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posts relating to manufacturing - management and economics related
Recommended posts: Managing the Supplier Relationship - American Manufacturing Successes - Top 10 Manufacturing Countries - Manufacturing and the Economy - Global Manufacturing Jobs Data
Related: articles on manufacturing improvement - lean manufacturing portal
Chinese firms bargain hunting in U.S.
Liu spent about $500,000 for seven acres in Spartanburg — less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city in southeast China where he runs three plants. U.S. electricity rates are about 75% lower, and in South Carolina, Liu doesn’t have to put up with frequent blackouts.
About the only major thing that’s more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board. But Liu expects to offset some of the higher labor costs with a payroll tax credit of $1,500 per employee from South Carolina.
“I was surprised,” said the 63-year-old president of Shanxi Yuncheng Plate-Making Group. “The gap’s not as large as I thought.” Liu is part of a growing wave of Chinese entrepreneurs expanding into the U.S. From Spartanburg to Los Angeles they are building factories, buying companies and investing in business and real estate.
True this is still a relatively small macro economic factor. However, it is growing. The primary push so far is economic - not a move to lean manufacturing (as far, as I can tell) to put manufacturing close to the customer. What is the biggest factor? The USA is spending more than $400 billion every year more than it produces. The only way to consume more than you produce is to borrow (and take an obligation to pay back those that lend you money) or sell the stuff you own to those that are producing more than they are consuming. China is producing more than $200 billion more than it consumes every year.
For decades foreigners have taken debt from Americans that promise to pay back later (to pay for what they consumed). Now many are deciding that these debts are not attractive investments and are looking to own productive assets in the USA (companies, factories…). Which is smart on there part in my opinion.
Related: The Budget Deficit, the Current Account Deficit and the Saving Deficit - Moving Jobs to Silicon Valley from India - $2,540,000,000,000 in USA Consumer Debt - How to Keep the USA Manufacturing - Top 10 Manufacturing Countries 2006
Warren Buffett’s 2004 Annual Report:
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This is the 1,000th post to the Curious Cat Management Improvement Blog. Here are some highlights:
Information Technology: Toyota IT Overview - “customizing the code, to its business processes, and not the other way around.”
Another former Toyota USA leader is talking a leading role at another company. Gary Convis from Toyota retired last year.
Related: articles by Gary Convis - Toyota Management Speech by Gary Convis - Toyota Management Develops the New Camry - Quality Conversation with Gary Convis - Jim Press, Toyota N. American President, Moves to Chrysler
Dana Holding Corporation Names Gary L. Convis Chief Executive Officer
Dana Holding Corporation (NYSE: DAN) emerged from bankruptcy recently and today announced that it has named Gary L. Convis, 65, to the post of Chief Executive Officer. Convis was appointed to Dana’s new Board of Directors in January 2008 after retiring from Toyota Motor Corporation, where he had spent more than 20 years culminating in his role as Chairman of Toyota Motor Manufacturing, Kentucky.
“We are delighted to welcome Gary as Chief Executive Officer,” said Dana Executive Chairman John Devine, who had served as the company’s acting CEO since January. “Gary is widely respected as one of the leading experts in lean manufacturing and management systems, including the Toyota Production System. Along with his strong leadership and global industry experience, we believe he is an ideal choice as our new Chief Executive.”
“I am honored by the Board’s confidence in me to lead Dana,” Convis said. “I’m also eager to join with our people in establishing world-class manufacturing systems and returning this great company to the leadership ranks of the global automotive supply industry.”
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Toyota is investing $350 million in a second Indian manufacturing plant. The plant is focused on producing vehicles for the local market - as the Toyota Production System suggests that production be close to the market.
Toyota to invest Rs1,400 crore for “strategic” small car in India
The plant will make the Corolla sedans along with the small cars The company plans to have high level of localisation for the small car by procuring several components and sub-systems from Indian vendors. Primarily the car maker plans to sell the small car in the fast growing domestic market, though some will be exported as well, the company stated.
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The Japan-based automaker said last year that it plans to capture 10 per cent of India’s market. In 2007 Toyota sales accounted for a mere 0.6 per cent of the Indian car market
Related: Manufacturing Takes off in India - Toyota Chairman Comments on India and Thailand - Top 10 Manufacturing Countries 2006 - Indian companies have received as many awards as companies from all other countries combined since 2000 - Toyota to Build New Plant in India to Make Small Cars - TVS Group Director on India - Manufacturing, Economy
Utah scrambling to meet need for technical workers
The situation continues to worsen, with jobs being created and unemployment remaining low in the state. And as the current work force ages, the supply of skilled workers is diminishing, forcing employers to recruit outside of Utah and sometimes leave Utah altogether, the report said.
