Crossroads in the UK
June 1, 2006
Historically, both manufacturers and the general public have perceived globalization as a matter of "us" vs. "them." Back in the 1980s, it was the Japanese, building cars and consumer electronics. Today, it's the Chinese and India.
However, the reality is a little more complex than latter-day mercantilists would have you believe. True, outsourcing production inevitably causes shifts in terms of where products are manufactured, and by whom. But, in a truly free market, one in which goods, services and capital flow freely without to regard to national borders, it seems that, inevitably, whatever goes around, comes around. You scratch my back, and I'll scratch yours: You build this neat new circuit board that my buddy in California designed, and I'll have a guy in Vietnam put it into a cell phone for export to the former Soviet Union.
Nowhere is this better illustrated than in the Perkins Shibaura plant in Peterborough, England. The plant-which assembles small two-, three- and four-stroke Perkins 400-series diesel engines for the industrial, agricultural and marine markets-is a veritable Hungarian goulash of different nationalities and manufacturing backgrounds.
Take, for example, the name: Perkins Shibuara is as joint venture between Perkins Engines Co. (Peterborough, England) and Ishikawajima Shibaura Machinery Co. (ISM, Tokyo). The former is one of the world's leading diesel engine manufacturers with a history stretching back more than 60 years. The latter-a subsidiary of Japanese industrial heavyweight Ishikawajima Harima Heavy Industries Co.-is a 50-year-old manufacturer of everything from tractors to portable pumps to weed whackers, with more than 1,200 employees.
And, this isn't just a subcontracting relationship operating under the guise of a "partnership," with one party simply outsourcing the grunt work of manufacturing to another. From a financial standpoint, Perkins Shibuara, which was incorporated in 1996, is 70 percent owned by Perkins Engines Co., with ISM owning the remaining 30 percent.
From a manufacturing standpoint, ISM is responsible for the design, casting and machining of all major components, while final assembly is performed at the 55,000-square-foot plant in England. Peterborough engineers are also responsible for the design and specification of final "dress" items, as required by customers. The supply chain is a multifaceted entity that includes major components coming in by ship from Japan and smaller parts coming in from local suppliers. For example, a local subsidiary of Anixter International Inc. (Glenview, IL) manages Perkins Shibaura's "small components" inventory, supplying hundreds of different parts to dozens of bin racks along the production line.
Fair enough. But, as the old marketing line goes, there's more. Ever since 1998, Perkins Engines has been a subsidiary of Caterpillar Inc. (CAT, Peoria, IL). This makes it part of a truly global concern, with tens of thousands of employees in facilities on nearly every continent and more than $36 billion in sales. Today many "Perkins" engines are going out the door in "CAT" yellow and black, for use both in Caterpillar equipment and for sale to other manufacturers as CAT engines.
Finally, the Perkins Shibaura partnership has been so successful it can no longer be contained within the four walls of the Peterborough facility. Sales are simply too strong; the North American market beckons. The result has been yet another global aspect to the Perkins Shibaura story: an additional 55,000-square-foot manufacturing facility, established in 2004 along the same lines as the Peterborough plant in a rehabbed CAT factory in Griffin, GA.
Mixing MethodologiesNot surprisingly, having so many different players from so many different backgrounds has resulted in a blending of philosophies. And, it's in this approach to manufacturing and the mixing of different ideas that the Perkins Shibaura story becomes really interesting.
For example, since it's inception, the partnership has encouraged the free exchange of ideas by having engineers, managers and shop floor operators visit back and forth between Japan and England.
According to Paul Clark, manager in charge of ramp-up at the Griffin plant, this doesn't just mean having people get together in a conference room. During the lead up to production in Peterborough, a number of Perkins representatives spent 4 weeks in Japan, both observing the manufacturing process and jumping in to take their own place at the line. Perkins Shibaura also used this approach during ramp-up of the Griffin facility (in addition to establishing a local training partnership with nearby Griffin Technical College and its Quick Start training program). To this day, managers and engineers shuttle back and forth on a regular basis between the partnership's various facilities. Perkins and ISM have both had engineers at their respective partners' sites for multiyear stints.
