There's no way we can compete with the Far East with our plant, some of it 30 years old, and their labour costs.' That was the unanimous view of chemical managers at Wilton, Teesside - until their polyester manufacturing site left the shelter of a large multinational for the bracing environment of a smaller firm. Proving again that there are no mature industries, only mature managers, they were galvanised into improvement, increasing performance efficiency by a third - not only equalling Far East rivals but opening up markets that no-one imagined existed.
DuPont bought the Wilton site's two PTA (pure terephthalic acid) plants from ICI in 1998, bringing heavy emphasis on safety, but leaving the economic model otherwise unchanged: their mission was to combat falling prices with minimum investment and constant economies in production. But much of that cost related to reliability. So running down the plant and cost-cutting were actually making matters worse by increasing unreliability.
As a result, in 2000 OEE (overall equipment effectiveness) was a very ordinary 70%. Wilton, sums up site manager Kevin Feeney, contained 30% 'hidden plant' - capacity paid for but not used. How could investment in new plant be justified in those circumstances?
At that point the site was transferred to DuPontSA, an American-Turkish joint venture that concentrates entirely on the polyester value chain.
That brought focus, but also exposure to a harsher world: the site was suddenly responsible for its own destiny.
The trigger for change, says Feeney, was the realisation that the site was being driven by the wrong metrics. Switching from the bottom line and manufacturing cost to unit cost and uptime opened up new possibilities, since 'we could see that if you drive uptime up, everything else follows: cost, quality, capacity, safety, inventory and, not least, morale - if the plant's working properly, you don't need to pull people in when they'd rather be watching Middlesbrough.'
The second Damascene moment came when managers studying a pie-chart of the root causes of plant downtime found they themselves controlled a sobering proportion (maintenance and operating routines, for example). They could be changed; even age-related failures could be fixed with a modest capital spend.
They could see it. But would the board see this highly unconventional thinking the same way? And would a unionised workforce respond to the need for a very different culture of flexibility and continuous improvement?
The business case showed that plant- and people-related uptime improvements could add profits of pounds 20 million to pounds 30 million over three years by lowering costs and raising volumes, which would also secure jobs and give the site a lifeline. Briefly, both sides agreed, and the vision has been triumphantly vindicated.
While boosting quality, the site has shaved cost per tonne by over 30%, allowing it to drop prices and increase volumes. DuPontSA now sells profitably into China, something previously inconceivable. Safety is at an all-time record, the site has won Investors in People status, and although staff no longer work for paternal ICI, they have a greater direct influence on their future through multi-skilling, teams and empowerment. And they rarely miss a Middlesbrough home game.
- PICME is a DTI-funded project that helps UK process manufacturers reduce manufacturing costs while increasing work satisfaction and productivity through benchmarking and lean manufacturing techniques. Participating company costs are assisted by a DTI grant and may be paid for out of savings and efficiencies made. Uptake in chemicals, polymer and pharmaceutical processing has been high. Contact PICME direct for details. Tel. 01642 430 021; firstname.lastname@example.org; www.picme.org.