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The college’s Lean Manufacturing Center was built from an old warehouse with state funds and $30 million from rocket-booster manufacturer Williams International. Williams provides the college with equipment and mentors to train students with practical, real-world applications, said Lloyd McCaffrey, the Lean Center’s director.
Related: Engineering Innovation for Manufacturing and the Economy - Applied Quality Engineering Education - Wisconsin Manufacturing - Top 10 Manufacturing Countries - Help Wanted: Lean Manufacturing Experts - The Lean MBA - Curious Cat Management Improvement Job Board
Five American Manufacturers Doing It Right
Related: North American Manufacturing - Top 10 Manufacturing Countries 2006 - Top 10 Manufacturing Countries (2005) - Innovation Needed to Keep USA Manufacturing?
Here is updated data from the UN on manufacturing output by country. China continues to grow amazingly moving into second place for 2006. I plan to write more on this data in the Curious Cat Investing and Economics Blog. UN Data, in billions of current US dollars:
| Country | 1990 | 2000 | 2004 | 2005 | 2006 |
|---|---|---|---|---|---|
| USA | 1,040 | 1,543 | 1,545 | 1,629 | 1,725 |
| China | 143 | 484 | 788 | 939 | 1096 |
| Japan | 808 | 1,033 | 962 | 954 | 929 |
| Germany | 437 | 392 | 559 | 584 | 620 |
| Italy | 240 | 206 | 295 | 291 | 313 |
| United Kingdom | 207 | 230 | 283 | 283 | 308 |
| France | 223 | 190 | 256 | 253 | 275 |
| Brazil | 117 | 120 | 130 | 172 | 231 |
| Korea | 65 | 134 | 173 | 199 | 216 |
| Canada | 92 | 129 | 165 | 188 | 213 |
| Additional countries of interest - not the next largest | |||||
| Mexico | 50 | 107 | 111 | 122 | 136 |
| India | 50 | 67 | 100 | 118 | 130 |
| Indonesia | 29 | 46 | 72 | 79 | 103 |
| Turkey | 33 | 38 | 75 | 92 | 100 |
Editorial: Engineering Innovation, Milwaukee Journal Sentinel:
Or Werner Zobel, a Modine Manufacturing engineer working in Germany who hatched the idea for a new cooling system that the Racine-based company believes could be revolutionary. The system uses ultra-thin layers of aluminum to dissipate heat, a breakthrough that has potential for car and truck radiators and air conditioning condensers.
Intellectual candlepower will fire the regional economy, the Milwaukee 7 regional economic development group believes. Its strategic plan relies on innovation-driven manufacturers that are heavy with engineers. But across the region, those companies say they can’t recruit enough engineers, and they worry that shortages will worsen as baby boomers retire. Complicating the picture is a shortage of visas for foreign-born engineers and increased competition from rapidly developing economies in China and India for those students even when they complete their studies in the United States.
The University of Wisconsin-Milwaukee, Marquette University and the Milwaukee School of Engineering are racing to fill the pipeline. Marquette and UWM are promising expansive new buildings and increased enrollment of both undergraduate and graduate students.
The USA continues to be by far the largest manufacturing in the world. And one important reason is the contributions provided by science and engineering (fed by strong science and engineering schools). In addition to other smart economic policies (The World Bank’s annual report on the easiest countries to do business in ranks the USA 3rd - after Singapore and New Zealand). Wisconsin manufacturing continues to get good discussion on various lean blogs for good reason(More Wisconsin Lean, Wisconsin Continues to Lead in Lean Government, History repeats itself). The success Wisconsin is enjoying is not due to one single factor but the efforts of many actors including companies, universities, government, the press… and groups like the Wisconsin Manufacturing Extension Partnership and the Madison Quality Improvement Network (I have managed MAQIN’s web site since it was created - John Hunter).
Related: Best Research University Rankings - 2007 - S&P 500 CEOs - Again Engineering Graduates Lead - Invest in New Management Methods by William G. Hunter, Commentary to the Milwaukee Journal, 1986
Strategic Deployment: How To Think Like Toyota:
Another company using strategy deployment, HNI Corp., has used a policy deployment mechanism for more than a decade. The office furniture manufacturer, an IndustryWeek Best Manufacturing Company for five consecutive years, deploys its strategy companywide using a Plan-Do-Check-Act (PDCA) sequence that moves from a three-year corporate plan to a unit-level development process that creates one-year plans with action steps. Progress reviews and annual reviews evaluate progress and then the cycle starts again, explains Todd Murphy, vice president and general manager of The HON Co.’s Cedartown, Ga., facility, a 2005 IW Best Plants winner. HON is the largest operating company within HNI Corp.
