2002 IW Best Plants: AMS, Operations Hillend

Feb. 14, 2002
Mission Critical: Customer partnerships and a multi-skilled workforce distinguish this supplier of circuit boards for military applications.

AMS, Operations Hillend, Fife, Scotland

At A Glance

  • Training center approved to instruct and qualify to the ANSI-J-001B soldering workmanship standard
  • Productivity gains (sales per employee) from US$98,000 in 1997 to $184,000 in 2001
  • Cranfield University and Management Today UK Best Factory Award

The test regimen at the AMS, Operations Hillend factory would flat-out destroy any ordinary printed circuit board. Destined for defense applications, the products assembled here are 100% tested and must withstand extreme temperatures, vibration and humidity levels. Not only must the boards work in hostile environments, they must continue to function for many years.

"For us, it's more about reliability than anything else," states Clovis Younger, manufacturing manager. "The things we build are mission critical."

To successfully manufacture such dependable products, the people at Hillend have adopted a flexible, team-based structure and trained to the highest workmanship standards. Enhanced customer responsiveness, plus quality and efficiency gains have fueled sales growth and an 88% increase in productivity during the past four years alone.

The Hillend factory in Fife is located just across the Forth estuary from the Scottish capital of Edinburgh. In total the site employs 313 people; just over half are in production. The facility is one of several operating units of AMS, a British/Italian joint venture of BAE Systems and Finmeccanica, with total annual sales in excess of US$1 billion.

The printed circuit boards produced here control radar and anti-missile systems on fighter aircraft, form the guts of a destroyer's radar arrays, and guide torpedoes. The largest product shipped out of the plant is a foot square and contains 24 individual circuit boards that keep the Challenger tank gun level and on target as it rolls over rough ground.

Compared with consumer electronics -- Solectron Corp. and Lexmark also have factories in Fife-the circuit boards manufactured by AMS are highly complex and expensive.

"The way I like to put it is that they'll make 10,000 of something that cost 30 quid each. We'll make 30 of something that cost 10,000 quid," says Younger.

A typical program will begin with prototypes, followed by full production (which might be only 1,000 boards), and then proceed to spares. The plant's immediate customers include BAE Systems, other divisions of AMS and various defense contractors in the UK and U.S.

The production area itself is roughly divided between conventional and newer surface-mount technology. Because of customer requirements for many legacy products, the plant has shifted to the newer technology only during the past couple of years.

Younger estimates that conventional circuit boards still account for 30% of the factory's output. The changes from this type of product to the latest generation can be dramatic. For example, a module for a radar array previously made at the factory measured 8-inches-by-10 inches and required 20 hours to build. The next-generation product is about the size of a bookmark and can be machine built in seven minutes.

The secret to Hillend's success lies in how the company has managed transitions like this without serious repercussions to its business or workforce, and continued to prosper as the overall defense market has continued to shrink.

The site hit its low point in 1994. Following several years of industry consolidation, outstanding orders stood at just $20 million. Employment had dropped to 420 from a peak of 1,350 in 1985.

Today, Hillend's order backlog has grown to $184 million. Over the past three years alone, annual revenues have risen 50% to $58 million, with exports growing from 5% to 29% of the total.

At the heart of this transformation is a rejuvenated workforce. The culture change began in 1995 with the implementation of a cross-functional team structure. Since then departmental walls have gradually eroded, and the various functions have been integrated into customer-focused teams that oversee all phases of a project. An individual quality engineer, for example, is responsible for a program all the way from prototype to production.

This culture change has been supported by ongoing additions to the company's benefits program, plus regular investments in new equipment (to the tune of $2 million annually).

In the manufacturing area a renewed customer focus has manifested itself through a number of initiatives, including a contract-focused, cellular layout, and the development of an extremely flexible and multi-skilled workforce. Because all production is low volume, build-to-contract, there isn't a standard work flow. Some circuit boards are soldered together conventionally by hand, one tiny component at a time. Others are assembled semi- or fully automatically.

Whatever the process, workmanship is critical if the final output is going to meet reliability requirements.

Rather than trying to meet the unique requirements of each customer, AMS managers decided to train and qualify all operators and engineers to ANSI-J-001B, the highest global soldering standard. The flexibility gained by bringing everyone in the plant up to the higher standard have apparently far outweighed the cost. In fact, as the only in-house training center in the United Kingdom that has been approved by IPC (the U.S.-based organization that maintains the ANSI-J-001B standard), the training department is actually a separate profit center and funds itself with outside work.

