Lean brings green
The Reko story starts with people and a process. On the people side, the company, located near Windsor, Ontario, went through some trauma.
Founded in 1976 by President and Chief Executive Officer Steve Reko, the company grew to include about 550 workers.
Today, Reko makes its own horizontal machining centers, fixturing and material-handling systems. It performs custom machining and hydroforms large metal frames for aircraft and other parts. And it is looking to expand its injection molding capabilities.
But that garden of services - called internally the Reko Tool Box - could not prevent profitability from collapsing last year. Profit margins were eaten alive by voracious automotive customers hungry for price cuts.
``We needed a new devotion to process,'' said Gordon Young, Reko's recently hired chief operating officer and a former executive with several Tier 1 auto suppliers. ``Toolmakers haven't developed a good profit model. It's not a football to be bounced around. A lot of companies are achieving 7 percent [profit] margins at best.''
Young, who most recently headed up supplier management at both Collins & Aikman Corp. and Textron Automotive Corp., had witnessed the same profit pitfalls for parts suppliers. Working with Reko's management team, toolmaking was turned on its head after Young arrived in April.
``We don't build molds anymore, at least not in the traditional sense,'' said Brian Bondy, manager of product development and a longtime Reko employee. ``We're all specialists now.''
Instead, the company had created the Reko Manufacturing Process, an offshoot of the Japanese-founded lean manufacturing approach prevalent among automakers.
A product planning group at Reko does most of the heavy lifting. It works initially with customers to estimate costs and break down the tooling process - one recent job was planned as 274 discrete operations. Then engineers, working almost entirely in three-dimensional computer models, take over to design every nook and cranny, or core and cavity, of a mold.
After that the data is downloaded to Reko's computer system. Progress reports come back to product planners, who can judge how cost controls are being met.
On the shop floor, the 3-D drawings are presented on computer monitors the size of den television sets. No worker has paper drawings or can even make changes to the mold on the floor.
Shop operations are split into smaller segments. Some workers are only responsible for gundrilling, others for polishing, others for mold assembly. No single worker is a generalist in Reko's system.
It is a tightly controlled operation, where standard parts and fixtures are used as much as possible to lower production time and cost. The company has dropped the time to make entire instrument panels to about 16-24 weeks, in many cases, instead of the 40 weeks it took five years ago, Young said.
The company is starting to use automated work cells, both for mold making and molding, that can reduce labor even more. Those cells would include vision systems, where parts can be electronically scanned for inspection.
``The speed and efficiency that is gained can make us very economical,'' said Roger Awad, president of Reko Automation & Machine Tool Inc. ``It's in the embryonic stage but an automated cell can boost our business even more.''
Sales have responded by inching up to about C$74 million (US$47.4 million) in 2002 from C$52 million (US$33.4 million) in 2001.
For the people part of the equation, Reko has laid off more than 90 workers this year at its 12 plants. While that has not been easy to do, it has not affected production except to lower labor costs, Young said.
``Repeat errors are down substantially,'' he said. ``We don't need as many people. It took some time to break old toolmaking habits but we've achieved a better level of success now.''
The biggest offender before: The desire of shop floor workers to change a mold design on the fly or send changes back to the engineering staff. That delayed projects and inflated costs, Young said.
Reko's stock, sold on the Toronto Stock Exchange, has risen to about $5 a share. Considering that it traded at about $1.50 a share in December, the company has gained attention.
``Some mold makers view themselves as craftsmen, but Reko sees the issue as removing waste, and they have different methodologies to do it,'' said Mengel of Plante & Moran. ``Some see lean manufacturing as being at odds with the craft, and I don't agree. You need to have both to some degree.''
The push to go lean does not end with Reko. Smaller molders are looking to the Far East for new processes too. President Tom Beddoe of Hi-Tech Molding and Tooling of Lilburn, Ga., made several visits to Taiwan learning how to speed tool production.
He came back with an approach that differs from Reko but is equally radical. The company takes the first 24 hours on a project to prepare a basic mold layout that shows the guts of the injection mold, including water lines and gating.
After that, the tool build begins, without the usual design steps that Beddoe said can add 10 days to a project. Instead, the mold is built off the print, while designers tweak the finer details.
The company makes most of its multicavity molds in four to five weeks, an instant in tooling terms. It even gives customers a guarantee in its contract
``We're willing to take a 30 percent hit if we can't make a mold in that time,'' Beddoe said. ``To compete with other countries, we have to change our way of thinking here. We've been working at this almost three years now and we're getting some visibility.''
The company also is expanding, adding 26,000 square feet to its plant near Atlanta. ``You have to be better today or you won't be in business tomorrow,'' Beddoe said.
Those thoughts were echoed by Glenn Starkey, president of mold supplier Progressive Components Corp. of Wauconda, Ill., and chairman of the global business council of the Society of the Plastics Industry Inc. in Washington.
Toolmakers cannot turn their backs on some of the fresh approaches taken by overseas mold shops, he said.
``Know thy competition, and strategize from there, rather than dwelling on how rough it's been,'' Starkey said. ``For all of us, it's difficult to not get caught up in the negatives, but we must fight forward.''
Means to an end
You can call MGS Manufacturing Group Inc. an engineering company, a problem-solving company or a global company.
Just don't call the company a toolmaker, even though that's where about 40 percent of its expected $120 million in 2002 sales come from.
``Engineering is the core,'' said John Hahn, MGS vice president of, naturally, engineering. ``Our founder, Mark Sellers, likes to say that anyone with a line of credit can build a tool shop. The difference is how you use it to solve a customer's problems.''
That holistic philosophy has led to growth in new directions for MGS. The company has fashioned a future around such areas of automation, where a seamless transition can be made from database design to production, and to manufacturing cells, where those standardized tools are added seamlessly to injection presses.
``It's the science of manufacturing that excites us,'' said Craig Hall, president of MGS' TecStar Manufacturing Co., the group that sells turnkey manufacturing processes to customers. ``Our advantage is in meeting stringent demands of customers for rapid time to market.''
While the tooling market stays soft, MGS has found molding to be an advantage. MGS recently bought 40 injection presses with clamping forces of 30-300 tons. Most of those machines will go to the company's molding plant at its Germantown, Wis., headquarters, with about five machines each going to facilities in Libertyville, Ill., and San Antonio.
Many of those presses will be used as part of MGS' toolmaking engine, Hahn said. Parts will be sampled and verified. The company also will use the presses to test new parts for customers.
MGS has found another engineering niche in the area of multi-shot molding, including a new rotary turntable injection system. When the company installs the new presses, it will add 25 portable injection units to help with multishot molding and add 20 robots.
About 95 percent of the new presses will be capable of two-shot molding, Hahn said.
The company is forming alliances with companies around the world, including one to transfer mold-build work to large European toolmaker Mikron Holding AG of Biel, Switzerland. Another new alliance, with Balda AG of Oeynhausen, Germany, includes the production of mold foil and in-mold decorative systems.
The companies started a new company, Albea Technologies LLP, to develop the decorative parts technology.
MGS now has more than 900 employees, up from just 40 in 1992. And it just doubled the size of its Germantown plant to 185,000 square feet.
``We have to start thinking of ourselves as being a big company,'' Hall said. ``It's a different mind-set than being one of many toolmakers.''
New plant, struggles
At Kellums & Coe, the tooling downturn was only part of the problem. A human tragedy hit the company even harder.
In August 1998, co-founder and President Jim Coe died in a tractor accident on his farm near the injection mold plant in rural Jeffersonville, near the Indiana-Kentucky border.
His sudden death left his widow, Carolyn, to run a new, 52,000-square-foot plant and keep its 47 employees working.
The chalk-white plant had opened that July, a month before the accident, with Carolyn Coe taking a major role in its architectural design.
With the building costing around $2.4 million, the company was at a crossroad. Carolyn had worked at the mold shop since 1985 and knew the business. But Jim was the hands-on engineer who could fix any problem on the manufacturing floor.
The next day, Carolyn told the employees not to worry about their jobs. Only a few of the company's customers went elsewhere. The company reorganized and found new leaders. Fortunately, Jim Coe had delegated authority and trained others.
The mold maker went after niches that few other shops did well, specializing in complicated tools, said project manager Troy Lewis. Such items as air-intake manifolds and fuel lines for the automotive market, and small consumer and medical parts were part of the company's mix, requiring lots of gating and hydraulic actions, he said.
But then came the slowdown. The year 2001 was terrible for the company, Coe said. She resisted laying off workers, even as the first part of 2002 continued to be soft.
``We had to start thinking about what we could and couldn't do,'' Coe said. ``The last two years we've seen business go down. We decided to do what we could to reverse that trend.''
The company is using its skills outside of conventional tooling. It has built some special machines and some robotic equipment to speed production.
It has started to perform production machining of parts, a niche it had formerly left to other shops. It increased its welding activities for customers, another special service it used to outsource.
None of that work has led Kellums & Coe back to high growth yet. The company is a humble survivor, with sales approaching $4 million this year. With a diverse customer base, some segments of the industry are starting to come back, Coe said.
New approaches are needed, Coe said. For a small shop, that can mean using the toolroom floor for other services, she said. Companies need to find any means to stay busy, she said.
But unlike some of the larger shops that have found success by changing their businesses, she acknowledged that there is only so much she can do in the face of the tooling meltdown.
``Someday, I'd like to pass on this business to my kids,'' Coe said. ``I don't want them to think that tooling is not a very good business to be in. We hope that isn't the case.''