Also central to policy deployment at HON is rapid continuous improvement, or RCI, a company culture focused on making breakthrough improvements. Further aligning policy deployment at HON is its reward system, which is linked to the achievement of policy deployment goals.
Manufacturing takes off in India by John Elliott:
This is not some futuristic vision of India. It’s the main factory of Moser Baer, a 24-year-old Indian company that was one of the first in the world to make high-definition DVDs and is now starting on flash memories and solar panels. And while not typical of most Indian factories, Moser Baer is one of a number of companies utilizing the same brainy ability that fueled the country’s IT boom to remake its manufacturing landscape.
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The second problem is India’s infrastructure, especially power shortages and the grossly inadequate highways and ports that make it difficult to transport goods. New highways are helping, but growing urban congestion is making the problem worse, and there are seemingly endless bureaucratic and physical delays at ports.
India has a great deal of potential for manufacturing. The roadblocks are largely economic I think. Poor infrastructure is a huge problem that requires huge investments be made. China has made huge investments in infrastructure and they have paid off. Another incredible drain on India’s progress in manufacturing is the government bureaucracy.
Related: Manufacturing in Asia - Hopeful About India’s Manufacturing Sector - Top 10 Manufacturing Countries - articles on manufacturing management
Sybron has adopted principles known as Danaher Business Systems, which he called a “playbook” to make the company run as a more efficient team. It’s centered on “kaizen,” a quality improvement process that grew out of the teaching of W. Edwards Deming. The focus on manufacturing and operations, combined “with our sales and marketing expertise (has) made us a much stronger company,” Tuttle said.
Danaher continues to do a good job improving management practices one purchase at a time. I continue to eye Danaher as a stock to buy but have not bought yet.
Related: Danaher Practicing Lean Thinking - Lean Thinking at Danaher - Tilting at Ludicrous CEO Pay - lean manufacturing directory
Gopal Srinivasan is Director of TVS Electronics Limited, Joint Managing Director of Sundaram-Clayton Limited and Director of various other TVS Group companies. TVS group companies, based in India, have been awarded 5 Deming Prizes. He discusses Deming and quality a bit. He also discusses their experiences in manufacturing in China and the strengths they have found in each country. And he discusses the Indian economy and manufacturing.
In the second part of the podcast he talks about the growth of the economy of Tamil Nadu and the inclusive approach required to help India grow. via Gopal Srinivasan of TVS Group of Companies on Entrepreneurship
Related: Hopeful About India’s Manufacturing Sector - Toyota Chairman Comments on India and Thailand - Indian Deming Prize Winner Expanding - 2005 Deming Prize Awardees - 2004 Deming Prize
Harvard Business Review has a new article on Toyota that both the Elegant Solutions blog (by Matthew E. May author of Elegant Solutions: Toyota’s Formula for Mastering Innovation - via: lean blog) and Got Boondoggle, have raved about.
Amazing HBR Interview with Toyota President Watanabe on Elegant Solutions:
What’s Next for Toyota?, Got Boondoogle:
For those people thinking they were catching up on Toyota that might not be good news. I suppose you could hope that Toyota will fail, but that doesn’t seem likely given past experience (and there continued vigilance). I don’t think we will see them spend $40 billion on robots and then decide they can’t make it work (GM in the 1980’s). But it is much easier to fail that succeed, so it is possible.
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Former Ford President responds to the Wall Street Journal with At Ford, Quality Was Our Motto in the 1980s:
I was first president, then chairman and CEO of Ford in those years, and my major undertaking was to make significant improvement in the quality of Ford’s products.
Shortly after becoming president, I arranged to meet with W. Edwards Deming and contracted with him to consult with us and assist us in improving our quality. We established six guiding principles for the company, the first of which was “Quality comes first — To achieve customer satisfaction, the quality of our products and services must be our number one priority.”
