2011 Top Plant winner: NACCO Materials Handling Group
Hire and higher: Building a workforce helps NACCO Materials Handling Group build profits—and world-class lift trucks.
While some businesses closed their doors during what some economists described as “the worst economic crisis since the Depression,” those that remained faced immense challenges over the past three years.
One manufacturer that not only survived the recession but became stronger in the process is NACCO Materials Handling Group Inc.’s (NMHG) Berea, Ky., plant, the 2011 Plant Engineering Top Plant winner. NMHG designs, engineers, manufactures, sells, and services a comprehensive line of lift trucks and aftermarket parts marketed globally under the Hyster and Yale brands.
“It’s a great honor to win the Top Plant award,” said Tim White, plant manager at NMHG’s Berea plant, who gives the credit to the workforce at the plant. “I would put this workforce up against any workforce, anywhere. We’ve weathered a very rough storm. We were lockstep with our workforce going through it. It wasn’t always good news, but we came out of it and we’re stronger because of it and we’re seeing results.”
John Gardiner, vice president, Americas Manufacturing at NACCO Materials Handling Group, Inc., understands what NMHG can gain from looking at where it is and where it needs to go on its continuous improvement journey. “I think the Berea team needs to reflect on what they have achieved and celebrate this mile marker and energize themselves for the future,” Gardiner said.
Although the recession was rough for many manufacturers, NMHG took advantage of the opportunity to get set for the recovery. “We used the slow time to continue to drive improvement,” said Gardiner. “Those who are ready when (the economy) comes back will be the winners.”
And winners they are.
Putting people back to work
Nearly every manufacturer felt the impact of the recession, which forced most companies to make production and workforce cuts. The Berea plant reduced its production schedule from two shifts to one and experienced multiple workforce reductions, according to White.
But NMHG positioned itself to respond to the economic rebound. During the sluggish economy, the company explored its options for the future. “When the recession hit, we started making plans for the recovery,” White said.
As the economy started to recover, NMHG saw increasing demand for its products—enough demand to justify rebuilding its workforce. The number of team members at the Berea plant increased from 502 in 2009 to 722 in 2010—more than 30%.
Hiring was gradual. “We looked for market stability,” said White. “We were conservative with bringing people on. As we saw stability, we brought people back to work.”
White estimates that the NMHG facility in Berea has slightly more team members now than before the recession. Within the past year, the plant also resumed second-shift operations.
“We called back some of the people who had worked for us previously,” said Steve Lawson, human resources manager at the Berea plant. “And we got a vast majority of them back—even though some were working at other places. Our work culture allows us to be the employer-of-choice in the area. We don’t have to seek very hard to get applicants.”
White agrees. “When people say they work at NMHG, people know this is a good spot to work,” he said. “It’s somewhere that you want to be, not somewhere that you have to be.”
Employee training gets a lift
In addition to refocusing its staffing approach, NMHG also prepared for the economic recovery in other ways—including the launch of eight new product lines. “We implemented a manufacturing execution system (MES),” said Gardiner. “We introduced new products. We have design changes coming through on our products on a regular basis.”
One of the most significant ways NMHG drove its continuous improvement during the downturn is training. “We recognized that if our projections were going to come true, we needed to change the way we train people,” said White.
NMHG increased training time from 10 hours to 80 hours per person, which must be completed before performing work in the plant. The new training program was already in place when the company began rehiring. “The first people to come back were previous employees,” White said. “Even though they worked here before, they went back through the training.”
In addition to basic employee job requirements, the training emphasizes safety, quality, delivery, cost, morale, and environment. “We ensure that all production employees are capable of performing their assigned jobs,” said Rodney Wilson, engineering services manager at NMHG. “We start the training with a qualified peer and then have their work reviewed by a certified trainer from the human resources department.”
“We had people who would volunteer to go to second shift to help train new people coming in,” Gardiner said. “We have changed a lot, and we had to bring those people back up to speed. There were a lot of positives. People who left and came back saw the improvements.”
Feedback from people who have been rehired and have completed the training indicates NMHG’s continuous improvement processes are working. “Even though they’ve been out of the building for a year or two,” said Wilson, “it’s refreshing to see their comments at the end of their training noting the continuous improvement that took place while they were gone.”
Training provides job-satisfaction benefits as well. Darnell Hill, one of NMHG’s trainers, has worked at the Berea plant for 34 years. The aspect that Hill likes most about his job is: “I get to interact with people while we are training. I get to learn their views on training and learning.”
