Industry Today, Volume 17, Issue 4, Global Manufacturing Outlook: Performance in the Crosshairs by digitalmagazine.industrytoday.com

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PUBLISHER’S LETTER

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PUBLISHER’S LETTER

he manufacturing world has always been

of directly competing, can be a healthy,

centered on continuous improvement,

productive solution. Reporting responses

but over the last decade, external global

derived from an international survey in which

conditions have been the dictator of

over 450 executives across six different sectors

change, shaping the manufacturing world

were polled, Dobbs discusses the slew of issues

through market uncertainty, and pulling the

expressed by manufacturers, and the various

covers off many businesses, leaving them bare

strategies they are employing to combat them,

and shivering as they struggled to find their

with the overall theme being channeled through

way on their own as they had for so many years

varying forms of increased collaboration and

before.

integration.

And yet, in this edition of Industry Today, our

However, how exactly is this achieved on

Focus story, entitled “Global Manufacturing

a global scale? In the article, Dobbs outlines

Outlook: Performance in the Crosshairs”,

four distinct actions manufacturers are taking

explains how manufacturers are retaking

towards successfully engaging and competing

control of their own destinies through an

in their respective industries. These key areas

elevation of integrated partnerships in the

are what will define the subsequent success of

face of what H. Jeffrey Dobbs, Global Chair of

companies going forward, and they all stem

KPMG’s Industrial Manufacturing practice, calls

from a manufacturer’s ability to not only look

‘Disruptive Complexity’.

inward for answers, but also outwards.

“The market challenges of the past five

‘Disruptive Complexity’ is here to stay, at

years, which were largely characterized by

least for the foreseeable future, and while

global uncertainty, economic volatility, geo-

the pervasive pressure of an accelerating

political instability, shifting markets, and natural

pace of change has created headaches

disasters have resulted in massive changes to

for manufacturers all over the world, quick

the manufacturing landscape,” Dobbs states.

relief is possible, and readily available, should

“The question for manufacturers, as a result, has

companies embrace this change and willingly

not been how do they fix these conditions, but

adapt their internal and external dynamics.

more of how do they prepare themselves to be

Because while the world is more fast-paced

able to effectively adapt to this new business

and sophisticated than ever, opportunities are

climate they find themselves in?”

bursting all over and it’s time to stand up and

The answer lies in the initial acknowledgement of the presence of a global marketplace, and

seize them through integration, rather than buckling under uncertainty.

the understanding that collaborating, instead

INDUSTRY TODAY 3

CONTENTS

06 FOCUS: KPMG

FEATURE COLLABORATIVE COMMONS

GLOBAL MANUFACURUING OUTLOOK PERFORMANCE IN THE CROSSHAIRS

FOUCS FOCUS • KPMG

he manufacturing sector is in the midst of period of ‘Disruptive Complexity’ – that we believe will be a major force for all manufacturers to reckon with. Explosive developments in technology, material science, advanced manufacturing and synergistic operating models are clearly beginning to redefine ‘the art of the possible’ and changing the way manufacturing companies compete and succeed. The market challenges of the past five years, which were largely characterized by global uncertainty, economic volatility, geo-political instability, shifting markets and natural disasters, have resulted in massive changes to the manufacturing landscape. However, these may seem tame compared to the new forces created by the proliferation of data, scientific discovery, robotics, technology and artificial intelligence just to mention a few. In this environment, manufacturers are still overwhelmingly focused on profitable growth and are considering a wide variety of strategies to achieve it. According to KPMG’s 2014 Global Manufacturing Outlook (GMO), which polled 460 senior executives across six industrial sectors split equally among the

20 FEATURE: EMPLOYEES COME IN 3 FLAVORS

FEATURE THREE FLAVORS

Zero Marginal Cost and the Internet of Things

The Collaborative Commons

What’s precipitating this great economic transformation is the extraordinary success of the marketplace. There lies a paradox at the very heart of the capitalist ethos that has been responsible, in large part, for its great success over the past two centuries, but that is now giving birth to its potential successor. Private enterprises are continually seeking new technologies to increase productivity and reduce the marginal cost of producing and distributing goods and services so they can lower prices, win over consumers, and secure sufficient profit for their investors. (Marginal cost is the cost of producing additional units of a good or service, if fixed costs are not counted.) Businesses, however, never imagined that

