In this era of belt-tightening, United Plastics Group Inc. wants to be the king of lean thinking, the model for other molders looking to reform their bloated ways.
The company has adopted a new culture with missionary zeal. Gone are its former days of three separate divisional presidents in three separate locations, of big plants and of bigger bank accounts to buy equipment.
In its place is a new mantra of lean, formulated last fall by the injection molder's new top executives and spread across UPG's 11 global facilities. The company has rewritten many of its old work rules, the same rules used by most molding peers to run their businesses, said UPG President and Chief Operating Officer Bruce Smith.
``We call it the `leaning' of our plants,'' said Smith, interviewed during a UPG media tour in Cleveland on July 10. ``We think we're the first company to fully integrate this across all our plants. They are going to live and breathe it everywhere.''
UPG does not have a lot of history to reverse. The company started in the plastics industry in 1999 and has since purchased five injection molding companies, all with different end markets and business strategies.
About a year after its last major purchase - that of the SPM operations from Dynacast International Ltd. in August 2000 - UPG made some internal changes. Smith and new Chief Executive Officer Shannon White came to the Westmont, Ill., company.
UPG, while continuing to grow in sales, had difficulty managing its far-flung holdings. Plants operated independently, which proved to be inefficient, Smith said.
``We had five cultures,'' he said.
Both White and Smith had managed similar tasks at other companies. White had come from packaging giant Rexam plc, where he had emphasized measured results while managing eight plants.
And Smith oversaw the start-up of Piston Automotive LLC, owned by former basketball player Vinnie Johnson. Before that, he had learned lean thinking at several large auto suppliers, including ITT Automotive and a division of Detroit Diesel Corp.
Joining them were several other new executives, including Chuck Villa from electronics molder Trend Technologies Inc. Villa, executive vice president for business development at UPG, said the new culture began to make more sense when UPG opened a plant in Suzhou, China, earlier this year.
That plant expects to do the same sales volume as UPG's facility in Bensenville, Ill. But instead of 60,000 square feet of space in Bensenville, Suzhou has 23,000. And instead of about 60 molding machines, the China plant has 22 injection presses.
``We did it right,'' Villa said. ``I couldn't believe it at first, but it works.''
Villa, who manages the sales side of the company, has readjusted his goals. Company sales are expected to be flat in 2003 - just more than $300 million - but cost reductions have improved profits, he said.
Change in course
The work has meant some hard decisions. UPG closed four plants in the past eight months.
But the company puts a positive spin on that. At two of the plants UPG kept 90 percent of the customers, shifting them to different facilities, Villa said. Today those customers are being served more efficiently, he added.
The company has reversed course on equipment buys, preferring not to purchase new machines, Villa said. By forming manufacturing cells to run a more logical work flow, the company is making due with less equipment.
The company has a name for its new lean-manufacturing program, the UPG Production System, and a new mission statement that emphasizes low cost and high quality.
To be low cost does not mean going to China or another developing country and hiring labor at dirt-cheap wages, Villa said. The company believes it can achieve similar savings by organizing its plants the right way all over the world.
Even in China, the company is as dependent on equipment as on labor, Villa said.
Smith bases his strategy on the kaizen lean manufacturing system, a Japanese style of management that emphasizes seamless work flow and the categorizing of both functions and parts. It includes work teams schooled in multiple tasks, quick setup time and the elimination of waste.
The process also emphasizes faster inventory turnover, with products moving out of plants quickly. In Bensenville, inventory turns over about 27 times a month now, compared to seven times a month in early 2001, Smith said.
The systematic approach also promotes open communication. Borrowing from Jack Welch and General Electric Co., employees are constantly given feedback, both positive and negative, on virtually a weekly basis, Villa said. Employee reviews are a constant, not a once-a-year event, he said.
UPG's goal is to promote internally but not at the expense of the company's mission.
``We want A players on our team,'' he said. ``But we also want A players who understand our [lean thinking].''
This year UPG is looking again to grow. The company is considering sites in Eastern Europe that it might open during the next 12-18 months, using funds from its owners, Los Angeles-based Aurora Capital Group, Villa said.
The leaning of UPG will remain a main ingredient in sales growth, Smith said. He said, with a bit of bluster, that the company would be the molder's archetype for lean manufacturing.
``Ours is the passion of the company,'' Smith said. ``It's in our DNA. We might have had a bumpy ride on our flight but we've come in for a smooth landing.''