Lowering environmental impact lowers energy costs
NMHG developed an energy committee to discover ways to lower the company’s environmental footprint. As manufacturing engineering services manager, Wilson leads the energy committee, which is comprised of leadership members from all of the company’s North American locations, making the team both local and divisional.
The energy committee’s target when it launched in October 2008 was to reduce the company’s utility usage (electric, water, natural gas, and landfill) by 10% year over year. NMHG exceeded its initial goal by reducing its utility usage 12.2% in 2009. But it didn’t stop there. In 2010, NMHG beat its 5% target by reducing usage 8.5%. And in 2011, the company is well above the 5% target with an 11% reduction so far.
NMHG discovered that while reducing its environmental impact, the company also reduced its energy costs. “When the energy committee started the audit program, we targeted some of the low-hanging fruit,” said Wilson. “We looked at simple ways to reduce energy usage such as turning off lights, monitors, fans, welding machines, and other types of equipment that could be turned off when not in use.”
Depending on the specific industry, air compressors can account for most of a manufacturing facility’s electricity usage. NMHG shuts down its nonessential air compressors during off shifts and weekends as part of its energy reduction program.
“We recognized that air leaks are very costly,” said Wilson. “We implemented a facility leak-tag program, which allows us to track the number of leaks we repair. It also provides location information that helps maintenance technicians identify and repair leaks quickly.”
Lighting is another area where manufacturers can reduce the amount of energy they use. NMHG reduced office and conference room lighting by 50% and parking area lighting by 75% in 2009. “For each fixture that had four fluorescent lamps, we reduced the number to two,” Wilson said. “We actually disconnected fixtures in some of the office areas. We reduced the number of light fixtures per pole from four to one in our parking lot, while maintaining adequate lighting levels.”
The Berea plant installed motion sensors to control the lighting in offices, conference rooms, and restrooms. “This year, we launched a program to replace around 1,100 metal-halide lighting fixtures with T8 fluorescent fixtures and lamps,” said Wilson. “We have at least a 20% increase in lumen output in areas where we replaced the metal halides with fluorescent T8s. From day one, metal halide lamps start to degrade. Around three or four weeks into a brand new metal halide, there’s probably 15% to 20% reduction in output.”
This year, the Berea plant worked with the Madison County Industrial Board to host an energy summit. School systems, banks, hospitals, and other local peers attended the summit to hear how NMHG reduced its energy usage and environmental impact by taking some very small actions.
Wilson said the energy summit was very successful. “We were able to work with some of our local peers who had gone through both failures and successes. In fact, the lighting that we’re changing out now is a result of the summit.”
The Berea plant has made other significant achievements in reducing its environmental footprint, including:
- Standardizing and monitoring office temperatures at 68 F during the winter and 74 F during the summer
- Working with its electrical energy provider to develop a better understanding of peak electricity usage in order to appropriately schedule load shedding
- Implementing a recycling program across the division.
Recyclables are collected on-site and transferred daily from point-of-use containers to a bulk storage hopper for periodic transfer to a recycling center. Recycled materials include:
- Sheet plastic
- Aluminum cans
- Glass bottles
- Plastic containers
- Office paper.
Neighborhoods resolve issues, problems
The Berea plant created what it calls the neighborhood process in response to a corporate quality survey that indicated opportunities for better communication and engagement. “We wanted to increase the engagement on the shop floor,” White said. “There are hundreds of great ideas out there.”
“We communicated the results of the survey and talked about the items they addressed,” said Lawson. “We held focus groups on how to address problems. People saw the need for change and created a process and set of tools by which they can communicate issues, concerns, and challenges. The focus groups were very positive; the result of those meetings became the neighborhood process.”
The neighborhood process—a first for NMHG—provides the opportunity for team members to meet with their support teams each week in a supervisor-led meeting. Each department or major functional area is a neighborhood.
Through the neighborhood process, each team member has the opportunity to be heard and receive information about plant operations. Teams identify improvement areas, create action plans, and determine when items must be completed. The top eight issues are prioritized and tracked.
The neighborhood process has proven to be a valuable asset for the Berea plant as well as for all of NMHG. Lawson said the plant has implemented around 1,100 items. Nearly 700 of them relate to safety and quality, according to White.