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14 FEATURE: COLLABORATIVE COMMONS

FEATURE TRADE SECRETS

Manufacturing a Trade Secret FEATURE THREE FLAVORS

Mike knew this was unsustainable for several reasons. He was not using his talents and would eventually become disengaged and frustrated. He was also not doing what he was hired to do, which would quickly become a source of irritation to the CEO and detrimental to the company as a whole. Mike assessed the situation and discovered that a few of his employees’ current roles 6 INDUSTRY TODAY were a substantial waste of talents and individual skillsets and having a negative impact organizationally. So, he reorganized the department and prioritized his time. He decided who his high-potential staff members were — his Critical People — and redesigned their job descriptions to allow them to take on more crucial projects. He found the Squeaky Wheels on

Too many manufacturers erroneously conclude that they do not have enforceable trade secrets in their manufacturing equipment, processes, or systems because individual components of their process may be known in the industry or available from third-party vendors. Trade secret law, however, protects unique combinations of equipment and/or processing steps, even if the individual components of that process are known in the public domain. Unfortunately, manufacturers frequently fail to properly ascertain and protect the trade secrets in their manufacturing process until a competitor seizes those intangible assets for itself and puts the entire business at risk.

ou know that you have created something worthwhile when someone tries to steal it. Unfortunately, when it comes to protecting a trade secret manufacturing process, a manufacturer must take steps to protect its trade secrets before the theft occurs if there is any hope to protect them. Imagine that you own a plastics manufacturing company that has been making plastic containers for the food industry for over 30 years. During that time, a number of your engineers developed a unique way of processing a compound that is otherwise difficult to handle, which allowed you to manufacture plastic containers that are more durable and cheaper to manufacture than all other containers on the market. Over time, your customers realize that your products are more durable than your competitors’ products, and you are able to sell them at a lower price as well. Your company’s brand comes to dominate

Much like the accelerating complexity of the global marketplace, the way businesses manage themselves internally, particularly from a personnel standpoint, has become exceedingly challenging as a productive, satisfied workforce become more and more paramount to a company’s success. And yet, listed below are three types of employees— or rather “flavors”—that make up a company and if properly identified and engaged, can better facilitate, rather than detract from, further success. ike was the CFO of a large manufacturing company in Texas. He was an outstanding executive and he accepted this position because it suited his strengths to a tee. The company was looking for a very strategic Head of Finance who could work in partnership with the company’s CEO to take market share in existing markets, enter new markets and diversify their product line. When Mike started his new job he quickly realized that there was a huge problem. The way the department was set up he had to spend all of his time looking at the past instead of working with the CEO to plan the future. He also found himself working 70 – 80 hours per week.

the market, and profits are at an all-time high. Now imagine that one of your longest tenured process engineers leaves the company and turns up with a job at one of your smallest competitors. In the absence of a valid non-competition agreement, that engineer is entitled to take a job with your competitor. Fortunately, however, the company is not much of a threat. One year later, you call a meeting to discuss the sudden and troubling loss of six major accounts. During that meeting, you discover that all six of the accounts went to the same small competitor that had hired your engineer a year ago. To make matters worse, you hear rumors during this meeting that this competitor has opened a brand new manufacturing facility that dramatically expands its production capacity. After investigating further, you discover that the former employee may have duplicated the innovative process your engineers INDUSTRY TODAY 7

26 FEATURE: MANUFACTURING A TRADE SECRET

INDUSTRY TODAY 21

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65 Madison Avenue, Suite 510,

