IW Best Plants Profile - 1998

Borg-Warner Automotive Frankfort, Ill.By George Taninecz In an established, picture-perfect residential neighborhood of Frankfort, Ill., sits a manufacturing operation that looks as much like an elementary school as a factory. Its in this inconspicuous 240,000-sq-ft facility that Borg-Warner Automotive (BWA) produces more automatic transmission "brake" bands than any other single location in the world -- well over half of the North American market. Unless you work with automatic transmissions, you most likely havent encountered a transmission band, which facilitates the shifting of gear ratios in an automobile. However, if you work at finding models of continuous improvement and world-class manufacturing, youd be advised to have an encounter with this manufacturer, BWAs Automatic Transmission Systems Corp. The plants approximately 490 employees build a select set of highly engineered transmission bands. Its operating philosophy, likewise, focuses on a select set of improvement initiatives -- constraint management, lean manufacturing (utilizing kanbans, pull systems, and capacity and labor flexibility), and employee involvement -- that drive it to local and corporate goals. These concepts, habitually cascaded down throughout the operation, have directly impacted the plants bottom line and helped land it on the 1998 roster of Americas Best Plants. "We have put in measures of both results and process indicators that keep people focused and aligned, and then we use those indicators to help put action plans together to drive it forward," says Ron Ames, plant manager in Frankfort. "There is a very strong bias for action and a focus on the results." Former plant manager Kelis Thacker agrees with Ames assessment and says, "No organization can focus on everything. . . . You have to narrow down your focus and figure out in your organization the key drivers that bring results to the bottom line. At the end of the day its the bottom line that makes you mediocre, good, or best of the best." The plant has established a tight organizational structure that, although producing a single macro product line -- transmission bands -- defines its business units based on the three to four distinct bands it makes. The units are headed by a business leader and consist of a production team, whose responsibilities include production, quality of parts, and incremental process and cost improvements, and "launch" teams, geared to developing new processes, and managing change, major cost reductions, and new-product development issues. Within each type of team are employees and disciplines, from manufacturing and finance to product-design engineering, which enable them to tackle virtually any business objective. Under Thacker a system was established by which business units are driven to religiously track, with Pareto analysis, their top scrap issue, top spending issue, and top constraint issue. "Lets talk about and focus on the principle issues that will drive results," stresses Thacker. Its not the fourth, sixth, or tenth problem on a teams list that receives attention, he says, but the first. Recognize and resolve the top issue, then go after the one that replaces it at the top of the list. Many issues are regularly knocked off the lists, yielding healthy results, particularly where they relate to the target indicators: a dramatic two-year increase in WIP turns of 165% to 57.2; a reduction in days of inventory on hand of 64.3% the last five years ("Were usually producing today what were going to ship tomorrow," says Thacker); productivity up 12.5% the last two years; productivity up nearly 38% the last five years; yields improved by better than 30% in the last two years; and manufacturing cost reductions, including purchased material costs, of 30% the last five years (most of which has been passed on to BWA customers). In the 1990s two former BWA Frankfort plant managers have moved up to BWA Automatic Transmission Systems corporate positions -- Bob Welding to president and Bruce Moorehouse to vice president of business development. And this summer Thacker took over the BWA headquarters plant in Bellwood, Ill. This type of management movement is indicative of the manufacturing mindset that permeates BWA, one that relies on a sort of collective consciousness and not on any one personality leading a plant. Employees -- from vice presidents to production workers -- are pulled toward corporate goals by a layering of communication mediums, including:

• Long-range planning sessions held annually and attended by all employees, in which management shares an understanding of the business-planning process and the upcoming challenges for the year.
• Quarterly plantwide meetings in which overall facility performance and customer performance ratings are reviewed.
• Business-unit meetings, held at least monthly, focusing on quality and customer-satisfaction issues for each process line, such as manufacturing, scrap, and adherence to specifications. "It allows people to see an impressive list of accomplishments each and every month," says Thacker.
• Supervisor meetings with the plantfloor workforce occur no less than weekly -- often daily -- and pound through the day-to-day details that align with the above agendas. "Theres a link from shop-floor initiatives to the corporate long-range plan," says Ames.

