Reshaping the future

Exal’s aluminum package factory is building momentum and helping to rebuild Youngstown.

05/14/2018


Courtesy: CFE MediaAn aluminum slug—maybe two inches around and ½-inch high—is turned into a sleek, shiny aluminum package through a trans-formative process. It’s accomplished through the relatively simple process of extrusion, using high-powered presses, done hundreds of thousands of times a day across 15 lines at the Exal plant in Youngstown, Ohio. 

The raw aluminum package is reshaped and labeled to hold beer, energy drinks, and personal care products for some of the world’s most iconic brands. It is as much art as manufacturing, with a production process that allows for many possible package variations. Managing that process is one of the keys at Exal.

“I came from the plant floor, so when I work with customers, they come up with some crazy plans. We try to steer them into possibilities,” said technical manager Keith Mitchell. “We still want to think outside the box, but we know the limitations on the machines.”

“It’s a partnership,” said Jason Berger, director of U.S. operations for Exal. “It’s about showing customers the potential. We think we can show them a more dynamic product that will draw sales.”

Reshaping aluminum is just one part of Exal’s mission. Helping to reshape Youngstown, a city that exemplifies the decline in manufacturing in America’s Rust Belt, is another goal. Four decades after the departure of steel foundries and mills from the community, Youngstown is trying to transform its economy and its reputation. 

Changing the business

It started with an aluminum beer bottle.

While Exal had done aluminum extrusion for years, the preferred container for beer was an aluminum can or a glass bottle. Then Exal developed the 16-ounce aluminum beer bottle, and the consumption of beer—and where it could be consumed—changed forever.

Exal’s designers worked with Budweiser. “We told them ‘here’s some things we can start to play with’,” said Tom Chupak, director of research and development. “That was about 14 years ago, and we came up with the final design. It started here.”

“Exal is focused on providing premium aluminum packaging.  A recent study showed that when a consumer picks up a product on the shelf, 70% of the time they buy it. Exal’s products make brands stand out on the shelf. 

Courtesy: CFE Media & Exal“We talk with the brand teams about what they are trying to do,” said Exal CEO Michael Mapes. “The facts are that brands in aluminum are growing, particularly at the expense of tinplate. Aluminum provides a differentiated and compelling consumer experience that is also good for the environment.”

A Columbus, Ohio native, Mapes has been on the job at Exal for the past two years after a career that included a stint with management consultant McKinsey & Company and experience running a number of global packaging businesses. Exal is owned by Ontario Teachers’ Pension Plan, and that private equity ownership allows Mapes to shape the company in the same dynamic way the Exal machines shape aluminum.

“It’s a perfect fit for me,” said Mapes. “The Ontario Teachers’ Private Pension is a great company; they’re focused and committed to doing the right thing. Managing the pensions of teachers forever is a really noble fiduciary responsibility. I love that. It’s a great owner with the right values. The business itself is a great business. It’s a product that consumers want.”

Mapes said there are three key trends in the business:

1. Differentiation: "Consumer packaged goods is a really crowded category, and there's not a lot of shelf space," Mapes notes. "It doesn't matter if it's beverage, home care, personal care-you've got to stand out on the shelf. We have the ability to shape the can and put the most beautiful graphics on the package to make it stand out on the shelf."

2. Premiumization: "Companies want to move up the value chain through premium products across all categories. Whether it's energy drinks or shaving cream, some people want a more premium feel," Mapes said.

3. Sustainability: "Consumers care more about the environment," Mapes said. "They're tired of seeing plastic in the ocean. Aluminum is infinitely recyclable and also durable and safe. Glass breaks, so our products are better-suited for many customer occasions and outdoor events. Our beverage customers can offer a premium package at outdoor events that not only looks cool, but is also more sustainable and safe. It's a great alternative to glass and plastic."

Getting the process right

Courtesy: CFE Media & ExalEven in a high speed and repeatable manufacturing operation, Mapes saw great opportunity for improvement and built his management team around the idea of searching for those improvements. “It starts with safety. We always lead with safety,” Mapes said. “We’ve reduced the record-able incident rate from over 5.0 (per 100,000 hours worked) to under 2.0 in the last 24 months.