Americas; Europe, Middle East and Africa; and Asia-Pacific, manufacturers indicate that increasing levels of supply chain transparency and visibility; improving use of data, analytics and business intelligence tools; integration of new technologies; and a continuation of the trend towards greater partnerships and collaborative business models are at the forefront of these strategies. But new strategies also bring new challenges and complexities. There is clearly much work still to be done to leverage the power of these business models, tools and technologies to ultimately overcome the complexities of data proliferation, the accelerating pace of change and disruptive innovation across the sector. Among the strategies and tactics that global manufacturing companies intend to 6deINDUSTRY TODAY ploy to capitalize on the market opportunities and stay ahead of their competition are: • Understanding product cost and profitability to support growth and performance across the enterprise; • Implementing predictive analytics that monitor evolving customer preferences; • Continuously evaluating models for innovation for effectiveness and return on

extreme productivity might one day bring marginal costs to near zero, making many goods and services nearly free, and no longer exchangeable in the capitalist market. That’s now beginning to happen. The zero marginal cost phenomenon invaded the information goods sector in the past decade. Hundreds of millions of consumers turned prosumers, producing and sharing their own music, videos, and other forms of entertainment, as well as news and knowledge, at near zero marginal cost, bypassing the capitalist marketplace. Music industry revenues plummeted. Newspaper and magazine revenues also shrank, with many publications going out of business, unable to compete with free web media and blogs, operating at near zero marginal cost. Similarly, book publishing shriveled while retail bookstores closed their doors as more prosumers published free e-books. More recently, the zero marginal cost phenomenon burst into the field of higher education, wreaking havoc on the traditional learning model. Six million students are currently enrolled in free Massive Open Online Courses (MOOCs), that operate at near zero marginal cost, and are being taught by world-class

INDUSTRY TODAY 7

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corporate@industrytoday.com

new economics system is beginning to flourish alongside the capitalist market. The Collaborative Commons is already changing the way we organize economic life, offering the possibility of dramatically narrowing the income divide and democratizing the global economy in the first half of the twenty-first century.

“The manufacturing world is entering an era of hyper-innovation where advances in technology and material science are rapidly changing what we consider ‘possible’ and creating new business opportunities along the way.” H. Jeffrey Dobbs explains.

Performance in the Crosshairs

www.industrytoday.com

KPMG • FOCUS

Global Manufacturing Outlook T

Employees come in Three Flavors

The emerging Internet of Things is leading to a zero marginal cost society and the rise of a new economic system. The Collaborative Commons is beginning to thrive, ushering in a Third Industrial Revolution and the transformation of the global economy.

Managing Editor: Susan G. Poeton Art Director: Seema Mazhar Project Managers: Marcos Elias, Editor: Steven Engelhardt, Contributing Designers: Jonathan Fordney, Renata Ginter, Project Director: Brian McMillan Eve Grinnell, Margaret Hanscom, Amanda Larkin, Jonathan Listig, Production: Melissa S. Burge Jorge Leandro Rodrigues Juliana Teixeira Profile Writers: Dan Harvey, Reuben Ford, Rachel Hartman, Lorie Greenspan, Michael Sommers, David Soyka Morristown, NJ 07960

Ph. 973.218.0310

Fax 973.455.0205

Industry Today is published bi-monthly by Positive Publications LLC, 65 Madison Avenue, Suite 510, Morristown, NJ 07960. Subscription price is $55 per year. Single copies may be purchased at $15 each plus shipping. Email, fax or phone the above address for details. POSTMASTER: Send address changes to Industry Today, 65 Madison Avenue, Suite 510, Morristown, NJ 07960. Copyright © Industry Today 2014. All rights reserved. No part of this publication may be reproduced in any form or for any purpose without prior written consent from the publisher and payment of the agreed fee. ISSN # 1521-8058

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VOLUME 17 • ISSUE 4

PROFILE • LAMONS

LAMONS • PROFILE

54 AKEBONO BRAKE-ING THE MOLD

PROFILE • AKEBONO

AKEBONO • PROFILE

Akebono is in the midst of its 85th year in business, a company that took root in Japan in 1929, but has slowly expanded its influence and impact across the world over the years to become the global enterprise it is today. Adrian Smith, chief engineer of high performance and electric brakes for the company, talks about the philosophy that has guided Akebono over the years, a recent renewed partnership with one of the most prestigious businesses in the F-1 racing circuit, and why an investment made back in the 90s is about to begin paying off in a huge way. Steve Engelhardt reports.

