SCHWERTBERG, AUSTRIA (Aug. 30, 9 a.m. EDT) — Two years ago the flooded River Aist swept through Engel Holding GmbH's factory and much of Schwertberg. But the flood also swept away an old way of manufacturing injection molding machines.
Engel was in summer shutdown during the August 2002 floods. A couple of maintenance workers spent a harrowing night inside the plant. After the water receded, employees joined members of the Austrian army to begin the cleanup. They shoveled what amounted to 1,000 truckloads of sand and mud out of the factory. Sixty-two metalworking centers were destroyed.
The scene today is quite different: Self-guided carts shuttle small-tonnage injection presses between assembly stations. The only evidence of the flood is a large wall surrounding the plant and bright yellow signs inside that indicate how high the river peaked. The “Hochwassermarke” reached more than 7 feet above the floor.
Set up to make Engel's global-platform Victory press, the assembly line is just one part of its new “continuous-flow production” for small and midsize machines. Workers in cubicles weld machine frames, and finish subassemblies like hydraulic pump assemblies and oil reservoirs — it's the industrial equivalent of the office “cube farm.” The parts go straight to a final assembly area in a just-in-time fashion.
“It's a complete change of philosophy. There's nothing at the same place as before the flood,” said Reinhard Bauer, Engel's manager of communications.
Next, Engel leaders plan to add a track so the automated carts can carry presses to a new painting station.
The goal is to turn out a finished Victory machine just four weeks after Engel receives an order. Before, with standard work-bay assembly, that process took six to 12 weeks.
The old way also was lot-driven, meaning assemblers would build machines in large lots, from parts stored in inventory. Now it's order-driven, so they can make a single machine to order as it passes by. “The production department is only allowed to supply groups of parts,” Bauer said.
Engel officials say they would have adopted the continuous- flow layout anyway in the future. But the flood pushed up the timetable, in effect ushering in a new era at the family-owned machinery maker.
“We have used this disaster and built this new,” Georg Tinschert, president of Engel Austria, said as Engel unveiled its K 2004 offerings at a news conference held earlier this summer.
Some other injection press makers also use an assembly line, but the method is still fairly rare in the industry. Engel said the Victory is a good candidate. To reduce the price and get fast delivery, the press has a pre-engineered, modular design, built from standard components. Engel introduced the Victory line at the 2001 K show.
Engel started the assembly line in early May. Because of weight restrictions with the self-guided carts, the assembly line can handle presses with up to 275 tons of clamping force.
After the frame is placed onto the cart, it moves around a loop through the various stages. At the final station, employees add piping and prepare each press for painting.
Another change: An outside supplier builds all piping systems and is responsible for supplying a specific number of pipes for that day in the proper sequence to match assembly.
Assembly crews can build presses with some special features, such as a multishot press with a second injection unit piggybacked onto the main injection unit.
Engel said the assembly line has lowered labor costs and reduced inventory. But continuous flow is not about eliminating workers. For example, after the flood, Engel decided not to replace its welding robot that made machine frames. Instead, the company went back to welding by hand. Bauer said manual welding is slower, but gives the company more flexibility.
Engel makes small and midsize injection molding machines in Schwertberg, with clamping forces from 110-440 tons. It builds large machines in St. Valentin, Austria. In another post-flood change, Engel this year moved production of all injection units — for all sizes of machine — from Steyr, Austria, and into St. Valentin, which was expanded by 23,000 square feet. The idea is to machine the cylinders, screws and nonreturn valves for JIT delivery. The company said St. Valentin now makes about 2,700 injection units a year.
The St. Valentin expansion also creates more space to build Engel's MacPET line of PET preform injection presses.
Engel also opened a Czech Republic plant last year to make electrical cabinets, conveyors and accessories for robots. The 120-employee plant is in Kaplice, just 60 miles from Schwertberg.
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As previously reported, Engel used the pre-K news conference to announce plans to build a large-tonnage press factory in China. Officials did not give a timetable or location for the China plant, which they called a “future-oriented project.”
Engel already has a factory in South Korea, in P'yongt'aek, that makes small and midsize machines.
Peter Neumann, chairman of the managing board at Engel Holding, said that in Asia, the company will maintain its strategy of using one plant for small and midsize presses and a separate plant for large machines. That's how Engel is structured in Austria and North America.
Engel plans to make only big machines in China to capitalize on the country's huge automotive sector, Neumann said. The 3-year-old South Korea operation will continue to supply China with smaller machines. South Korea should reach peak capacity — 550 presses — next year and after that, Engel will ship Austrian-made machines to Asia. The plant should ship 440 presses this year, officials predict.
Some machinery competitors have questioned whether Engel made a mistake in selecting South Korea for its first Asian plant and should have just gone straight for the lower-cost China. Neumann dismissed that talk. He said Engel is happy with the Korean location.
“We feel confident that decision was the right one. … We have been quite successful in selling to China already,” he said.
Meanwhile Neumann said that market-share gains, especially in Europe and Asia, have translated into increasing sales. Engel's sales increased 13 percent, to 538.2 million euros ($633 million) during 2003-04. The fiscal year ran from April 1, 2003, to March 31, 2004.
Neumann said the company is profitable.
North America remains an important market for Engel presses, but the region has slipped since the last K show in 2001. In the 2003-04 year, North America accounted for one-fourth of total sales. Three years ago, the “still flourishing” North American market generated a third of Engel's sales, Neumann said.
During that same period, Engel's Asian sales doubled, from 5 percent to 10 percent now.
Engel gets about two-thirds of its business from Europe.
Neumann commented on the much-publicized U.S. market for injection presses, which has declined to about the level of 2000, the last very strong year. He called it a “complete market collapse [that] has affected all manufacturers in the North American market.”
Large-tonnage business is still good, but Neumann said the overall situation is more uncertain. “Is the [U.S.] market coming back for investments in new injection molding machines? Yes or no? This is for us a question mark,” he said.
Engel supplies North America from plants in Guelph, Ontario, and York, Pa.
In K 2004 technology news, Engel will continue its push into multicomponent molding and launch a move into the broader packaging market beyond PET preforms. Engel also is adding tie bars to its all-electric lineup, which will increase clamping force to 385 tons.
Engel will show 10 presses at K. Among its demonstrations will be multicomponent molding on a large two-platen Duo Combi SC machine, when it molds a car sunroof with an integrated frame. A rotary table will move the mold through the two injection units. Tinschert said that last year, one of every three multicomponent or multicolor presses built in Europe came from Engel.