Managers single out this training as one of two primary contributors to the operation's world-class quality performance (95% first-time test yields) among defense and avionics electronics plants.

Product quality has also been bolstered by AMS' design for manufacture program. At one time the customer's attitude was, "Here's a box of bits and some drawings. Now go away and build that, and don't ask any questions," recalls Younger.

While customers still make the ultimate design decisions, in order to make the circuit boards easier and cheaper to manufacture and test, Hillend has become increasingly involved in development.

To foster communication, they've formed integrated product teams comprised of AMS engineers, quality personnel, program managers, supplier representatives and a member of their customer's engineering team. They've also developed Web-based guidelines that present optimum and acceptable clearances and connectors, and checklists that will score a particular design.

As a direct result of the design for manufacturing program, part variety has decreased from 1,700 to 250, although outstanding orders have climbed 50% since 1997. Over four major contracts, AMS estimates that they've saved their customers well over $23 million.

Such are the results that keep customers coming back for more. 

Web-Exclusive Best Practices

Benchmarking Contact: Elizabeth Niccolls, business improvement manager, [email protected], +44 1383 836175.

Action Plan For Operational Excellence In their efforts to move the organization forward, managers at the AMS factory in Hillend, Scotland, have used the EFQM Business Excellence Model ( www.efqm.org) as a guide. Similar to the Malcolm Baldrige program in the U.S., the EFQM model was introduced in 1991 as the basis for judging applicants for the European Quality Award. Maintained by a multinational, not-for-profit foundation, the model presents an organizational framework grounded in the concepts of total quality management. It is the foundation for the majority of Europe's national and regional quality awards.

Beyond the formal awards program, many organizations use the EFQM model as a self-assessment tool to measure their progress on the path to operational excellence.

"One of the things [the EFQM model] makes you do is look at your business and identify the key processes within your business, have an owner for them and an improvement plan for them," notes Clovis Younger, who owns the production process as manufacturing manager.

In support of this focus, AMS has widely adopted what it calls "plan-on-a-page." On one sheet of paper -- the type is small but not microscopic -- are the operation's mission and vision, strategic objectives and key deliverables. Each criterion of the business excellence model is listed, including leadership, strategy, people, partnerships, processes and the customer.

Within these divisions, the specific projects, performance targets and current status are stated explicitly for the previous year, the current quarter and each of the next four quarters. Each member of the management team must sign off on the plan.

"When you look at some standards, they look at a particular area of your business, maybe your quality management system or your financial systems, but the business excellence model applies to all areas of your business, and they must all improve," observes Elizabeth Niccolls, business improvement manager. "We adopted plan-on-a-page throughout the site because all areas have to get better. Those areas that don't become an anchor to the rest of the organization."

Prototype Prowess Hillend once processed prototypes in its main production areas. As technology advances made it increasingly expensive to build circuit boards in a lab environment, more and more customers began transferring the work to Hillend, and the task became increasingly disruptive.

To accommodate its customers' needs, Hillend set up a separate, streamlined prototype department to offer three-day turnaround. As the prototypes are being made, customers' design engineers can come in and view the boards as they're assembled, see what's easy and what's difficult to build, and go back and make any design changes. 

Developing A Local Talent Pool Training is an AMS core competency. Through one program young people just out of school learn basic electronics by assembling doorbells for the deaf. Supported in part by a government grant, the training program is a microcosm for the whole site -- the trainees follow the same procedures and fill out the same paperwork that are used in the main factory.

"As they build these doorbells, they inspect them. When they fail [the trainees] get really angry but that means they have to do the diagnostics to figure out what is wrong, make it right, rework it and get it set for the customer," says Niccolls.

The trainees learn how the work flows, learn basic job discipline and gain a thorough understanding of electronics assembly. After they can competently build doorbells the trainees are transferred to the shop floor. Here, over the course of the two-year program, they move through different production areas.

Upon program completion the trainees receive their Scottish Vocational Qualification, ANSI-J-001B soldering workmanship qualification, plus a computer literacy certification. At this point they can be hired by AMS, or they can find work elsewhere in the region.

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