Lamons is a company that today, represents one of the world’s largest suppliers of metal gaskets and fasteners. Respecting tradition while facilitating innovation, the company has been firing on all cylinders as of late, developing new products and expanding their production bases around the world. Kris Kolb, vice president of sales and marketing for company’s U.S division, talks about some of these recent developments, their significance towards Lamon’s philosophy of embracing a global marketplace, and why he feels 2014 will be a big year for the Houston-based manufacturer. Steve Engelhardt reports. stablished in 1947, Lamons began to build its identity as a distributor for gaskets and sealing materials. “We would buy gaskets and perform light manufacturing in order to support our relatively local marketplace” says Kolb, adding, “after a relatively short period of time, we began to develop our own advanced production processes for metal gaskets and this has transformed us into the gasket manufacturing powerhouse that

Lamons is today.” Over the last 60 years Lamons has grown our manufacturing capability for metallic and semi-metallic gaskets and is considered a premier provider for quality and local service. In addition, Lamons also opted to enter into the fastener market as well, a move Kolb says was quite “unique, and was an opportunity that we identified early as an extremely valuable complementary item to our core product line” referring to the fact

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34 LAMONS GROWING A GASKET

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PROFILE • AUBURN GEAR

AUBURN GEAR • PROFILE

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110 CASCADE AEROSPACE TAKING FLIGHT

PROFILE • CASCADE AEROSPACE

Whether it’s snow, rain, or sleet crashing down from the heavens above, a heavier-than-usual tow load attached to the back of one’s vehicle, or a combination of both, individuals and businesses alike have often worried about how less-than-optimal conditions will affect their ability to get what they need, to where they need to go. Enter, Auburn Gear. The automotive and construction gear manufacturer, based out of Auburn, Ind., has been filling this need, among others, for almost 75 years. Justin Smith, director of marketing for the company, talks about the history of Auburn Gear, why their gear-based products thrive in the automobile and construction markets, and previews the exciting new line of products they are set to unveil this year. Steve Engelhardt reports. 64 INDUSTRY TODAY

of gear-based products, the makeup of their customer base produces a similar identity. And Smith says that he and his company enjoy, and prefer, it that way. “Doing business with the individual versus businesses produces different rewards for us,” he says, adding, “I’ve had guys come up to me and say, for example, ‘I have one of your gears in my ’72 Pontiac Trans-AM, and it still works great to this day.’” He says their awareness and dedication to the human side to their business has allowed them to thrive in their relationships with customers. “Even if you’re a smaller customer we treat you no differently than one of our

million dollar-plus companies,” he says.

Made in the USA And yet, for as strong as its focus is on the customer, Auburn Gear truly distinguishes itself in not just its products, but the way it goes about manufacturing them as well. “I think one of our biggest differentiators is that we’re a 100 percent madein-America company. Every part of our process is done right here in Indiana,” he says, “We stand behind our quality and are constantly improving our products and services.” The company operates entirely out of their 44-acre headquarters in Auburn, with INDUSTRY TODAY 65

64 AUBURN GEAR HOW AUBURN GEAR DIFFERENTIATES ITSELF 120 BOURNS Sensor of Success 96

he name Auburn Gear has been around since 1982, but the company’s foundational blocks go back as far as 1938, when it operated under its original name of Board Warner, establishing itself over the years as one of North America’s largest independent producers of construction and automotive gear. Getting their foot in the door as one of the original OEM’s of limited slip differentials for some of the automobile industry’s biggest names, Smith says that his company has grown greatly from its humble roots to become the burgeoning business it is today. Because of Auburn Gear’s longevity and diverse range

