End-user, OEMs, automation manufacturer share advice on tough global markets

Schaumburg, Ill.— An end-user, integrator, two original equipment manufacturer (OEMs) and an automation/controls manufacturer on June 27 discussed “Management of Global Manufacturing,” including how they’re surviving in the brutal competitiveness of worldwide markets.

Key issues include increased competitiveness in global marketplaces; streamlining and simplification of automation platforms and controls; and recognition that plant processes need to improve, along with the technologies applied to them. The panel was held at and sponsored by Omron Electronics LLC ‘s (www.omron.com/oei) North American headquarters here, near Chicago, as part of the firm’s “Technology Connection” symposium for editors. The panelists offered the following advice and observations:

Roger Cope , vp of Lamb Technicon (Warren, Mich.) says automotive manufacturers have been pushing risk of capital investments onto OEMs. Lamb Technicon, a member of Unova’s Industrial Automation Systems subsidiary, is a designer and integrator of production metal-cutting and assembly solutions for automotive powertrain and heavy-duty diesel engine manufacturing. Information flow increases with manufacturing flexibility, so people and infrastructure need to respond appropriately, says Mr. Cope.

For manufacturing, “globalization doesn’t mean Americanization,” Mr. Cope warned. “We’re still trying to realize what it means to an American company when everyone wants to do business here.” Increased globalization means competing with companies that may not consider return on investment when bidding on a job, often quoting below cost.

Mr. Cope said 65% of U.S. job losses are in manufacturing. Manufacturing accounted for 30% of U.S. jobs in 1953, but only 13% now. As much as automotive manufacturers’ margins have dropped, OEMs’ margins have dropped more. Lamb’s revenues have dropped from a high of $600 million to $200 million, requiring the most-unpleasant task of laying off people right and left. Mr. Cope called Lamb Technicon the last U.S.-owned machining system manufacturer serving the powertrain sector. He’s observed a shift of expertise to Germany and Japan, which consider machining a core competency. He also advised that people dust off, reread and believe their macroeconomics’ textbooks to help understand the risks inherent in global business today.

Doug Bartow , strategic sourcing manager for FMC Technologies (Chicago, Ill. www.fmctechnologies.com), said his goal is controls harmonization in food processing equipment, which is accomplished with about 80% of lines. FMC Technologies, which also offers automated equipment for energy and airport industries, aims to sell a process, rather than just custom machinery.

In food processing, “We like to be able to walk into a plant and deliver a 3% increase in net income.” One method can be a complete processing line with a common automation platform, to cost-effectively facilitate food freshness, safety and ease of training. For example, using a vision system to scan a chicken breast prior to processing can reduce waste a valuable fraction of a percent. Selecting fewer automation vendors decreases the amount of infrastructure for FMC Technologies to support, creating higher volume for remaining vendors. With higher volume also comes better pricing, increased dedication and improved customer support from the automation vendor, he says.

FMC Technology sales staffers, who may not be fluent in controls, may hesitate to investigate what’s behind a customer’s push for a certain brand of automation, such as regional loyalties. “If we find out what’s behind the request, we may be able to offer more value with another product, and, perhaps triple the warranty on the equipment to close the sale,” Mr. Bartow explains.

Food processing equipment must be easy to use, partially because of high employee turnover in such environments. “Raise your hand if you want to work in a food processing plant,” he challenged the audience of editors and reporters. [No one volunteered.] “Our goal is to allow our customers to be able to teach someone their job in 20 minutes,” Mr. Bartow added.

To facilitate ease of use, FMC Technologies has created cross-functional teams to help integrate automation on equipment, such as chicken processing freezers, fryers and ovens. Mr. Bartow says FMC Technologies is reviewing a client-server model; it would be easier to write programs to one server, rather than to three brands of PLCs, he adds. However, exceptions can be made. Sticking to one technology may be less critical for a large customer in one stand-alone food-processing facility, such as a recent $10 million project in China, he notes.

