The Advantage of Making It
Some corporate executives evince an attitude about their manufacturing operations which indicates that they, well,tolerate them. Which is all the more remarkable in that these executives lead companies that are fundamentallymanufacturing companies: the companies make tangible items that are then sold to consumers. But Sam Licavoli, chairman, president, and chief executive officer ofTextron Automotive Company (Troy, MI) is different. "My whole background has been in operations," he says. He attained his current position in April, 1999. Before that he was president of Textron Automotive's Trim division, president of the Automotive Group of A.O. Smith, and had positions at Walker Manufacturing,International Harvester, and Ford Motor Co. Licavoli references Textron Automotive's 60 manufacturing facilities in relation to his background, and remarks, "I look at that as an advantage." He adds, "If a manufacturing company is not going to manufacturer properly, efficiently, and effectively, then it is not going to be successful."
Although that might seem to some people to be nothing more than stating the obvious, it is more obvious that there are people who seem to have forgotten that manufacturing companies make stuff.
Textron Automotive's stuff (which is certainly an indelicate way of describing products that tend to rack up a variety of awards from customers and organizations alike) comes from five divisions, and there is a lot of it: annual sales are on the order of $2.7 billion (which is about a quarter of the sales for the parent company, which also has companies including Bell Helicopter and Cessna Aircraft in its portfolio). Textron Automotive's divisions—and an assortment of the products they produce—are:
• Textron Automotive Trim: Instrument panels; cockpit systems; door panel assemblies and systems; interior quarter panel and side wall trim; interior trim consoles and assemblies; liftgate trim panels; fascias and bumpers; front-end modules; claddings and exterior trim moldings; exterior grilles; signals and other lighting assemblies; structural composite bumpers; underhood functional molded components.
• Kautex Textron: Plastic fuel tanks; fuel filler systems and components; precision blow-molded products for air induction systems, reservoirs and bumpers
• McCord Winn Textron: Seat comfort systems (e.g., mechanical and pneumatic lumbar systems and massage systems); windshield and headlamp washer systems; small motor armature assemblies and brushless motors.
• CWC Textron: Engine camshafts; balance shafts; intermediate shafts; crankshaft vibration damper components.
• Micromatic Textron: Spline rolling machines and tooling; honing machines, abrasives and tooling; automatic piston ringing and assembly machines.
As a company that is mainly a Tier One supplier in the common sense of that word, the last-named division jumps out: fundamentally, Micromatic Textron is in the machine tool business. That's hardly the norm for any Tier One supplier. Licavoli comments, "It's been in the family for a long, long time, and it does very well. So we say, 'What's wrong with it?'" He noes that Kautex Textron actually builds blow molding machines (almost exclusively for in-house use), so there is other machine manufacture going on within Textron Automotive.
But when asked what the company is really all about, he echoes that famous comment from The Graduate, when he points out that within the auto industry, "We are the largest injection molder in North America," and states that one of the core competencies that Textron Automotive has (and he defines "core competency" as "a discipline that drives us in our product planning process") is plastics.
Like any automotive supplier, Licavoli wants his business to grow: "We want to grow, and are being challenged to grow by our corporation." And he believes that the plastics capability can help this occur. He notes, for example that there are additional opportunities for plastic fuel tanks. He admits that they have "pretty well penetrated" the European automotive market, with installation on the order of 80%, and that plastic fuel tanks are "maturing rapidly" in North America, with about half of the vehicles being fitted with them. "The next opportunity is in Asia, where there is only about a 5% use of plastic fuel tanks."
Beyond that, he sees greater use of plastics under the hood—air intake manifolds, and other parts related to air management. He thinks that because of the company's current involvement in that vicinity, as well as with fuel management, "there is further upside opportunity there" for Textron Automotive.
|Sam Licavoli of Textron Automotive: "We want to be the premier automotive supplier for trim—interior and exterior trim—as well as for plastic fuel tanks and other related components that are core to us."|
Exteriors is an area where the biggest division, Textron Automotive Trim, is already doing plenty of work. But presently, Licavoli notes, they are injection molding, not working with sheet molding compound (SMC). He calls that "an interesting area, or opportunity," and says that while it isn't "in our strategy right now," they'll be closely following it to see whether it would be a beneficial capability to add to the portfolio.