CASCADE AEROSPACE • PROFILE

COASUL Turning to Chicken

128 DAYTON-PHOENIX Providing Improved Locomotion

“This is the year Cascade Aerospace takes flight.” Those are the words of Benjamin Boehm, executive vice president and COO of Cascade Aerospace, a Canada-based aerospace and defense contractor. In a conversation with Industry Today, Boehm talks about the work they’ve done to establish the Cascade Aerospace name over the years, some recent projects and achievements they’ve attained, and why 2014 looks to keep them flying sky high. Steve Engelhardt reports.

he history of Cascade Aerospace dates back to 1969, where they began operating under the name Conair Group, a specialty aviation services firm that focused particularly on aerial firefighting.

In developing, operating, and maintaining a fleet of some 90 aircraft, the company was able to acquire the expertise required to offer third-party maintenance and modification. Their ambition carried them to 1993, when

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76 DOUGLAS MACHINE The Whole Package

70 RAISMAN Brazilian Power Parts

104 GREENCORE Core Quality

86 VIVENDA DO

44 HOUGHTON Industrial Mettle

they pulled the trigger on integrating maintenance services into their capabilities, and later on, in 2001, their success in such market was actualized, as the maintenance division broke off from Conair Group and built

CAMARÃO What’s Cooking

INDUSTRY TODAY 5

FOCUS KPMG

Global Manufactu Outlook

Performance in the Crosshairs 6 INDUSTRY TODAY

uring

FOCUS KPMG

Americas; Europe, Middle East and Africa; and Asia-Pacific, manufacturers indicate that increasing levels of supply chain transparency and visibility; improving use of data, analytics and business intelligence tools; integration of new technologies; and a continuation of the trend towards greater partnerships and collaborative business models are at the forefront of these strategies. But new strategies also bring new challenges and complexities. There is clearly much work still to be done to leverage the power of these business models, tools and technologies to ultimately overcome the complexities of data proliferation, the accelerating pace of change and disruptive innovation across the sector. Among the strategies and tactics that global manufacturing companies intend to deploy to capitalize on the market opportunities and stay ahead of their competition are: • Understanding product cost and profitability to support growth and performance across the enterprise; • Implementing predictive analytics that monitor evolving customer preferences; • Continuously evaluating models for innovation for effectiveness and return on

INDUSTRY TODAY 7

FOCUS KPMG

investment; • Leveraging partnerships to create new OEM/supplier collaborative innovation models and create synergies across the value chain; • Integrating cutting edge technology such as 3D printing and new additive manufacturing capabilities to accelerate product lifecycles and increase profitability; • Utilizing technology and data to support real-time business intelligence and to build trust, visibility and transparency across the supply chain to create virtual vertically-integrated manufacturing 8 INDUSTRY TODAY

networks. Let’s take a closer look at these areas.

Looking for profitability

Manufacturers around the world will want to focus on increasing visibility into their profitability and costs. Yet few think they are very effective at determining the profitability of their existing product lines. Indeed, according to the 2014 KPMG GMO, when asked how effective their organizations are at determining their profitability, more than half of all respondents believe themselves to be ‘effective’; only 12 percent

consider themselves to be ‘very effective’. Manufacturers need to better align their cost and revenue data to help drive decision-making and enhance profitability. This isn’t simply about getting data and making spreadsheets; it’s about having the appropriate information, at the right level of granularity and – maybe most importantly – with the right speed and frequency to generate timely insight to help people make better business decisions. The reality is that insights around profitability and costs drive today’s competitive advantage. Clearly, there is a big difference

FOCUS KPMG

H. JEFFREY DOBBS H. Jeffrey Dobbs is the Global Chair of KPMG’s Industrial Manufacturing practice, which includes Automotive, Aerospace & Defense, Engineering & Industrial Products and Conglomerates. In this role he is responsible for building the KPMG brand in the sector through the creation of leading industry services, thought leadership and go to market strategies to support the largest industrial manufacturers in the world. He can be reached at jdobbs@kpmg.com.