Jerry Yen , common controls technology manager, Manufacturing Engineering Group, GM Powertrain (Detroit, Mich.) and co-chair of Open, Modular Architecture Control (OMAC) Users Group , explained that GM standardization has moved beyond a bill of materials to a bill of design and a bill of process. GM Powertrain has led in GM’s global manufacturing efforts, though recent acquisitions have made the effort more challenging. Mr. Yen admitted that GM, like other organizations with many sites globally, repeats mistakes more often than needed by not recording and sharing lessons learned.

A goal is to achieve 100% production for all equipment purchases within six-months. Mr. Yen added that execution issues to work on include the need to:

Improve asset utilization. There’s a tendency toward “just-in-case” manufacturing, where missed forecasts leave equipment in warehouses rather than putting it to use;

Create better connections between product engineering and manufacturing engineering teams;

Reduce number of changes in design during production;

Decrease debugging during start-up;

Better integrate the voice of the plant into overall decision-making;

Help information technology and manufacturing engineering people work together more effectively;

Try to drive manufacturing based on business decisions; and

Enable learning on a global scale.

“It’s us in North America, along with Germans, Italians, and Koreans. How do we bring them all together?” he asked. The bill of process aims to record and integrate a standard, best way of doing things, including relying on established global specifications for mechanical, hydraulic, pneumatic, controls, and safety equipment and systems. At a higher level, projects will be coordinated across regions, so equipment can be purchased for a multi-stage rollout at the same time, creating better leverage with suppliers, Mr. Yen says. Bill of process is especially useful when implementing new technologies.

A bill of process isn’t designed to freeze processes, halt creativity, show that past work was wrong, or built on opinions. Bill of process also considers regional cultures, practices, and availability of local technical resources. For example, a GM Shanghai plant recently used PLCs, rather than PC-based controls, he says, due to issues of local resources and support. Also, Mr. Yen admits, there’s a cost of “commonization.” In some cases, a change to fit bill of process might eliminate shortcuts or increase equipment costs when a certain set of controls on machinery isn’t the standard OEM offering.

[For more on OMAC, see Control Engineering Online , Daily News Desk, March 12, 2002, at https://www.controleng.com/index.asp?layout=articleWebzine&articleId=CA221313 ]

David Quebbemann , marketing manager of Omron ‘s Industrial Automation division, concurred that end-users are pushing manufacturing to suppliers, creating a virtual manufacturing environment. Global suppliers, such as Omron, with more than half its sales outside Japan, have global, national and regional sales efforts. Global support teams have been created for major accounts, Mr. Quebbemann points out, at Sony, Honda, Nokia and GM.

Challenges for Omron include efforts to make pricing standard, globally, and decoupling various services into an ala carte menu, isolating cost of the product from consulting, engineering services, system integration and support.

Ways Omron is helping customers include multi-language documentation (with translation utilities built into some products); global certification of products for wiring and standards; support for major industrial networks/protocols; sales support consistency; application engineering support; 24/7 customer support; global training centers; and web-based training and documentation.

In other news, Omron reported June 26 on its accelerated growth in China, with expected expansion of employees there to 7,000 by March 2005, up from 4,000 in June 2002. Separately, Omron’s Industrial Automation division adds it is “aggressively pursuing Fortune 100 customers,” with contracts at two GM Powertrain plants and at Honda Manufacturing of Alabama. Several new products were also introduced, including a new HMI architecture. [For more, see Control Engineering Online , Daily News Desk, June 28, 2002, at https://www.controleng.com/index.asp?layout=articlewebzine&articleid=CA231252 ]

Rob Loomis, vp of Omron’s Industrial Automation division, told Control Engineering after the June 27 panel session, that Omron’s 30,000 products—from commodities to high-end vision and motion control systems—create the challenge of finding the right mix of local product service and support for each customer. In addition, every market demands a unique complement of services and support. To help customers, automation vendors need to look beyond the obvious to what’s constraining the process. That requires going beyond the pursuit of technology for technology’s sake, Mr. Loomis says. And, in other cases, customers need to overcome hesitation. With networks for instance, if customers aren’t using them, they need to pick one and go with it, he suggested.

Control Engineering Daily News Desk

Mark T. Hoske, editor-in-chief

MHoske@cfemedia.com

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