to open a joint assembly facility in Huntsville, Ala. And Braidy Industries broke ground in early June on construction of what it says will be the nation’s first greenfield aluminum rolling mill in more than three decades—a project worth an estimated $1.3 billion, which will transform a 370-acre site in Greenup County in Kentucky and promises to create some 550 permanent jobs.

We could also talk about Volvo Cars USA, which kicks off production later this year in its new Berkeley County, S.C., site with the redesigned S60 sedan. Or Nucor Corp. and its two rebar micro mill projects, or Cleveland-Cliffs Inc., which has designs on Toledo. Or the scores of other new plants and expansions that are underway, recently opened or freshly proposed.

Taking a look at the full picture, it appears that U.S. manufacturing is experiencing something of a baby boom. With all the good news in industrial reports lately, this probably shouldn’t come as surprise.

U.S. manufacturing recorded its 21st consecutive month of growth in May, the Institute for Supply Management reported in its monthly gauge of the sector. That’s nearly two years of continued growth.

Moreover, vacancy rates for U.S. manufacturing have dropped to 3.8%, “well below the 10-year average of 7.3%,” wrote Jason Tolliver in a recent column for Area Development. Tolliver, who is vice president and head of industrial research, Americas, for real estate services firm Cushman & Wakefield, also pointed out that manufacturing construction has rebounded.

“The current average of 12.5 million square feet of new manufacturing product added per year is close to the pre-recession average of 12.6 million square feet,” he wrote. “Since 2010, 62.5 million square feet of manufacturing space has come online in the United States.”

That’s a lot of new manufacturing space in play, with a significant number of “expectant” manufacturers likely to add to U.S. square footage soon.

It’s good news, even great news, but challenging nevertheless in an environment of low unemployment and skills deficits, coupled with the pressures that accompany multimillion-dollar projects. IndustryWeek spoke with several manufacturers who have been engaged recently in new construction, both to learn of progress with their plans and to share best practices. Here is what we learned. 

Challenge One: The Workforce

Volvo Cars, Berkeley County, S.C.

Volvo Cars began hiring production and maintenance team members more than a year ago for its new South Carolina plant, which begins production later this year. While it ultimately expects to create nearly 4,000 jobs following the introduction of a second vehicle to its production lineup from 2021, it is currently trying to fill about 1,500 to 2,000 positions of those positions.

The requirement for production workers is fairly basic: a high school diploma or GED, WorkKeys assessment and one year of manufacturing experience. To supplement the entry-level qualifications, the carmaker says it has worked both with state and local officials to develop a 62-hour compressed manufacturing curriculum that is offered at area technical schools.

“Completion of this program would satisfy our one year of manufacturing experience,” Volvo Cars said.

But that’s not all. The automotive company is also taking steps to assure its new hires fully understand the company’s core manufacturing philosophy.

“Some of our team members spent months training in Sweden and our other manufacturing plants to understand our philosophy, our culture and our processes,” the company explained. “They are now our subject matter experts who are training our new team members. We also have team members from our other manufacturing locations who work side by side with our team members to provide expertise and hands-on training.”

Even with all of this effort, however, reports indicate that Volvo Cars is struggling to fill positions in a state where the unemployment rate hovers around 4.2% and where competition for workforce talent is intense. In April, only about half of the positions needed in the first wave of hiring were filled, according to Charleston, S.C.’s Post and Courier. 

“It’s a little bit tougher than we had in our plans,” Anders Gustafsson, Volvo Cars USA president and CEO, told the news organization. “But I think everyone is doing an excellent job here in attracting new talent.”

Given the nation’s low unemployment rate and well-documented skills gap, Volvo Cars’ hiring challenge is unsurprising, and it is being echoed by manufacturers around the U.S. Solutions remain elusive. 

Challenge Two: Merging Systems

Mazda Toyota Manufacturing U.S.A. Inc., Huntsville, Ala.

Like Volvo Cars, Mazda Toyota Manufacturing will find itself in need of thousands of workers for its recently announced assembly plant in Huntsville, Ala. That’s further down the road for this facility, though, as construction has yet to begin. More immediately, the automotive partners face a different challenge. Each company comes to the partnership with its own culture. How will this work in the new factory?

They have a plan.

But first, some details about the site. Full-scale construction of this joint venture’s assembly plant is scheduled to begin in 2019. From here, Mazda will assemble a crossover model new to the North American market, while Toyota will produce its popular Corolla. Like Volvo Cars plans for South Carolina, the Mazda Toyota Manufacturing facility in Huntsville could eventually employ up to 4,000 team members.

This combined effort has the lean crowd all asking the same question: Will the Toyota Production System guide this plant? Perhaps not, givencomments from Mark Brazeal, vice president of administration, Mazda Toyota Manufacturing U.S.A. (MTMUS). He said the overall philosophy of the joint venture is to share the best manufacturing practices of both individual companies to create “a new and improved Mazda-Toyota practice.”

“We plan to execute this practice for all functions including production, manufacturing process engineering, plant engineering, safety, environmental and human resource development,” he said.

In fact, the company is in the very early stages of doing just that.

MTMUS has created preparation teams, made up of Mazda and Toyota personnel, for each function. Those teams will go through the integration process and propose new philosophies and processes “that not only adhere to the fundamental values of each company but reflect our past successes,” according to Brazeal. “This will not only shape Mazda Toyota’s way of manufacturing but truly shape the culture from the ground up.” 

