IW Best Plants Profile - 2000

Digital in Dakota Imation plant roars along the technology road map. ByGeorge TanineczImation Corp., Data Storage & Information Management, Wahpeton, N. Dak.At a glance

• 45% of plant shipments to ex-port markets.
• 0.02% warranty costs as a percentage of sales in 1999.
• First-pass yield percentage in the high 90s.
• 0.79% annual labor turnover rate in 2000.
• 100% of production workforce in empowered teams.
• 99% on-time delivery rate.
• Zero lost-workday injuries from January through August 2000.

Near the Red River Valley in southeast North Dakota, amid crops of sugar beets, soybeans, and sunflowers, sprawls a manufacturing operation that could easily be in Silicon Valley. It could be, but then Imation Corp. wouldn't have some 600 Dakotans, Minnesotans, and the occasional transplant -- a potent blend of technical expertise, humility, and flexibility -- driving it to beat competitors from around the globe for hotly contested, cost-conscious data-storage markets. The Imation staff steer the 240,000-sq-ft facility, located about an hour south of Fargo, along an aggressive technology road map, developing new technologies from the ground up while zealously pursuing productivity improvements on mature products. They have little choice. Product life cycles for data-storage and information-management products are short, and selling prices plummet annually. Few know that better than Ronald E. Cizek, director of manufacturing operations, data storage and information management, at the Imation facility. One of the original 13 employees in Wahpeton when it started up in 1977, Cizek has seen the facility -- originally a 3M Co. plant that was part of the Imation Corp. spinoff in 1996 -- advance from 8-track cartridges and VHS tapes to tape-backup cartridges, computer diskettes, and SuperDisks. Wahpeton, the largest diskette manufacturing site in the world, now produces hundreds of millions of diskettes per year -- more than 30% of the worldwide market. This year it became the first plant in North America to manufacture CD-RWs (readable and writable). "Our technology and the speed with which we do things allows us to really service our customers and key OEMs, and that gives us a competitive advantage at the end of the day. . . . We stretch ourselves and our people, and we test how many things we can handle," says Cizek. Allowing Wahpeton to handle numerous projects is a foundation of on-site equipment and technology. A molding-technology center develops new injection-molding tooling (about 60 new tools per year), molded components, and new molding processes. A materials-characterization lab assesses and optimizes purchased materials, develops new materials, and explores recycling opportunities (4.2 million lb of purchased recycled resins in 1999). A tooling-fabrication center produces optical tooling and augments existing equipment to accommodate new products (in some cases tooling life has been extended by 20 times the industry standard). And a metal-competency center focuses on metal-component design and development. The four technology centers support Imation's injection molding, metal stamping, assembly, and packaging operations and, in concert with maintenance personnel, compile multitudes of fraction-of-a-cent cost savings and contribute to quality levels of double-digit ppm or better. Keith Mitterling, mold coordinator in the tooling-fabrication center, says, "One of the best things about [Imation] is the faith they put in their employees as far as the cost of researching new ideas, trying new technologies, and trying to find new ways-innovative ways-to do things to cut our costs and do our jobs better." An example of that is a metal-stamping operation that, with input from engineers, operators, and maintenance, doubled the component output per day for a critical operation, while maintaining quality and equipment durability. Such cross-functional ingenuity has allowed the facility to grow its share of the worldwide diskette market despite a steady market decline. Melyssa Evanson, production-operations manager, says diskette productivity has increased by 250% and unit costs have been cut 60% in the last five years. She credits the plant's quality-improvement and cost-reduction process. "It's really from the ground up, from the production floor to the maintenance people to the engineering ranks and also to the management perspective." "Quality improvement and cost reduction managed to one-hundredth of a penny would be very difficult for a company that's never thought that way. But with us it's the competitive nature of what we do," says Cizek. "And if we can compete on a manufactured diskette, then why not apply those same techniques to engineering-intensive value-added products, and really leverage that vertical integration for the betterment of the company." And that's just where Imation's road map is directing it. In 1998 Wahpeton ramped up its Manufacturing Services Center (MSC), the unit that provides custom-designed and manufactured products for some of the biggest names in high tech and large volume, new-product opportunities for Imation. As that unit grows and Imation peers over the next high-tech horizon, the ongoing need for a technically adept workforce increases. The Imation plant works with the North Dakota State College of Science (a trade technical school and junior college) and pursues the best, young technology minds across the country. The staff at Wahpeton has included graduates from Massachusetts Institute of Technology and Rensselaer Polytechnic Institute, and the facility has been awarded 11 U.S. patents since 1996, four since the first half of 1999. "When we go out and recruit, we're able to bring in very high caliber people, and that makes a big difference in terms of what we're able to do and how we're able to move forward," says Cizek. The Imation staff includes senior engineer Kristi Chavez, a native North Dakotan who graduated with a doctorate from Georgia Tech. Chavez helped Imation reach its most recent marker, the launch of its CD-RW line. The CD-RW line, class-100 clean, is indicative of Imation's technology commitment. CD-RW facilities and equipment cost $10 million and the unit ramped up, incredibly, in less than a year, from announcement to manufacturing. In just months of operation the unit gave Imation a respect-able share of the worldwide CD-RW market, estimated at 66.7 million units in 2000 and projected to grow to 181.9 million units by 2003, according to market research firm Understanding & Solutions Ltd., Bedfordshire, UK. Dennis Gladen, site manager, says the CD-RW operation leverages the same internal-design capabilities of low-cost manufacturing developed on Imation's diskette lines, and has an attractive path for future migration, from the 640 MB CD-RW currently produced to digital video disks, with essentially the same equipment and processes. The CD-RW implementation evolved out of a change-management process called global product and process planning system (GPPPS). "This