At the plantwide and monthly meetings the following tracked items of progress are relayed: value creation (an equation of operating income plus cash flow), inventory turns, scrap, contribution margin, delivery perform-ance, defective ppm, customer concerns, and safety incidents. Kurt Heberling, chief engineer, says the communication links allow employees and managers to be exposed to the "next level" of reporting data, familiarizing them with responsibilities and assignments of superiors, which in turn helps to push employees up through the BWA organization and spawns a promote-from-within environment. "You can set up your plant or business 10 different ways, and you can be successful all 10 different ways, if youve got the whole team on board," advises Thacker. "If youve got the trust, respect in the organization, and the leadership, you can be successful." BWA has been successful while competing in a highly competitive, ultra-cost-conscious automotive industry. General Motors Corp. accounts for more than half of the plants production, Ford Motor Co. for a little over one-third. Chrysler Corp. and the aftermarket round out the customer dossier, which the plant tracks via customer-supplied performance ratings, customer surveys, and self-assessments. BWA has chosen to attack that market with a high-end product. "Borg-Warner is a product leader," says Ames. "We looked at the different strategies that different companies deploy. You can be low-cost producer, you can have customer intimacy, you can be a product leader -- thats our niche. Were an innovator. We go after the high-tech. Were looking for highly engineered applications that we can put our technology in." In 1997 the plant found nearly 14 million applications for its products, producing 7 million Flex-Bands, 5 million Maji-Bands, 1.6 million Rigid-Bands, and 600,000 Uni-Bands. With the exception of Rigid-Bands, BWA holds patent rights on all the products, and as such has secured a place in the markets future. Each band, though carrying different performance characteristics, consists of four supply components -- coiled-steel straps and brackets, paper, and adhesives. Straps and brackets (blanked, pierced, and rolled) are joined into bands, and an adhesive-coated paper friction liner is applied. "We look at ourselves as the technology leader and not a commodity supplier," says Heberling. That, he adds, will enable BWA to keep ahead of automotive-industry needs such as hybrid and electric-vehicle technologies: "As transmissions evolve, this plant will evolve with them." If the product emphasis at BWA Frankfort is high-tech, the workforce emphasis is high-involvement. Plant manager Ames says the basic concepts of constraint management, cost-cutting, and waste-reduction work well in Frankfort and corporate-wide because management understands that people are the true drivers of improvement: "Basically the procedure that all the Borg plants have used for that is teamwork, driving decisions down to the lowest possible level in the organization," says Ames. For instance, this summer the plant began running a new line dedicated to its 5R55N Maji-Band product. Dina Thurmond, team leader of the line, points with pride to the business units layout and processes, which in addition to running the 5R55N is flexible enough to cover virtually any product manufactured in the plant. Additionally, nearly all of the equipment in the line came from other BWA Frankfort processes, retooled for new uses by the plants maintenance department. Even before Thurmond says it, you know she played a big part in designing the line. "All of us had a say in how we put together the line. . . . That meant a lot to us. You have a sense of ownership," says Thurmond. She says teaming and team training have given employees confidence to pursue such tasks, and managers now are willing to acknowledge their ideas -- not exactly what it was like 12 years ago when she started. Throughout the business units, such as the 5R55N line, employees are cross-trained and frequently rotate among jobs as often as every four hours. This relieves body stress and monotony, and brings a fresh eye to a repetitive process. Thats important because plant-floor employees handle quality control. "We built quality into the system," says Dan Zapalski, a business-unit supervisor. "The operators have control over the system. We took away quality inspectors because thats non-valued-added." Above and beyond the natural work teams within each business unit at BWA Frankfort, the plant relies on a cadre of teams with specific parameters of impact, including, but not limited to:

• Safety teams handle safety orientations, training, and workplace evaluations. Thacker says they are "the most successful Ive ever seen because its a grass-roots committee."
• Wellness teams host walking events in the community and promote and coordinate lifestyle physicals in which employees can earn Lifestyle Bucks to cover their health-care contributions or future medical needs.
• First-aid responder teams -- in which members meet OSHA requirements for CPR and similar designations -- train departments in response techniques, such as heat treatment or laceration care.
• Energy teams seek out utility cost reductions and in the last two years produced $263,000 in savings.

The facility also rewards employees for their teaming and individual efforts: Frankfort offers profit sharing, a tuition-reimbursement program, perfect attendance awards, and team-project completion parties. The plant this year adopted a suggestion system (Qwik Fit) that rewards employees randomly -- $50 weekly and $500 monthly -- for self-implemented ideas in quality, safety, environment, productivity, and profitability. By mid-summer Ernie Hatfield, a mill-pocket operator, says he already had pocketed $600, with one of his ideas netting plant savings of $80,000. In May and June some $200,000 was saved in the plant via the Qwik Fit program. "All the early answers have been [deployed]. We have to go to the people," says Heberling. "Thats why we keep talking about people being our resources. . . . This plant does what every other plant wants to do. It takes a product thats not easy to make money on, and it makes money. It continues to strive -- it continues to be a leader. Thats not easily done, and its because of the people here." At A Glance

• 21 ppm customer reject rate on shipped products.
• Work-team scrap reductions of $451,000 in 1997.
• Increased WIP turns by 165% in last two years.
• Reduced WIP by 73.2% in last five years.
• First-pass yield improvements (five years) of 30%+.
• 100% empowered natural work teams.
• 31% improvement in plant scrap costs the last two years.
• 100% customer retention rate.
• ISO 9001 and QS 9000 registered.
• Expects ISO 14001 certification in late 1998 or early 1999.
• Safety incident rate dropped 58% since 1995.
• One stretch in 1998 of approximately 500,000 work-hours without a lost-time accident.