Challenge Three: Cultural Development

UGN Inc., Monroe, Ohio, and Silao, Mexico

Automotive supplier UGN Inc. has recently opened facilities in two countries. First, the company opened its sixth facility in Monroe, Ohio, in 2015, and then last year it opened a new plant in Mexico to serve its automotive OEMs there.

While stretching from the theme of U.S.-exclusive developments, this case provides insight into another challenge: maintaining successful plant culture across new sites and regions.

“How you handle things from a culture standpoint is vitally important,” says CEO Peter Anthony. “We transferred some individuals from our various plants... to our new business so they could help develop the new culture at the new plant in the ‘UGN Way.’”

As you might expect with an automotive company, the UGN Way and the UGN culture are all around lean, and not just on the shop floor.

“We view [lean] as a total enterprise tool. We take the view you should be thinking lean in everything you do,” Anthony says. “From a new factory standpoint, there are many facets, from site selection to how it’s laid out to the equipment that is being used.”

For example, when it comes to factory layout, engineering works with the vice president of continuous improvement. The facilities, wherever they are located, share the same standards, similar equipment and common parts.

This similarity among manufacturing plants not only helps disseminate the UGN Way across plants, but it also allows gains made from kaizens in one facility to be shared across other factories. 

Best Practices: Marching to the Same Beat

Intertape Polymer Group, Midland, N.C.

We’ve talked through some of the challenges manufacturers face as they launch greenfield plants. Let’s now address some best practices from one manufacturing company that has developed a formula for success.

In late 2017, Intertape Polymer Group launched a new greenfield tape facility in Midland, N.C., that it says launched with zero customer issues. The manufacturer is already planning to add capacity at the site by early 2019.

A plant launch that delivers with zero customer issues begs the question: How do you make that happen? Jai Sundararaman, IPG vice president of business transformation, whose business transformation team was the primary lead in developing and executing the project, doesn’t claim to have all the answers, but he does outline several tactics taken by IPG that may have contributed to the early success of the Midland plant.

1. Model of engagement. The organization identified a candidate (an engineer in their operations) and moved him into the business transformation office, which was leading the factory project. They then made that candidate a project manager and engaged him in vendor selection, plant layout, technical details and all the other important components of constructing a new facility. Finally, as the new facility was nearing completion, the engineer-cum-project leader transitioned into yet another role: operations leader of the new plant.

This operating model may be unusual, but it delivered benefits for the team. Sundararaman points out that the new plant’s operations leader was engaged with facility from day one. He was involved in key decisions throughout the process and is truly a partner in the project. “It’s truly a joint ownership and partnership,” notes the business transformation vice president.

All that said, the engineer-cum-project manager-cum-operations leader did not operate in a vacuum, adds Sundararaman. Decision-making was guided and governed by the business excellence and technical support teams. “It’s a very active coaching model, so the [candidate] has to be willing to listen and learn,” he noted.

 There were people who were worried about model, Sundararaman admits. “People are not sure whether an engineer can be a project leader or whether a project leader can become an operations guy. Totally different skill sets,” he says. “But that is why we have the framework, the governance, along with the technical support, so that the person eases into the role.”

2. Delivering on the business case. Teams were measured on their individual goals, but the bigger emphasis was placed on cross-functionally achieving the business case. Say, for example, the business case was that the new facility reach a certain output by a certain date.

 “The challenge when you are building a new plant is the cross-functional interaction and the risks that are introduced,” Sundararaman says. “How do you make sure everyone is fully aligned, that we are not marching toward a particular deliverable for each individual functional silo but are, overall, comprehensively marching toward the business case? For us, even though each team had their timeline, you will be rewarded only when we hit the business case. That’s the rallying cry.”

3. Constant communication. You might also call it “radical transparency,” to use Sundararaman’s words.     The vice president said the team used an online, cloud-based program management tool to keep everyone engaged. And rather than a single keeper of knowledge to whom data was fed, “everybody had access to everything.”

“The challenge when you are building a new plant is the cross-functional interaction and the risks that are introduced,” Sundararaman says. “How do you make sure everyone is fully aligned, that we are not marching toward a particular deliverable for each individual functional silo but are, overall, comprehensively marching toward the business case? For us, even though each team had their timeline, you will be rewarded only when we hit the business case. That’s the rallying cry.”

It’s an exciting time for U.S. manufacturing, with greenfield plants and factory expansions popping up across the nation as business booms for many companies. It can be scary, too. Big plans mean big dollars at play, and wrong steps can be costly.  

UGN’s Anthony describes it this way: “Opening a new factory is always exciting, but it comes with its challenges. I kind of equate it to raising a kid. It is fun, but it is probably one of the hardest jobs you will have.” 

About the Author

Jill Jusko

Bio: Jill Jusko is executive editor for IndustryWeek. She has been writing about manufacturing operations leadership for more than 20 years. Her coverage spotlights companies that are in pursuit of world-class results in quality, productivity, cost and other benchmarks by implementing the latest continuous improvement and lean/Six-Sigma strategies. Jill also coordinates IndustryWeek’s Best Plants Awards Program, which annually salutes the leading manufacturing facilities in North America.

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