ABB Waterford

Source: Exec Digital UK

Date :6/1/2007 6:15:16 AM

A lean and fit company with an eye to the future

ABB Ltd’s Transformer division, in Waterford, on the south-east coast of Ireland, has been through an extensive process of re-tooling, re-organisation and modernisation over the last three years. The company is part of global conglomerate ABB, which has its HQ in Zurich, operates in 100 countries across the planet and is a leader in power and automation technologies

Written by Alison Withers & Produced by Ben Weaver

Plant manager Knut Skaar, 53, transferred to Waterford from the company’s factory in Thailand 16 months ago. He joined Supply Manager Paul McCann, 54, who had been working in telecommunications in Europe until he took the chance of returning to his homeland with his new role at ABB just under two years ago. Together with the management team, they have been driving forward the changes at Waterford to improve the company’s processes and put it in a position to produce the equipment needed for energy supply from renewable sources, particularly wind farms.

Significant investment over the last three years

Skaar, who is originally from Norway, says the change from managing the Thailand factory, which produced large transformers, to Waterford, which produces smaller and more local ones has been “very interesting in terms of both the culture and the temperature!”

The Waterford factory was built in 1951 and was originally Belgian owned. ABB acquired it around 20 years ago and has spent £1 million a year over the last three years on reorganising the factory’s layout and installing new machinery to be ready to take advantage of new markets.

With global warming and climate change constantly in the news the company is already well ahead in developing its expertise in producing transformers for wind turbines and wind farms. Skaar says: “We have seen an increased general demand….. but for the new market we are probably looking at a 200% increase, though it’s still a small percentage of total volume.” They had one “significant” order last year and already this year have won three more equally significant orders.

Planning ahead for this expected growth and reconfiguring the operations within the factory were therefore crucial, so it made sense to start introducing the Kaizen and Kanban lean and fit systems at the same time.

Paul McCann explains: “We would have implemented the ERP (Enterprise Resource Planning) system irrespective of where the market was going. It was a much more complex factory mix to manage than it had been. With the volume and mix of products we had to implement a lot of Kanban systems to improve material flow. Previously we would give materials to the factory to make one job, now we stock material on the line where it’s common, so we set minimum and maximum levels and replenish from the main store. It’s a much more efficient means of controlling the materials flow. It used to be a push system, now it’s a pull system.” He says the raw materials they use, like steel and copper, are ideal for a manual Kanban system.

Skaar adds: “We really want to have a quick throughput of the product, between three and seven days for the majority of products and we need to have a very efficient flow of materials to not clog up the manufacturing area.”

Add to that introducing a 5-S (Sort – Store – Shine - Standardize - Sustain) system for keeping areas clean and tidy and the company has gone through a number of very major changes in a very short time. Two major areas are complete, new metal manufacturing area and the welding shop, which makes the tanks the transformers are housed in, and the turning facility has been upgraded. The workforce has increased within a year from 170 to its current 230.

The company already had a management team with executives responsible for technical, marketing, financial, HR, production, quality and supply management but McCann’s post was newly-created: “My role didn’t exist before I came, but it’s about speeding processes and taking cost out to be competitive because we are in a high cost country, it’s challenging.” He says it’s also had implications for staff: “it’s created some changes to what we would have expected from staff, they’ve had more pressure put on them because of the different products and materials, the variety and complexity of planning. Recruitment and engineering have been impacted and we’ve had to put more skilled people in.”

It’s an on-going process ….

is part of the continuous improvement process one of the most significant activities likely to continue into the future is training, which McCann describes as a critical part of the process and one that’s taken up a lot of time in the last 12 months. Skaar adds: “The market is demanding more and higher quality so we can’t backslide. We are trying to map each individual’s skills so we have a base where we can start for improvement.”

For the time being staff have been recruited to meet market demand and there will continue to be a large investment in training. A big challenge coming up in an industry driven by customer needs with products tailored for each client is to recruit enough skilled engineers. Says Skaar: “We think we are facing a challenge with the design resources for new contracts for new transformers.” The Waterford factory hopes to use the ABB group’s training and recruitment systems to recruit more qualified electrical engineers, though, says Skaar, they are in short supply.

Reorganisation in the factory will continue as will refining the processes. The next step is to upgrade the capacity and quality of the winding machinery which makes the drums. Skaar says: “On processes we are having weekly meetings with the staff in different areas so we can see where something’s been tested and failed or if something comes up as a minor issue it will be reviewed every week.”

McCann will be looking to enhance the supply chain process into much greater detail and envisages further changes because of the limit on the central store’s physical capacity, which will mean moving materials through much more quickly and might mean changing to planning daily rather than weekly.

New products in development in the wind turbine market include a transformer combined with switch and connections, boxed into a metal housing to make a small electricity substation which can then be put at the base of the turbine, rather than mounted on the turbine as transformers used to be.

…. And so are sustainability and human rights

Operating as it does in so many places around the world ABB has developed a formidable record in observing sustainability practices and human rights. The group is a member of Amnesty International UK’s business group, the BLIHR UK (Business Leaders Initiative on Human Rights), the CPM (Centre for Environmental Assessment of Product and Material), Sweden, The US Global Village Energy Partnership, the International Committee of the Red Cross, Switzerland, ISO Switzerland, UN Global Compact and the US-based Pew Centre on Global Climate Change, to name just a few.

Skaar says: “There are a lot of programmes in the group which we are rolling out. There are regular updates via our intranet and everyone has to sign up to the human rights code of ethics after doing the training.” In Thailand, he says, workers were paid a fair wage, as are all locally-employed workers in the group’s factories around the world. “When we are working for low cost countries we pay a decent salary. We want to keep them after putting in the training investment.”

McCann adds that as a result of the Enron situation in the US, they have also all gone through exercises, called SOX, in the US, which promote internal auditing to a high standard of transparency. He says: “SOX is a code of business ethics put through the US Senate and we follow this so everything we do in business is up front and nothing hidden. We are willing to be scrutinised top to bottom and we do a lot of internal auditing. We are listed on the New York Stock Exchange and it’s a big benefit to be a 100 percent SOX compliant company.”