Collaborate to innovate

Manufacturers are rethinking their product development strategy and are increasingly focused on enhanced spending, shifting towards breakthrough innovation objectives and exploring new collaborative business models to create competitive advantage.

The manufacturing world is entering an era of hyper-innovation where advances in technology and material science are rapidly changing what we consider ‘possible’ and creating new business opportunities along the way. Ultimately, those organizations that do not balance investment in ‘incremental innovation’ with investment in

between knowing where your data comes from and knowing that it is the right data to inform better decision making noted. This isn’t about getting the most data, it’s about having access to the right data at the right time to drive financial decision making. Given the ongoing shifts that we continue to see in product lines, technology and supply chains, organizations should prioritize a wide variety of analytics and data-driven investments in an attempt to get a better handle on their costs and profits. Many manufacturers are looking for any way they can to get more insight into their business. INDUSTRY TODAY 9

FOCUS KPMG ‘breakthrough innovation’ may find themselves left behind their competitors. There are clear indications that – if they could – manufacturers would like to spend more on innovation. In fact, almost half of all respondents in this year’s KPMG GMO say that a lack of R&D funding is one of the three biggest challenges impacting their ability to innovate. But with challenges securing new funding, many manufacturers are instead focused on stretching their R&D investments as far as possible. And, as a result, we have seen a significant shift towards the development of research partnerships, the introduction of new technologies and the adoption of more collaborative business models with suppliers and – at times – competitors. Partnerships, in particular, rose up the agenda in this year’s GMO. Almost nine in ten say that partnerships, not in-house efforts, will form the future of innovation, up from just 51 percent who said the same in our 2013 survey. Similarly, more than two thirds of respondents say that they are adopting more collaborative business models presumably to improve growth and leverage investments.

Integrate Advanced Technology

Technology is also coming into play as manufacturers look to squeeze more out of their investments, and new technologies are also making their mark. Consider, for example, the fact that more than eight in ten re-

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FOCUS KPMG

spondents in the KPMG GMO say that 3D printers are already impacting their productivity. 3D printing (or ‘additive manufacturing’) isn’t just a new type of technology; it’s a potential business model disruptor and market-maker. The cost and efficiency benefits are clear – the ability to produce small-lot or highly customized parts in an ‘on-demand’ setting will no doubt be revolutionary for manufacturers. As the data shows, manufacturers across sectors and geographies agree that the impact of 3D can’t be ignored. But turning 3D printing into sustainable competitive advantage will require manufacturers to rethink their value chain and revise their existing strategies to understand how 3D will impact their business models over the long-term. So while 3D printers may not mean the immedi-

ate dissolution of the traditional manufacturing business model over the short-term, management may want to consider how they might start integrating additive manufacturing into their existing supply chain in order to build up their capability and exploit rapidly emerging opportunities.

Integrating the Supply Chain

Ask a manufacturer to identify their biggest supply chain challenge and you’ll more than likely hear the word visibility. But to achieve greater visibility, organizations will need to improve the integration of their supply chain. Our survey demonstrates that challenges related to visibility have vaulted up the agenda for manufacturing leaders. Indeed, respondents are now twice as

likely to admit that they lack visibility across the extended supply chain as they were last year (40 percent versus 20 percent in 2013). While the value associated with increased visibility is certainly alluring to manufacturers, many have stalled simply because they lack either the skills or the capacity. Given that most organizations have traditionally been very focused on optimizing within their walls rather than outside of them, achieving the necessary change in skills and capacity will be a lingering problem. This is not to say that visibility hasn’t improved significantly. According to our research, many of the gains in supply chain visibility have resulted from stronger relationships between manufacturers and their top tier suppliers. In fact, more than three quarters of

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FOCUS KPMG respondents say that their relationship with top tier suppliers is now strong enough for them to share real-time capacity and demand data. An even higher proportion (83 percent) say that they feel that their top tier suppliers’ data is reliable enough to support closer relationships; effectively setting the stage for