plant thrives on change, lots of change, but we have to manage that change because every idea proposed, every change proposed, is not necessarily good," says Larry Gast, quality systems manager. GPPPS defines all business and manufacturing processes for a new product or proposed change, and evaluates the customer, product, and environmental impacts. The result, he notes, is that "we only implement good ideas." Web Exclusive Best Practices Imation Corp., maker of digital storage media. By George Taninecz Benchmarking contact: Larry Gast, quality systems manager, [email protected], 701/671-6121. PASS For Better Safety "1999 was the best year in terms of safety in 10 years, and we're going to blow that away in 2000," declares Ron Cizek, director of manufacturing operations at Imation Corp.'s Wahpeton, N. Dak. complex. From 1995 to 1999 lost workdays at the plant decreased by 91%. Through August 2000 the plant recorded an injury/illness incident rate of just 0.59 (just two injuries). Key to the safety improvement has been the plant's behavioral-based Personal Awareness Safety System (PASS). Keith Mitterling, mold coordinator in the tooling fabrication center and a member of the PASS steering committee, says the PASS mission works "to reduce injuries and illness by changing the culture at our site. Employees will recognize the at-risk behaviors that tend to contribute to injuries and illness before they happen. What it's directed toward is looking at the processes of the people and not the machines that people are using." More than 50 Wahpeton employees have been trained as PASS observers; that is, they notify fellow employees that they're being observed, and then make recommendations regarding appropriate safety equipment, stress-reducing movements, etc. "After the observations are done, we collect the information and have a problem-solving session to go over areas so [we can] identify a problem, identify a root cause, and generate a possible solution," relays Mitterling. Employees from problem areas are brought into the sessions to help find solutions. "It's the actual employees that look at the results and say, 'These are the things we can do to make the work area better.'" "The PASS process is not a quick fix nor all of sudden will it make all of this go away," says Terri Blackwelder, site receptionist and a PASS steering committee member. "It's something that takes two to three years before you see actual benefits of the process as people become more inclined to look at what they're doing and how they're doing it so as to not hurt themselves." Also contributing to stellar safety at Wahpeton is participation in the North Dakota Workers' Compensation Risk-Management Program, an on-staff occupational health nurse who interacts with local health-care providers, and inclusion of safety measures in the Imation pay-for-performance program. Leveling The Global Field Even a world-class facility such as Imation can find it difficult to compete on a playing field that's slanted in favor of international challengers. Imation has taken unusual steps to level the field. The plant sought and was awarded Foreign Trade Zone status from the U.S. Customs Dept., which enables it to import raw materials duty free for finished products that are sold in the U.S. or abroad. Given that the plant exports 45% of its products overseas -- primarily to Europe and the Pacific Rim -- the savings on purchased material significantly impacts Imation's cost comparisons with global competitors. Employee Empowerment "We put a lot of emphasis on an empowered workforce. [The workforce is] making decisions and driving decisions up from the bottom of our organization, empowering people to lead and do things out of the ordinary," says Cizek. The Imation facility reported that 99% of its workforce is empowered, taking on responsibilities such as production scheduling, interteam communications, skills certification, safety review and compliance, daily job assignments, and training to name a few. The plant involves employees in benchmarking activities, shares financial information widely with staff, and encourages and implements employee suggestions through structured continuous-improvement programs. The facility also rewards employees for individual performance, team performance, and has a profit-sharing plan (minimum of 4.4% payout above annual base wage in 1999). Like most IW Best Plants, Wahpeton stresses training: 95% of its production personnel have multiskill certifications, and production employees receive an average of 54 hours of training annually. "We put a lot of emphasis on training and competency because if our employees don't have the skills they're not going to be able to deliver in this highly competitive work environment," says Cizek. Shifts For The Better In the late 1980s a management restructuring of shifts at the plant created adverse affects on employees and morale. For nearly a year an empowered employee team worked on developing an alternative. What evolved was an unusual shift structure that uses four, 12-hour shifts (two per day) based on a 28-day work period. In a 28-day cycle, shifts are scheduled to work 14 days with no more than three scheduled work days in a row; half of the 14 days are day shift and half are night shift. The schedule allows for employees to coordinate with colleagues longer periods (i.e. seven days on and seven days off) and long-term crews of day or night shifts for personal needs. It also includes job sharing (even in a production setting). After implementation, the plan was widely approved by employees and it has been reviewed twice since. An indication of its success: In 1999 the plant had an employee turnover rate (including retirees, buyouts, transfers, etc.) of just 0.71% in 1999 and 0.79% in 2000. Online Enterprise In May of this year the plant went live with its implementation of Oracle Manufacturing, a bundle of software applications for manufacturing operations from Oracle Corp. It's the first Imation plant to do so. The IT project involved more than 2,800 hours of training for 81 "critical users," and puts the Dakota facility online with Imation headquarters, which in May 1998 replaced 450 legacy systems with 10 Oracle-based systems. Flood Relief The weather in North Dakota can get pretty rough. This past summer temperatures were pushing 100 degrees. Winter brings frigid Artic wind and temperatures plummeting far below zero. But in the spring of 1997 it was devastating floods that tested the mettle of area residents. Water cascaded over the Red River that begins on the border of Wahpeton, N. Dak., and Breckenridge, Minn. Some Imation employees lost homes in the flood, and many spent long nights and days following their shifts to sandbag homes and buildings, patrol dikes, and man pumps. The Wahpeton plant, as a group, pulled together to support their colleagues, neighbors, and public institutions. The plant also donated equipment and resources, and later that summer celebrated the sacrifices and tenacity of its workforce."