Outsourcing maintenance opens up plant availability for Tier 1 auto supplier

The decision for Griffin, Ga.-based Nacom Corp., an electronic assembly supplier to automotive OEMs, to relocate to Mexico wasn't an easy one. The most pressing priority leading up to the move was building sufficient stock inventory to meet customers' requirements during the transition—even though the plant was closing.
By Jim Fulcher (jimfulcher@comcast.net) May 1, 2008

The decision for Griffin, Ga.-based Nacom Corp. , an electronic assembly supplier to automotive OEMs, to relocate to Mexico wasn’t an easy one. The most pressing priority leading up to the move was building sufficient stock inventory to meet customers’ requirements during the transition—even though the plant was closing.

“We supply the Big Three and other automakers like Toyota and Nissan, and we knew we had to build several months of bank stock before moving the facility so it wouldn’t affect our customers’ JIT production, says Tom Clark, Nacom’s director of operations and engineering. “We needed to increase production to meet that goal, which [puts more] emphasis on preventive maintenance and machine uptime. At the same time, we were prepared for 50 percent to 60 percent of our maintenance associates to leave the company because they knew the plant was closing.”

That’s why Nacom decided to outsource maintenance to Advanced Technology Services (ATS) , which supplies managed production equipment maintenance, industrial parts repair, and IT solutions.

ATS, already known for its staff of 2,000 people, is making a name for itself for the same reasons companies in the IT outsourcing business succeed, says Houghton Leroy, research director for enterprise asset management with Dedham, Mass.-based ARC Advisory Group . Namely, there’s growing demand for such services.

“First, the skilled maintenance labor pool is rapidly shrinking as more employees retire,” says Leroy. “Second, the complexity of assets has changed, and it costs even more to maintain them. Finally, the cost of spare parts is rising, and many companies don’t want the cost of carrying spare parts anyway. These are all compelling reasons to outsource maintenance to a company like ATS.”

In the case of Nacom, the decision to outsource maintenance proved to be sound.

“We are a lean company, so we don’t carry buffer inventory. That means we need to focus on production and let ATS do what they do best: maintenance to ensure production uptime,” Clark says. “ROI has been significant in a short time. We’ve seen a 45-percent improvement in plant availability, and a 30-percent reduction in maintenance overtime.” Clark adds that ATS took over Nacom’s maintenance staff, so no jobs were actually lost.