“Then there is quality. We’ve reduced the defect rate by 72%, and it already was at a great level. We focused on delivering the right value to customers. We got even tighter with the process, came up with some innovative solutions, and we started growing the business.” 

For both the new management team that joined Mapes in Youngstown and for the employees who were around when Exal opened 25 years ago, the changes have been pronounced.

“We’re constantly trying to drive up speeds, and our motors process has become more refined,” said Mitchell. “We’ve done a lot just with the modernization of old equipment.”

“We spend a lot of time on routine maintenance,” said Berger. “We have a pretty robust preventive maintenance program. You can buy all the best technology out there, but if you’re not maintaining it, it’s not going to be productive.”

Exal also has invested in 3-D printing, allowing full prototypes of bottle designs, including labels, before production begins. “We can give someone a mock-up of what the bottle will look like for $1,000 versus the $30,000 it might take to make a physical prototype, and we can stretch the graphics so the customer can see what it will look like. I feel like we’re ahead of the curve.”

“Just over the last six months in Youngstown alone, OEEs improved by 20%. That’s meaningful,” Mapes said. “That immediately frees up capacity and frees up ability to sell more products.

What we’re focused on here is delivering the most value to customers and to make the best quality products.”

Rebuilding in Youngstown

Courtesy: CFE MediaThe investments Exal has made in people and processes in Youngstown are significant, but their impact has been as much about how this community is perceived as it is about the financial impact. Slowly, Youngstown is recovering its footing as a manufacturing community and recovering its civic pride. 

“I was here 25 years ago, and there wasn’t a nice way to get into town. It was a depressed area,” Mitchell said. “The city has worked hard to tear down and get rid of the blight. Some of the steel mills have been torn down. That’s made it feel better to drive in here. Now they’re bringing the downtown back.”

“I’ve seen steady progress in Youngstown,” said Greg Galvin, Exal’s vice president of human resources. “This organization in particular has received a lot of support from the city of Youngstown. Youngtown now has a business incubator. Youngstown State University (YSU) has Ohio’s only college dedicated to STEM (Science, Technology, Engineering, and Math)—YSU is a real hidden gem. It’s a great success story.”

“I grew up in Newcastle, about 15 miles away. I moved back for this job, and I was pleasantly surprised,” said director of human resources, Thomas Shaffer. “Youngstown is like a mini-Pittsburgh. It has reinvented itself from technology and the university systems.”

The next horizon

With more than 400 employees on-site in Youngstown, part of the nearly 1,000 worldwide employees in North America and South America, there is a sense that the organization is moving forward in its 25th year. Yet some of the challenges remain that all American manufacturers face. “There’s a struggle to find talent,” Shaffer said. “We have a really good core work force with low turnover. We find folks with the skills and capabilities we need, and we’re working on more and better training programs. We do a lot of cross training to minimize the impact of folks leaving. But it’s always a struggle to find good people.”

“This has always been a hard-working, blue collar town and it still is,” Galvin added. “That applies to the people here at Exal. “We have low turnover and low absenteeism. We are very proud of our workforce here.”

But innovation has been the key to Exal’s growth, and now they are looking at innovation in a new market segment: wine. “Currently wine is primarily packaged in a glass 750-ml bottle. Glass presents challenges for outdoor occasions and events. Wine in aluminum is the fastest growing packaging segment within the category.” Mapes said. “It’s not convenient, and this is an opportunity for our premium packaging. Aluminum provides an on-the-go convenience and resonates with millennials who are open to drinking wine out of an aluminum bottle.”

It’s part of Exal’s overall strategy to continue to create unique opportunities in what otherwise might be a commodity space. “We’ve spent 24 months getting a solid foundation—getting the right people in the right roles, investing in talent and capabilities, and we’ve been focused on our customers to bring new innovation and ideas to different segments,” Mapes said. “Right now, we’re seeing our business grow. We’ve taken the right steps to position the business well. 

“But that’s just the short-term noise,” he added. “It doesn’t change the value we bring to the consumer package goods market. We’re looking to differentiate the products on the shelves and help our existing customers and new customers grow their brands.”

Bob Vavra, content manager at CFE Media, bvavra@cfemedia.com



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