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manufacturers to move from traditional supply ‘chains’ to supplier ‘networks’. You simply can’t build the type of relationship you need to share real-time data without trust. Yet while there will always be an overarching issue of trust when suppliers feel they are being measured and evaluated based

on their real-time data, it is encouraging to see that suppliers and manufacturers are moving forward with setting the stage for real-time information sharing. At the same time, technology is also being leveraged to improve visibility and supply chain integration. Manufacturers must remember that these technologies

FOCUS KPMG are more of a foundation for improving visibility and integration. The magic really happens when they are coupled with the right visibility or collaboration technologies to drive serious value from the data the other systems are capturing. Moving toward a globally integrated supply network is of par-

amount importance for this sector. We believe there is still much work to be done around trusted relationships, transparency, and technology enablement to foster these types of collaborative business models.

of many indications that `Disruptive Complexity’ is here to stay. What is also quite clear is that great opportunities await those companies willing to envision and embrace this complex but opportunity-rich environment.

Conclusion

The pervasive pressure of an accelerating pace of change is one

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FEATURE COLLABORATIVE COMMONS

The Collaborative Commons 6 INDUSTRY TODAY

FEATURE COLLABORATIVE COMMONS

Zero Marginal Cost and the Internet of Things

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FEATURE COLLABORATIVE COMMONS

academics, and receiving college credits. Economists acknowledge the deep disruption that near zero marginal cost has had on the above mentioned industries but, until late, have argued that the

phenomenon would be restricted to information goods, and not spill over to the world of physical goods and services. No longer. A new general purpose technology platform is evolving with the potential of reducing mar-

Jeremy Rifkin is the author of The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. Rifkin is an advisor to the European Union and to heads of state around the world, and is the president of the Foundation on Economic Trends in Washington, DC.

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ginal costs across large sectors of the industrial economy. The ubiquitous Communication Internet is expanding its global reach by connecting with an incipient renewable Energy Internet, and an embryonic automated Logistics and Transport Internet, creating a distributed neural network, combining communications, power, and mobility in a single operating system—a Third Industrial Revolution. This more encompassing super Internet of Things (IoT) is designed to connect every thing and every human being across the economic value chain in an indivisible intelligent web that functions like a global brain. Twelve billion sensors are already attached to

FEATURE COLLABORATIVE COMMONS natural resources, road systems, warehouses, vehicles, factory production lines, the electricity grid, retail stores, offices and homes, continually feeding Big Data to the Communication Internet, Energy Internet, and Logistics Internet. By 2030, upwards of 100 trillion sensors will be connected to the IoT. Business enterprises and prosumers will be able to connect to the IoT and use Big Data and analytics to develop predictive algorithms that can speed efficiency, dramatically increase productivity, reduce the use of energy and other resources, and lower the marginal cost of producing and distributing physical things to near zero. For example, the bulk of the energy we use to heat our homes and run our appliances, power our businesses, drive our vehicles, and operate every part of the global economy will be generated at near zero marginal cost and be nearly free in the coming decades. That’s already the case for several million early adopters who have transformed their homes and businesses into micro-power plants to harvest renewable energy on-site. Even before the fixed costs for the installation of solar and wind are paid back—often as little as 2 to 8 years—the marginal cost of the harvested energy is nearly free. Unlike fossil fuels and uranium for nuclear power, in which the commodity itself always costs something, the sun collected on rooftops and the wind travelling up the side of buildings are nearly free. The IoT will enable prosumers to monitor their

electricity usage, optimize their energy efficiency, and share surplus green electricity with others on the Energy Internet. Similarly, hundreds of thousands of hobbyists and thousands of startup companies are already printing out their own manufactured products using free software, and cheap recycled plastic, paper, and other locally available feedstock at near zero marginal cost. The additive manufacturing process uses one tenth of the materials of traditional factory production, resulting in a dramatic reduction in the use of the earth’s resources. By 2020, prosumers will be able to share their 3D printed products with others on the Collaborative Commons by transporting them

in driverless electric and fuel cell vehicles, powered by near zero marginal cost renewable energy, facilitated by an automated Logistics and Transport Internet.

