Lean and mean – Program helping plants compete globally, save jobs

Machine operator Joe Scafidi didn’t think it would work.

Now, six months after Standard-Thomson began switching from traditional assembly-line production of thermostats for the auto industry to "lean manufacturing," Scafidi, 46, is a believer. He is among the first of the company’s 270 workers to train in the process, and the contrast between his work area and other sections of the 160,000-square-foot plant is stark: no clutter on the floor, no extra inventory stored at the site.

By Diane E. Lewis, Boston Globe Staff

Scafidi says there is another benefit to going lean: Managers listen to workers more these days.

"Before we got into lean, the things I’d say to management would go in one ear and out the other," said Scafidi, a lead man who can run all the machines in the plant. "Now, I have much more say. I was even in on the planning of where the machines ought to be."

With 60 years in Waltham, Standard-Thomson is betting on lean manufacturing to help it adapt — and survive — in an increasingly competitive global marketplace. Still, there are no guarantees. Some specialists say companies are facing a Catch-22: Employers need to be more efficient to compete. But their ability to do more with less contributes to the loss of factory jobs.

Like most domestic suppliers that sell directly to the Big Three automakers, Standard-Thomson is under pressure to meet prices set by competitors that manufacture in China or other low-cost countries. In fact, General Motors and Ford Motor Co. say that if suppliers can’t match those cheaper prices they will take their business elsewhere.

"We are being forced to compete with firms that can sell the product for less," said Mark Migliozzi, Standard-Thomson’s plant manager. "And China is the buzzword."

To help it beat the competition, Standard-Thomson is streamlining production to reduce costs. It is relying on a $119,000 grant from the state Division of Employment and Training to help it apply lean manufacturing to its workplace. It has also spent $100,000 of its own funds for training.

In classes held by the Massachusetts Manufacturing Extension Partnership, a state and federally funded nonprofit that helps companies stay competitive, workers are encouraged to devise simpler and faster ways to make a product. Managers are taught to implement the lean doctrine developed by entrepreneur Henry Ford and popularized by Japanese manufacturers. So far, 180 of Standard-Thomson’s workers have been trained.

"We’re hoping `lean’ will reduce waste in the manufacturing process and that can help us stay competitive in the world market," said Stephen Buitkus, the lean manufacturing coordinator in Waltham. Standard-Thomson is a unit of Tomkins PLC, a $4 billion British conglomerate.

"With lean, you make the quantity that the customer requires and no more," said Buitkus. "When the quantity is reached, the worker shuts the machine off and moves to another piece of equipment." Abiding by that principle, the company reduced its stored inventory by $350,000 this year, he said.

Other Massachusetts companies have the same idea. This year, 120 manufacturers will get help. Of those, 82 percent are receiving instructions on implementing lean manufacturing, said the partnership. Last year, 77 companies received assistance.

The partnership started helping big companies switch from traditional production to lean manufacturing 10 years ago, but a sluggish US economy and the growing threat of low-cost foreign competition spurred demand for training among small and midsize firms, said Michael Prior, a senior project manager with the group.

However, lean manufacturing will not end factory shutdowns or layoffs. One reason, specialists say, is manufacturers are the victims of the very efficiencies they attained. The introduction of new processes and technological productivity has never been higher. Neither have job losses.

Nationwide, 2.7 million factory jobs have vanished since 2000, according to the US Bureau of Labor Statistics. In Massachusetts, 88,400 factory jobs disappeared between September 1997 and September 2003. Some work went abroad, but not all of it.

"Knowing lean can buy a company a few years and save some jobs in the interim, as long as going lean doesn’t mean substituting machinery for the labor force," said Robert Reich, US labor secretary from 1993 to 1997 and a professor of social economic policy at Brandeis University. "Will it keep jobs in Waltham for the next 10 years? I hope so, but I am not betting on it."

Reich said technological change will eventually mean more factories with fewer people — even if they are here in the United States. "It’s not just China, India or Latin America that are taking factory jobs," he said. "It’s also technology."

Standard-Thomson’s Migliozzi said the company has no intention of cutting jobs. "Our goal is not to reduce people’s jobs, but to improve material flow to make us more competitive," he said. "The goal is to grow the business and, hopefully, hire more people."

Prior said companies in the state training program "have a verbal understanding that jobs will not be negatively affected as a result of a lean implementation."

Many at Standard-Thomson are union workers who have never experienced a permanent layoff from the plant. That doesn’t mean they’re not worried. "People are not against the lean program, but they are concerned about their pockets. People are concerned that lean could eliminate overtime," said Dagoberto Valiente, 42, of Pawtucket, R.I., a member of the executive committee at the International Union of Electrical Workers, Local 274, and a lead man at the plant.

Migliozzi said the company may reduce overtime, but the reduction will have nothing to do with lean manufacturing. "We will not have as much overtime because the equipment is better," he said. "But that is just us getting our operation in order. Overtime in the past has been a free thing for a lot of people. It will be reduced as we fix the process."

At Standard-Thomson, the lean process has been completed in one work group. There, machinery once located on opposite sides of the plant is clustered together, eliminating the need to travel around the building. That alone has saved the company about $30,000, said Migliozzi. The firm also spent $2 million on plant renovations and equipment purchases in connection with lean manufacturing.

Changing the way the plant operates is beginning to make a difference, said Migliozzi. "Where lean has been implemented, productivity has improved 2 percent over last year," he said.

"We’ve also seen an 8 percent improvement on on-time deliveries. We went from being on-time 87 percent of the time to 95 percent this year."

Diane E. Lewis can be reached at [email protected].
© Copyright 2003 Globe Newspaper Company.

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