IOWA CITY, IOWA - Like a veteran politician, Ed Northern strides onto the bustling factory floor, shaking hands with employees and waving to those he cannot reach. Conversation is sometimes difficult in the noisy plant, which makes instrument panels for United Technologies Automotive. But Northern, 51, is unfazed as he inspects the facility with his plant manager.
``My whole future rides on what he does here,'' Northern remarks, gesturing toward the manager.
Even allowing for Northern's rah-rah style, there is considerable truth to that statement. Inefficient factories have dragged down the profits of United Technologies' Interior Parts Division, and Northern was brought in last February from United Technologies Corp.'s Pratt & Whitney unit to lead a turnaround.
In a fiercely competitive market segment, the division's me-diocre performance has lagged behind United Technologies' other four divisions. Last year, the parent firm earned $180 million, a $2 million drop from the previous year. UT Automotive ranks third among Plastics News' top North American injection molders with related sales of $514 million, and No. 16 among the Automotive News top OEM suppliers to North America, with total North American OEM automotive sales in 1995 of $2.14 billion.
United Technologies' president, Norm Bodine, blames the earnings shortfall in 1995 on inefficient factories, and he has launched a corporate shake-up.
``I became convinced that we had good plans for improving manufacturing, but the management team was not making the tough decisions,'' Bodine said. ``Any time you make changes, you have to take risks.''
Bodine, 53, joined the firm in 1984, following a stint as president of Prestolite Co. He was named United Technologies' chief executive officer in 1992, shortly after his predecessor had launched a reorganization.
Fearful that yet another shake-up would cause confusion and hurt morale, Bodine decided to sit tight for awhile. He began to question his strategy in 1994, when he attempted - and failed - to raise cash by floating an initial public offering of United Technologies stock.
The timing proved lousy, because the market had entered a downturn. But Wall Street also appeared to be skeptical about United Technologies' future.
Although United Technologies' sales topped $3 billion last year, the company depends heavily on Ford Motor Co., which accounts for 40 percent of sales. Meanwhile, rivals such as Lear Corp. and Johnson Controls Inc. expanded rapidly by acquiring smaller suppliers.
Bodine decided it was time to shake up the company. He rejected the Pac-Man expansion strategy favored by Lear and Johnson Controls, preferring to expand internally. He focused on productivity.
To boost profits, Bodine:
Closed six plants. Over the past 18 months, United Technologies announced the shutdown of four facilities in the United States, plus two plants in Mexico and Spain.
The company cut nearly 4,900 jobs from its world payroll, and eliminated 15 percent of its factory space.
Focused on three core products: headliners, instrument panels and door panels. Those are key components for any supplier that wants to design an entire car interior.
Meanwhile, the company unloaded marginal operations. Last week, United Technologies sold its steering wheel division to Breed Technologies Inc.
Beefed up product research. The interiors division will allocate 3-6 percent of sales for research. Until this year, research and development accounted for less than 1 percent of sales.
Improved quality control. This summer, Bodine appointed Michael O'Day as his quality-control czar to standardize each division's production system. Bodine took action after Ford was forced to recall 8 million vehicles equipped with defective ignition switches produced by United Technologies.
Shook up management. Bodine named new general managers in three of United Technologies' six divisions.
The key executive is Northern, who joined United Technologies in February.
Northern inherited an operation that had not changed much since 1989, when the company - the former Sheller-Globe Corp. of Toledo, Ohio - was acquired by United Technologies. With 18 plants and 6,000 workers, the division produced a grab bag of components for the Big Three automakers.
First, Northern chose certain plants as key facilities to produce core components.
For example, United Technologies' facility in Port Huron, Mich., would produce headliners, while the Iowa City plant would make instrument panels.
Next, Northern subdivided each plant into separate business units. Individual managers were assigned to oversee production of each component. This system allowed Northern to determine how much profit each product generated.
Then Northern's managers figured out how to boost productivity by making better use of factory floor space.
In Port Huron, for example, the firm gets the same output using only half the factory space it formerly needed.
And finally, Northern launched a kaizen ``constant improvement'' program to boost efficiency in each plant.
Some plants are doing better than others.
The Port Huron factory has improved productivity, while Iowa City is making prog-ress, Northern said.
By contrast, Northern said his efforts to boost efficiency at two door-panel plants, in Wauseon, Ohio, and Bourbon, Ind., have been mixed.
The changes have been wrenching for workers and supervisors.
``Drastic measures needed to be taken, but it was almost too much to absorb,'' said Larry Omann, business agent for Teamsters Local 238, which represents United Technologies hourly workers in Iowa City.
The simultaneous introduction of kaizen, higher quality standards and stand-alone business units has caused some confusion, Omann said.
``For years, the supervisors were told: `When in doubt, ship it out.' It was production against quality. Now, they're being told that if the quality is bad, don't ship it. That's a big change for the supervisors,'' he said.
It's too early to determine whether Bodine has the cure for United Technologies. But one Wall Street analyst suggests that the company's improving financial results this year will buy time for Bodine's turnaround.
``It's not as if UTA is a big sore thumb,'' said George Shapiro, an analyst for Salomon Bros., a brokerage company headquartered in New York .
``As long they keep improving performance, I think they do have the luxury of time.''