The neighborhood process is also good for employee morale. Steve Goosey, an assembler at the Berea plant, has been with NMHG only about a year. What he likes most about working for the company is the way it cares about its people. “The neighborhood process shows us that management is open to employee ideas.”
Wilson said prioritization and accountability are other significant results of the neighborhood process. “We choose the first eight things we want to work on. Everyone knows that’s what we need to focus on first. We’re holding ourselves accountable to knock those things off the board.”
White said the only person who can take something off the board or consider it closed is the person who put it on.
The underlying glue that holds this process together is communication. White said people can bring up issues and will get feedback and status on them. “Team members know that if issues are brought up using the neighborhood process, they will be taken seriously. It has streamlined our communication as well as the work and support functions.”
“Knowing where an issue is in the process is half the battle,” said Lawson. “This keeps people engaged and believing in the process.”
Driving operations, continuous improvement
The Berea plant holds a kickoff meeting at the start of every production day to develop production plans and identify potential challenges. Key performance indicators are reported to evaluate first-hour performance and escalate potential production issues. Each neighborhood reports during the morning meeting as well.
Daily production is executed according to demand flow technology (DFT) manufacturing principles, which, according to White, is the core of the Berea plant’s manufacturing system. With DFT, customer demand drives manufacturing production scheduling and operations based on demand pull rather than forecasted schedule push principles. DFT aligns business and customer goals, and is simple, repeatable, effective, and customer-centric.
NMHG believes that DFT manufacturing principles and 5s (sort, straighten, shine, standardize, sustain) provide the overall support for waste elimination. “In my opinion, 5s is the bedrock of any production system,” said White. “Where we have the most traction is around 5s activities.”
Dan Campbell is a business analyst lead at the Berea plant. Campbell developed E-Schedule, an electronic scheduling system that generates production schedules, details product sequences, maintains inventory integrity, and performs labor reporting at key stages in the manufacturing process.
The E-Schedule system ties the manufacturing operations together according to sequence. It improves operational efficiency by eliminating manual work schedule creation and manipulation. “It’s the interface to the external schedule,” said White. “It grabs customer orders from our AS-400 system, coordinates them with the proper bills of materials, and determines the individual piece-parts we need to fabricate for the day’s schedule.”
E-Schedule isn’t the only e-manufacturing tool developed at the Berea plant. Campbell also developed the in-house MES, which is based on Windows SQL, .NET, and Visual Basic. The MES tracks activities and resources, links administration to the shop floor, and integrates with other systems in purchasing, shipping/receiving, inventory control, maintenance, and scheduling.
Because the MES is linked to E-Schedule, it triggers and controls workflow by providing detailed unit-specific build information to assembly operators. It incorporates safety, quality, engineering work methods, and assembly work instructions in the proper sequence to produce each specific assembly. Together the MES and E-Schedule allow the Berea plant to mix multiple lift truck models on the same line according to customer demand instead of building them in batches.
Maintaining equipment, production uptime
The Berea plant performs preventive maintenance (PM) to ensure production uptime. PM tasks not performed by the end of the month are rolled into the next month and become the highest priority. “Our goal is a 95% PM completion rate each month,” said Wilson. “With the actions we’ve taken, we’re continually in the 95% to 99% range.”
Equipment operators are empowered to deal with easily resolved issues, allowing maintenance personnel to spend more time on PM activities. This operator empowerment came about as a result of the troubleshooting guides the Berea plant developed for its major equipment. Troubleshooting guides are decision trees that outline common issues, their causes, and suggested actions or solutions.
Anyone can generate work orders when issues arise that require maintenance intervention. However, they are typically initiated by supervision via a web-based CMMS which tracks the work orders and maintains PM schedules.
Uptime percentage is reported during the daily kickoff meetings. Issues are tracked through the neighborhood meetings. Wilson said the troubleshooting guides have resulted in more uptime because operators can react to situations immediately instead of having to wait for a maintenance team.
When the economy finally began to recover, NMHG was able to hire, rehire, and train employees. It reduced its environmental impact and introduced new lift truck models. Because the company used the downturn to prepare for the rebound, the Berea plant is lifting its continuous improvement efforts even higher.
At NMHG’s Berea facility, continuous improvement is driven at all levels of the organization. “We have to continue to improve to be the best that we can be,” Gardiner said. “Winning the Top Plant award is a mile marker along the road, and the journey is long.”
Smith is president of BIT Writing and Editing Services and former Plant Engineering editor.
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Annual Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.