Training helps NJ manufacturer maintain a competitive edge

Despite mounting competitive pressures, Johanson Manufacturing intends to remain in the state of New Jersey. The family-owned-and-operated manufacturer of precision electronic and fiber-optic products is making a critical investment in the company and its people with assistance from the New Jersey Department of Labor and Workforce Development and the New Jersey Manufacturing Extension Partnersh...

By Bob Loderstedt, President and CEO, New Jersey Manufacturing Extension Partnership September 1, 2006

Despite mounting competitive pressures, Johanson Manufacturing intends to remain in the state of New Jersey. The family-owned-and-operated manufacturer of precision electronic and fiber-optic products is making a critical investment in the company and its people with assistance from the New Jersey Department of Labor and Workforce Development and the New Jersey Manufacturing Extension Partnership, an affiliate of the NIST Manufacturing Extension Partnership.

Johanson manufactures the components for power amplifiers that go into the base stations for cell phone towers.

“We sell to the telecommunications industry worldwide, and our competition is worldwide,” said company president Donald C. Reilly. Johanson exports 50% of its products to Asia, with another 10% going to Europe.

The 60-year-old company has been under tremendous pressure to reduce cost, especially for capacitors, which is its primary product line. The total number of capacitors required for electronic products has been steadily declining, with fewer required per unit. In an earlier move to reduce cost, Johanson set up a labor-intensive assembly plant in the Dominican Republic in 1994, which today has 220 employees. However, the design expertise and technical parts manufacturing have remained at the company’s headquarters in Boonton, NJ, which employs 90 people in its manufacturing and business operations.

Developing the workforce

With assistance from NJMEP, Johanson received a customized training grant for $80,000 last year from the state’s Department of Labor and Workforce Development. The grant runs for a year and must be matched by the recipient. Johanson’s match consists of the wages of the hourly and salaried employees for the time spent in training.

Joe Mastrianni, an experienced field agent with NJMEP, has helped a number of companies in New Jersey receive grants.

“The state of New Jersey is committed to keeping manufacturing in the state, “Mastrianni said. “Brian Peters of the Department of Labor and his team continue to play a key role in working with manufacturing, We have a good partnership with the Department of Labor.”

According to Mastrianni, NJMEP does all of the administrative work for the company, from writing up and submitting the grant application to turning in the training workshop attendee list to the state.

As soon as a company receives a grant, Mastrianni identifies and contacts the appropriate trainers, schedules the training and then works with the company to decide on an agenda. NJMEP has an established network of trainers.

NJMEP has applied its Hexagon Model to its work with Johanson. Designed to move a small or medium-sized manufacturer from its current state to high performance, the Hexagon Model refers to the six major sides of a business — strategic planning, succession planning, human resource plan, manufacturing strategy, information technology and distribution strategy.

“Johanson is a good example of where we’ve been touching all sides of the business,” said Mastrianni, who has more than 20 years of experience in manufacturing management. In addition to the phases of Lean transformation, NJMEP provided Johanson with training workshops in customer service, the company’s computer platform technology, ethics, ISO internal auditing, and quality procedure and flowchart simplification. NJMEP has submitted a second grant application on behalf of Johanson for additional training.

Implementing Lean through teams

While Johanson had some Lean training prior to 2005, the grant enabled the company to refocus its Lean efforts. Johanson decided to use the stockroom as its starting point for implementing Lean instead of its production environment. According to Timothy R. Swanson, founder and executive director of TSG Associates and NJMEP’s Lean consultant on the project, the stockroom was selected because it was exceptionally visible to the entire staff and would serve as a “model showpiece” for what Johanson could accomplish with implementing Lean.

Swanson used the structured continuous improvement process approach with Johanson, which is a team-based improvement philosophy in combination with Lean tools. Because it’s a business challenge for small companies to take people away from their jobs for training, Swanson created an approach where smaller teams meet more frequently to learn and implement Lean concepts.

Scheduling staff time and workload has been a critical factor at Johanson. “Our resources are limited,” said Robert M. Pisapia, manufacturing manager and Lean champion. “With the grant, we’ve been able to schedule the training and team meetings in such a way to minimize the impact on our operations. Professional training has made a big difference, enabling us to move ahead much faster.”

Following Swanson’s one-day Lean overview training session, six teams that meet for two hours every week, were put in place to implement Lean. Swanson, who describes himself as the trainer, coach and guide for Johanson’s Lean process, first identified a set of six Lean tools appropriate for the stockroom and then formed a team around each tool, such as process value-stream mapping, visual measures and metrics, and workplace organization with 5S. Each team is trained in the specific tool and implements it across the work areas of the entire organization. Swanson meets weekly with each team for an hour or two to assess progress.

Team composition is intentionally cross-functional to promote cross-fertilization of ideas. Employees can also take what they’re learning back to their own work areas and are getting to know each other better.

“People who normally don’t work together are doing so now,” said Patricia Sanders, Johanson’s controller.

Johanson is already realizing the benefits of Lean in substantially greater stockroom efficiencies, job creation and retention and increased sales. In the stockroom, 900 square feet of space was made available and a savings of $60,000 was realized through a reduction of waste and obsolete materials. Across the company, seven jobs have been preserved, with another five positions created. Johanson expects to add six positions in the near future.

Additional sales of $1.1 million are anticipated this year, and sales of $5 million over the next two years are projected through the introduction of a new product line.

“This means of looking at how to organize and manage our business has enabled us to be far more aggressive in looking for opportunities in contract manufacturing and new product lines,” said Reilly. “We have a clear methodology that allows us to introduce them into our system. It just makes it so much simpler and more efficient.”

The Lean process has also empowered employees to express their ideas on how to improve operations. As Nancy Johanson, the owner of the company and the founder’s daughter, notes, “The momentum is growing. We’re a much healthier company because of it.”

Bob Loderstedt is President and CEO of the New Jersey Manufacturing Extension Partnership (NJMEP). He can be reached at (973) 642-7151 or via e-mail at . NJMEP is a not-for-profit organization that provides technical and business assistance to small and medium-sized manufacturers in New Jersey through a network of NJ-based universities, county colleges and private sector experts. Information about NJMEP can be found at its Web site: .

The Manufacturing Extension Partnership (MEP) is a program of the National Institute of Standards and Technology (NIST), located in Gaithersburg, Maryland. Information can be found at its Web site: . Inquiries can be sent via e-mail to .