Licavoli says that most of the growth will be organic, however, not via acquisitions.
Where he sees the biggest opportunities is in the area of modules.
Modules Make It Better
The first rule in the auto industry, it's been said, is to make money. The first rule in the mind of the consumer is to get the most for one's money. So the company that will be able to follow its industry rule will need to keep the consumer's rule in mind, as well. The two might seem to be at odds.
But Licavoli thinks that both parties can be satisfied. It can be accomplished with modules.
First, he notes that it is important to define a module. At Textron Automotive they're considered to be "a subsystem of a vehicle that will be designed, integrated, and installed as a single part number." Given that, he says that there are significant opportunities in terms of weight savings, cost reduction, space savings, and reduced assembly time, just to hit a few points. This is not theoretical.
McCord Winn Textron won the 1999 Grand Award from the Society of Plastics Engineers' Automotive Division for its RITec—Reservoir Integration Technology—system that's fitted on the 2000 Dodge Durango and Dakota. This is a single blow-molded component that combines the engine coolant and front and rear washer reservoirs, the fan shroud, and the rear filler assembly. This cuts weight by 1.2 lb., reduces cost, reduces assembly plant labor and floor space requirements, improves recyclablity, and even makes it easier for the consumer to fill the fluids.
"If a module is undertaken with truly an integrated engineering approach, starting with the customer and having all of the participants designing it together, then the power of synergy takes over," Licavoli stresses. "What we're finding is that you come up with innovative technology when you have a number of experts working together—you get more innovation than you would if you were designing the parts separately." He explains that if people are doing individual parts, they are unlikely to see that perhaps that part, or a portion of it, isn't really necessary: each person is doing his or her own thing; that beyond performance, the requirement is to make sure that your piece fits with the others. But it may be that x-number of pieces can be eliminated. That doesn't become clear unless the whole thing is being considered as a module. And with the clarity of modularity, the cost and weight savings can be realized.
What's more, in the Textron Automotive approach to modules, Licavoli explains, "It is not our philosophy to vertically integrate everything." He cites, for example, a cockpit module: they're not going to get into the radio and heater business. Textron Automotive will make the components that it is best at and partner with others for the rest. He believes that supplier companies that have vertically integrated may have "a rude awakening if this industry goes back to being a cyclical business." He notes, "If you vertically integrate and make everything in a module, then you have picked up all of the fixed costs from the OEs and from different suppliers into your organization." And if the market softens, said vertical integrator is stuck with lots of fixed costs. But by working with suppliers as key partners, the systems integrator can be flexible and nimble, which Licavoli believes a supplier needs to be.
Not surprisingly, Textron Automotive wants to be the integrator (in certain areas, such as cockpits, front ends, etc.). Licavoli acknowledges that everyone wants to be the integrator, but he believes that only the companies that are focused on specific areas and that are willing to work at acquiring the skills and the capabilities necessary to bring together the resources will be effective. And being effective at making stuff is essential.
William F. Maclean, president of Textron Automotive Trim, comments, "We are aggressively rolling out lean methods in all of our manufacturing facilities"—and when he says "all," he means all of the divisions' operation—"and are sharing lean best practices among them." There are three staff experts on lean in the Troy headquarters and one in Europe who travel out to the plants to help drive the process; each of the plants has its own lean facilitator. Cross-functional teams are creating standard documents that define best practices for a number of operations, such as injection molding, chroming, error proofing. There is a program used by the Textron Automotive designers—Best In Class Engineered Products—that allows them to know what manufacturing can do so what's designed is what can be built. There is an Advanced Quality Planning Process that assures that the necessary steps are taken so that products are designed, engineered, built and launched properly. And while many companies are working lean and best practices in their factories, Textron Automotive is moving it into administrative and functional support areas. According to Licavoli, "Our objective is to cut the amount of time necessary for a program in half."
Licavoli says that in 1999, Textron Automotive launched 19 major projects. "All but one was an absolute success." But what about that one that wasn't quite right? "The one we had some problems with was a product that we took over from another supplier that had opted to get out of the business." The lead time was short, he says, and they inherited the other company's tools. "And we had to shortcut our own system, and when we do that . . ." There's a method to making things right. And they're defining , codifying and, most importantly, doing it at Textron Automotive.