"When [the series] was first manufactured in England, there was a need for a colossal amount of information assimilation from Japan. ISM provided not only technical specifications for every aspect of the engine assembly and test performance requirements, but also access to their manufacturing facility, so that Perkins was able to review how they had successfully been able to manufacture the engine," Clark says. "We took the philosophy that it made no sense to reinvent the wheel, so many of the best practices from Japan were started at the inception."
Clark, who is now back with Perkins Engines as an engineering service manager, notes that this approach worked especially well when it came to translating the 400 Series assembly process to the Griffin plant. Clark first became involved in Perkins Shibaura in 2001 when the company was making a push to double production capacity. As part of this effort-which increased annual production from 30,000 to 60,000 units without increasing man-hours-Perkins Shibaura implemented DC electric drivers with process-monitoring capabilities throughout the line, to improve throughput, quality and traceability. When it came time to put together the plant in Griffin, Clark was able to implement DC electric tools right out of the gate, without having to go through the same learning curve all over again.
ISM also sent over two of the company's most experienced quality and operations managers to help with the process, ensuring that the theoretical training being provided was effectively translated into practice.
"When Griffin was started, we had significant help from both companies.... We were very pleased that the ISM quality manager agreed to stay in Griffin for a 1-year period to aid us with this great breadth of knowledge and expertise," Clarks says. "The one thing that training doesn't provide is experience. Virtually everything that Griffin experienced had been seen before either in Japan or England."
Not that the workers at the newer facilities are blindly following their more senior partners abroad. At Peterborough, volume requirements, and the physical size and shape of the facility are such that the production line simply couldn't be a carbon copy of the line in Japan. Similarly, at Griffin there were problems with engine testing, due to the fact that-no big surprise-there is a marked difference in temperature, humidity and altitude between Peterborough and Georgia. Central to the Perkins Shibaura assembly process is a comprehensive, functional test of each engine before it is cleared for painting and shipment. Because of the differences in climate, perfectly good engines were failing Perkins Shibaura's rigorous battery of power, emissions and noise tests. In response, representatives from all three facilities worked together to modify the characteristics of engine test performance to avoid failing good engines.
Indeed, as the Peterborough and Griffin facilities gained experience of their own, they quickly became equal partners in the manufacturing process-in part spurred on by the friendly rivalry that is inevitable when three different groups of people are engaged in roughly the same activity.
"We are constantly replicating process improvements backwards and forwards between both facilities," says Peterborough Manufacturing Manager, Warren Houston. "Any time there is a process improvement, we evaluate whether to bring it to the other facility."
For example, once the plant was up and running, operators at Peterborough found it was very easy to misidentify the similar-looking springs used in the engine governing mechanism. (Depending on the specific model and style, different springs are used to deliver different performance.) In response, they recommended color-coding the springs to ensure each assembly is completed correctly, a practice that has now been adopted in Griffin.
Similarly, operators at the Griffin plant experienced problems with the engine start spring coming apart during engine assembly. Although, the problem had previously been addressed using a captivating peg to lock the pin in place, the people at Griffin thought they could do better. Ultimately, they came up with a partial redesign of the spring head so that the neck is less constricted and less susceptible to becoming detached. This practice is now standard in Peterborough.
According to Houston, this exchange even extends to assemblers at ISM, which continues to manufacture complete engines for sale under its own brand. "If they make a change to their facility, we like to know about it. It helps the relationship to know each other's best practices," Houston says.
The CAT EffectAnother significant influence has been input from parent company Caterpillar, especially in the area of Six Sigma methodologies. Since its inception, Perkins Engines has prided itself on the reliability of its products. During the 1990s, it was a part of the total quality movement, training each of its employees in problem solving and team-centered improvements.
Then came CAT's 2001 Six Sigma initiative, whereby the company mandated that operations worldwide would adopt the methodology. According to Clark, Six Sigma helped Perkins Shibaura "focus" its quality efforts. In conjunction with lean manufacturing-adopted by Perkins in the mid-1990s and long a central part of doing business at ISM-Perkins Shibauru found it had the tools it needed to both enact improvements and ensure that the solutions it discovered would be sustainable over the long haul.