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In 2004 I was part of a group to put together a 2 1/2 Day seminar for the Deming Institute (recent seminar in Michigan). We held that meeting at the Louisville Slugger plant (see photo). It was a great experience. If you find yourself in the area they offer tours of the plant. This article discusses the efforts at Louisville Slugger: The sweet spot:
Continual improvement is a critical practice to adopt as a standard practices (more of Deming’s 14 obligations of management). They moved production from a plant in New York to there headquarters in Louisville,
“Most of these people have never worked in a manufacturing facility before,” says Bob Hillerich. “We’ve had to provide a great deal of education about our business and processes. We’re also teaching them 5-S cleanliness techniques at the same time that we are teaching them the TPM system. It’s a lot to digest.”
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In maintenance, Bob Hillerich has been focused on trying to retain the wealth of knowledge in his crew. “I’m terrified about Rouns leaving,” he says. “We know what his 44 years of experience brings to this plant. We are going to spend the next six months really picking his brain and documenting what he does.”
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But on the other hand… “Having zero turnover is just as challenging,” says Bob Hillerich. “You have great people, but they have done it the same way for so long that it’s hard to convince them to really shake things up and push the envelope. In our case, we have had to embrace technology to a much greater extent. That’s been difficult for some.”
Related: Kentucky trip photos - Change to Survive: A Brand New Ball Game (video by the producers of the Deming Library) - Deming’s Ideas at Markey’s Audio Visual - Free, Perfect and Now (on Applying Deming’s ideas at Marshall Industries - Improvement at UTC - Transformation and Redesign at the White House Communications Agency
The triumph of lean production by Steve Schifferes
In contrast, workers at Ford’s brand-new truck plant in Dearborn, Michigan, pull the cord only twice a week
Just think about that Toyota’s Georgetown plant (seen by many as one of the best examples of lean manufacturing) stops the line 2,000 a week. Do you think your organizations systems are as well designed as the Georgetown plant? Does your organization stop to examine what needs to be improved with anything approaching that level (granted Georgetown is large but even so…)?
Related: Andon definition - Jidoka definition - Ford and Managing the Supplier Relationship - The Georgetown Kentucky Way - Toyota’s New Texas Plant
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Western Trailers improves efficiency – with some help:
There’s a need for greater efficiency, especially as companies get bigger, he said. Western Trailers built a new manufacturing plant in 1998 and expanded it last year. The company has added about 75 manufacturing employees in the past two years, Panter said. “With the rapid growth we had, it was easier to lose focus on the principles because we were trying to get product out,” he said. “This brought us back into focus. And it’s helpful to teach the people on the floor.”
I am much more interested in lean stories where waste is reduced and employment increases than where employment is decreased. The idea is to reduce waste, increase value to customers and grow.
Related: Idaho’s TechHelp - Wisconsin Manufacturing - Applied Quality Engineering Education - Terex Handlers: Lean Manufacturing - La-Z-Boy Lean
Short term lean thinking payoffs are nice, but the long term benefits are much more powerful.
Related: Danaher’s Low Profile Lean Excellence - Lean Blog - lean manufacturing articles - 10 Stocks for 10 years update (Danaher was in serious consideration)
Since I don’t see a the full press release on the Shingo Prize for Excellence in Manufacturing site, I include it below.
Related: 2006 Shingo Prize - 2006 Deming Prize - The Best Factory in the World
2007 Winners are:
Autoliv Querétaro CMX Facility, Querétaro, Mexico
Baxter Healthcare Corporation, North Cove Plant, Marion, North Carolina
Baxter S.A. de C.V., Cuernavaca Plant, Morelos, Mexico
Cordis de Mexico, Juarez, Mexico
Delphi Packard Electrical/Electronic Architecture’s Chihuahua 1, Chihuahua, Mexico
Delphi Packard Electrical/Electronic Architecture’s Cableados Fresnillo 1, Fresnillo, Mexico
DENSO Manufacturing Tennessee, Inc., Instrument Cluster Division, Maryville, Tennessee (more…)
3M in building spree to end capacity constraints
In the past, a 3M culture that viewed new investment with circumspection and an over-reliance on the Six Sigma management technique made it shy of building some needed capacity, Buckley said. “We got ourselves into a position in which we thought Six Sigma would come to our rescue. We all known that in reality it’s something that runs out of steam,” he said.
Well if you “know” that you are not properly executing a six sigma management system. Previous posts on this topic: Management Advice Failures - Change is not Improvement - Leaving Quality Behind? - Going lean Brings Long-term Payoffs. Often six sigma programs amount to cost cutting programs (which can easily run out of steam),; but that is so far from effective six sigma management that it isn’t really fair to equate a programing calling itself “six sigma” with the actual practice of six sigma management.
Still the CEO still seems to believe in lean six sigma:
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