Springfield Remanufacturing, Behlen, and SC Johnson deliver outstanding “return on individuals”

If you'd invested $10,000 in Springfield Remanufacturing (SRC) when it was founded in 1983, you'd be sitting on $12 million today. For CEO Jack Stack and a dozen other managers who took on a great deal of debt to buy a floundering remanufacturing plant owned by International Harvester, that initial investment was all about people.

By Staff April 1, 2006

If you’d invested $10,000 in Springfield Remanufacturing (SRC) when it was founded in 1983, you’d be sitting on $12 million today.

For CEO Jack Stack and a dozen other managers who took on a great deal of debt to buy a floundering remanufacturing plant owned by International Harvester, that initial investment was all about people.

Right from the start, the Springfield, Mo.-based company committed to full employee ownership, and it remains that way today. In 22 years, there have been no layoffs, making SRC an employer of choice in the community.

Employee engagement continues to be vital to Springfield’s success.

“Most of our growth is due to our people’s willingness to use their heads, as well as their hands,” says Jeff Payne, general manager of SRC’s largest plant. Payne regularly hears about employees’ efforts to recover material from throwaway bins, which has saved the company and its customers thousands of dollars.

More than 1,000 SCR employees have a voice in matters both strategic—e.g., new partnerships and businesses—and tactical, such as kaizan initiatives. “Because we open our books, our employees are financially astute,” says Payne. “They understand that to compete we need to manage our costs and implement lean manufacturing.”

In restoring engines, for instance, workers compare the costs of used parts and their own labor to refit those parts against the cost of buying and installing new parts.

Not the norm

That level of commitment and hustle puts SRC in a distinct minority. According to the 2005 Skills Gap Report generated by New York-based Deloitte , The Manufacturing Institute, and the National Association of Manufacturers, only 29 percent of companies perceive their employees to be “highly engaged,” compared to 72 percent with “moderately” or “minimally” engaged workers.

SRC’s “people-first” culture has been a force behind the company’s diversification. In addition to rebuilding agricultural and construction equipment, as well as truck engines, it also has automotive, marine, packaging, power unit, drivetrain, hydraulics, electrical, consulting, and logistics businesses. “We have flexibility to move employees to other projects if one faces a slowdown, or if we expand operations,” says Payne.

Detailed succession planning ensures those transitions go smoothly. For instance, “depth charts” for managerial positions include three potential back-up candidates, with readiness assessments and skills needs for each. When SRC opened a new business with John Deere , it simply moved 80 to 100 employees—nearly one-third of its workforce at one plant—and replaced them with another set of fully trained workers who were ready to move up.

Though generally a slow adopter of technology, SRC’s workforce has not been immune to technology-driven changes. Typically, Springfield invests in new technology not to reduce labor, but rather to support growth, recover more material, keep costs down, and improve its environmental record.

For instance, advanced spray welding tools and RFID scanners have become standard fixtures on the shop floor, necessitating training for many employees. SRC also works hard to hire the right people up front, since those new hires will become owners and therefore are likely to stick around for the long term.

Focusing on the future

Behlen Manufacturing Co., a Columbus, Neb.-based maker of fencing and steel frames for industrial buildings, had a two-part problem: it faced turnover rates as high as 150 percent in certain welding areas, while much of its tool and die staff was rapidly approaching retirement. “There just wasn’t any new blood in place to fill those positions,” says Duane Matson, training coordinator. “We needed to be more proactive with that skilled group.”

To find the workers it needed, Behlen partnered with local schools for internships and job-shadowing opportunities at Behlen’s facilities while students took classes for college credit. Behlen also supplies the college welding program and local high schools that still have welding programs with an unending supply of scrap for practice.

These are the components of a holistic human capital strategy. “First we have to recruit interested individuals into some of these skilled areas; then we have to train them properly; and in the end we have to retain them,” says Matson. “Our gainsharing and profit-sharing programs have proved to be two great motivational and retention tools.”

The bottom line is that turnover is down. “We are in considerably better shape than we were a few years ago,” says Matson. “We continue to reap the reward of building strong relationships with local schools.”

Popular products, popular place

SC Johnson is in the top 10 of Fortune’s 100 Best Companies to work for in America, offering an impressive list of employee benefits and onsite amenities at its Racine, Wis.-based headquarters.

These aren’t perks offered for their own sake, but rather, they serve to reflect a strong culture inextricably linked to the privately held company’s great success. With 12,000 employees in more than 70 countries and $6.5 billion in annual sales, SC Johnson makes many popular household cleaning, home storage, and air-care products.

“Every person who works at SC Johnson is absolutely essential to our success,” says spokesperson Petrell Ozbay. “Our business depends on the talent of our people. As a family company, we see our employees as part of a larger family.”

Focus on family, while maybe a bit old-fashioned, has been a guiding principle at SC Johnson for more than 120 years. But it’s also proved highly effective. SC Johnson is among the rarest of breeds: an American manufacturer that’s never had a layoff.

For all its tradition, SC Johnson could not be more modern in terms of operations and organization. Production teams are encouraged to work collaboratively and creatively. They are responsible for not only daily problems, but long-term issues as well.

“Instead of management dictating to them, the teams work to achieve consensus on production processes, staffing, scheduling, and quality,” says Ozbay. Certain roles—like those with responsibility for quality, safety, and cost management—are rotated to allow team members to develop skills and learn the business more broadly.

Cross-functional and stretch assignments are entrenched in the culture, as is promoting from within, which SC Johnson has done for 90 percent of its executive positions. In fact, the current VP of Product Supply in North America started as a general serviceman.

Of course, internal hiring only makes sense for companies that stress training and development. At SC Johnson, those opportunities include its LINK college-credit program. To date, more than 275 employees have completed nearly 450 courses for academic credit. The average semester enrollment is 10 percent to 15 percent of plant workers. Programs include robotics training and Six Sigma Yellow Belt Certification.

Ongoing recruiting is another part of the formula. “Creating an environment where people want to invest and develop their talents helps us win in the marketplace,” concludes Ozbay.

Human capital management stats

9 million: total number of Americans employed in durable manufacturing ( The New York Times )

19: percentage of payroll employees devoted to durable goods manufacturers, 1965

8: percentage of payroll employees devoted to durable goods manufacturers, 2005 ( U.S. Bureau of Labor )

1:1 : ratio of U.S. and Asian spending on nanotechnology ( National Summit on Competitiveness )

33: percentage of 2004 U.S. GDP driven by good-producing sector—the highest since 2000

20: percentage of 2004 U.S. economic growth driven by goods-producing sector ( U.S. Department of Commerce )

50: percentage increase in the size of the global workforce in the last 15 years ( Harvard economist Richard Freeman )

11: Percentage of all U.S. bachelor degrees awarded that were in engineering or physical science, versus world average of 23 percent and China’s 50 percent ( National Science Foundation )

270,000: Number of assembly jobs in Mexico lost since 2000 ( McKinsey )

$5 billion: Mexico’s trade debt to China ( McKinsey )

Read more:

NAM’s 2005 Skills Gap Report :

CedarCrestone’s Workforce Technologies survey: