During a four-year period, Delphi Connection Systems has purchased more than 240 injection molding machines and set up two new factories near Warren and Youngstown, Ohio - a massive capital investment in an economically depressed area.
Delphi operates plants around the world. Planners ran the numbers and decided that - if done right - northeast Ohio was the right place for an expansion, Randall Ash told a PolymerOhio conference held April 13 at the University of Akron. The key is reaching maximum efficiency by eliminating as much waste as possible, he said.
``If anyone says it's impossible to be competitive against the Chinese when supplying parts in North America, look a little harder. You can do it. You just have to have the guts to do it. You've got to execute to it. And you cannot accept anything that is second-rate,'' said Ash, manager of North American molding engineering for Delphi Package Electric Systems.
Delphi Connection Systems, a major molder of electrical connectors for automotive and other markets, is a unit of Warren-based Delphi Packard Electric.
Ash outlined several fundamental principles Delphi officials used when planning the plants. Delphi had the guts, the money and a unique need to replace 220 aging presses - some 30 years old - if the company wanted to remain a leader in connectors.
But Ash said the principles apply to molders of all sizes, especially these days, as processors struggle to survive a global onslaught of competition. PolymerOhio, a statewide trade group, focused its half-day event on maintaining profitability while costs escalate.
``A lot of improvements can be made just by developing the `eyes for lean.' I've been exposed to this now for 10 years. I can walk into any plant, including my own, and find places where we're losing money,'' he said.
Employees at the new Delphi plants work three 12-hour days, followed by three days off. Even though Delphi pays a shift premium, Ash said that 24/7 schedule is far more efficient than running five days a week and shutting down on Saturday and Sunday.
``I can still lower my costs enough to compete on a global basis,'' he said.
Ash gave another piece of advice: Before expanding by buying new equipment, a company should make sure it's getting the most efficient utilization out of the machines it already has.
``If you need capacity, check your process cycle times first,'' he said. ``And if you have too much equipment, and you see no chance in the future to use it, then lose it, because it's costing you money sitting on the floor.''
Cutting out downtime and scrap or rework parts is critical. ``Anything that keeps that equipment from making good parts is money you lost,'' Ash said.
Ash listed several principles Delphi used to justify its big investment in Ohio:
* Raw utilization, a percentage measured by dividing the number of hours the equipment is making good parts by the number of hours in a work week. Scheduled downtime is usually the main thing that hurts this number.
* First-time quality, which highlights the number of parts scrapped or requiring rework. ``If it's not producing good parts, that's where you lose money, and that's where we focused on the two new plants,'' he said.
* Returned/rejected parts per million. ``Our RRPPM goal is zero, and it is possible,'' he said.
* Eliminate overproduction by tying together orders, production and shipping, with the goal a just-in-time operation. Quick-mold changes are very important.
* Cutting down waiting time by operators and even by the molding machine itself. Delphi constantly works to reduce cycles by coordinating parts-picker robots with clamp opening and closing.
Attendees also heard Greg Smith of Resin Technology Inc. review resin prices - another factor that hits profitability.
Prices of commodity resins increased dramatically in 2004, as natural gas, oil and feedstocks such as benzene skyrocketed. ``None of us think natural gas prices are coming down any time soon,'' said Smith, managing partner of Fort Worth, Texas-based RTI, which helps companies negotiate resin prices.
Smith gave a similar outlook for several commodity resins, including polyethylene, polypropylene, polystyrene and vinyl. Prices appear to be leveling off and may even retreat a bit. But in general, RTI thinks prices will not decline to the levels of two years ago.
RTI encourages processors to have a strategy and appoint a resin expert who can learn the complex world of resin and petrochemical pricing. ``When the cost of the part that you're making is 60 percent or so equal to the resin cost, you should have a resin plan. But not many companies do,'' he said.
Ken Vaughan, who runs consulting firm New Horizon Partners Inc. in Solon, Ohio, explained how a processor can link day-to-day performance measurements with long-term company goals. The two often are disconnected, he said.
After creating long-range goals and a strategy to get there, leaders have to drive that down to the operational level, Vaughan said. Every action should be justified as part of the broader goals, he said.