"Literally thousands of projects were launched over...a 10-year period, which resulted in gains in productivity, quality and employee engagement," says Clark, a Six Sigma black belt in his own right. "Tools like process mapping, Five Whys, Ishikawa diagrams, the Eight Wastes, visual management techniques and decision-making grids provided all of us with the ability and permission to review and change anything that would result in an improvement."
Houston notes that Six Sigma methodologies were central to a complete revamping of the Peterborough plant that took place in 2005. This included combining what had been two separate lines into a single, flexible line. It also allowed the company to reduce the number of work hours from three shifts to just two, all the while maintaining an annual output of some 80,000 to 85,000 engines. The result has been a production process that is both flexible and efficient, with work-in-progress invariably positioned so that operators can do their jobs without a lot of reaching, lifting or bending.
Again, assembly tools are nearly all DC electric and tied into the system's digital production management system. Most tools are suspended overhead with balancers that provide easy access. At a number of stations, tools are supported by torque tubes, which ensure precision driving of fasteners and protect operators from injury. Where necessary, these rigid systems specify the order in which critical fasteners need to be driven.
Before performing an operation, operators scan a bar code attached to each engine, part of creating a detailed record for each engine that comes down the line. Dozens of computer screens detail the kind of work that needs to be done at each station and how best to do it. A large, overhead LED scoreboard keeps track of takt times, target figures and work performed.
Near the end of the line, each engine enters a testing area, where it is individually evaluated in its own test cell. Currently, Peterborough has 16 fully functioning cells. Griffin has eight, but will eventually have 12. In all, Perkins Shibaura tests each engine according to eight different parameters. These include torque, noise, power, efficiency and emissions, to ensure the engines comply with environmental regulations in both Europe and the United States (See sidebar). Any problems are immediately rectified. Otherwise, each passed engine continues on to a cleaning station, a paint shop and then final dressing before shipment.
As a final piece to the Perkins Shibaura's cultural puzzle, Houston cites the company's climate of open internal communication as being a vital factor in its success. In contrast to parent company, Perkins Engines, the 185 employees in Peterborough are all salaried, from the front office on down.
Also, in a practice derived from Japan, all employees wear the same work clothes, so that on a typical day a visitor will be hard-pressed to find anyone wearing a suit and tie. As a result, there is a notable flattening of the organization. Open channels of communication mean problems can be identified and solved much more quickly.
"Although, we still have an element of hierarchy, we also have an absolute open-door policy," Houston says. "Nobody should have any fear about stopping any of us [in engineering and management] on the shop floor if there's something we need to discuss. Everybody helps in the day-to-day running of the operation."
Ramping Up for 400DIn April, Perkins Engines Co. unveiled a new line of environmentally compliant 400D series diesel engines for use in agricultural machinery, generator, construction and general industrial applications.
The series, which is available in the 11- to 67-hp range, meets all European and U.S. Tier 3 and Stage IIIa emission requirements, in anticipation of when those standards come into force in 2008. It also incorporates improved noise-reduction technologies and more compact cooling packages. According to Perkins Shibaura General Manager, Michael Wright, the company is introducing the engines now so OEMs will be able to ensure their products are also compliant well before the legislative deadline.
From an assembly standpoint, manufacturing engineers have been planning for this upgrade for well over a year. In fact, it's been on their minds ever since they began planning for a comprehensive process upgrade of the Perkins Shibaura plant in Peterborough last year.
According to manufacturing manager Warren Houston, the resulting flexible line was built with an eye toward accommodating future product changes. He and other Perkins Shibaura engineers have also been working together on design-for-manufacturing issues, such as the inclusion of poke-yoke features into the engines' constituent parts, to help smooth the transition.
According to Houston, Perkins Shibaura will begin preproduction test runs in July, with ramp-up to full production of the 400D line in early 2007.