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FEATURE COLLABORATIVE COMMONS The distributed, peer to peer nature of the Internet of Things platform allows millions of small players—social enterprises and prosumers—to come together in a global Collaborative Commons, and produce and share green energy and 3D printed manufactured products directly with one another at near zero marginal cost and for nearly free, just as we’ve done in producing and sharing information goods on the Internet. This fundamental technological transformation

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in the way economic activity is organized and scaled portends a great shift in the flow of economic power from the few to the multitudes and the democratization of economic life.

The Rise of the Collaborative Commons

Millions of people are transferring bits and pieces of their economic life to the global Collaborative Commons. Prosumers are not only producing and sharing their

own information, entertainment, green energy, 3D-printed goods, and enrolling in massive open online courses on the Collaborative Commons at near zero marginal cost. They are also sharing cars, homes, and even clothes with one another via social media sites, rentals, redistribution clubs, and cooperatives, at low or near zero marginal cost. Forty percent of the US population is actively engaged in the collaborative sharing economy. For example, 800,000 individu-

FEATURE COLLABORATIVE COMMONS als in the US are now using car sharing services. Each car share vehicle eliminates 15 personally owned cars. Concurrently, millions of apartment dwellers and home owners are sharing their dwellings with millions of travelers, at near zero marginal cost around the world, via online services like Airbnb and Couchsurfing. In New York alone, Airbnb’s 416,000 guests who stayed in houses and apartments between 2012 and 2013 cost the New York hotel industry 1 mil-

lion lost room nights. The result is that “exchange value” in the marketplace is increasingly being replaced by “shareable value” on the Collaborative Commons. Global companies, operating in the profit-driven marketplace, will likely remain with us far into the future, albeit in an increasingly streamlined role, primarily as an aggregator of network services and solutions, allowing them to thrive alongside the Collaborative Commons as power-

ful partners in the coming era. The financial sector will also play a critical part in the collaborative age, funding the build out of the Third Industrial Revolution Internet of Things infrastructure. The capitalist market, however, will no longer be the exclusive arbiter of economic life. We are entering a world partially beyond markets where we are learning how to live together in an increasingly interdependent global Collaborative Commons.

INDUSTRY TODAY 11

FEATURE THREE FLAVORS

Employees come in Three Flavors

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FEATURE THREE FLAVORS

ike was the CFO of a large manufacturing company in Texas. He was an outstanding executive and he accepted this position because it suited his strengths to a tee. The company was looking for a very strategic Head of Finance who could work in partnership with the company’s CEO to take market share in existing markets, enter new markets and diversify their product line. When Mike started his new job he quickly realized that there was a huge problem. The way the department was set up he had to spend all of his time looking at the past instead of working with the CEO to plan the future. He also found himself working 70 – 80 hours per week.

Mike knew this was unsustainable for several reasons. He was not using his talents and would eventually become disengaged and frustrated. He was also not doing what he was hired to do, which would quickly become a source of irritation to the CEO and detrimental to the company as a whole. Mike assessed the situation and discovered that a few of his employees’ current roles were a substantial waste of talents and individual skill sets and having a negative impact organizationally. So, he reorganized the department and prioritized his time. He decided who his high-potential staff members were — his Critical People — and redesigned their job descriptions to allow them to take on more crucial projects. He found the Squeaky Wheels on INDUSTRY TODAY 21

FEATURE THREE FLAVORS

the staff and provided essential training, and then determined who needed a bit of motivation or to be moved on. Mike had identified the “flavors” of his employees. Like a workplace Neapolitan ice cream, employees typically come in three distinct “flavors”: your Critical People, the Squeaky Wheels and the Fat Middle. Most managers and supervisors either attempt to manage every employee from each of these groups in the same manner. Or worse, they spend the majority of time with their Squeaky Wheels – rewarding bad performance or behavior. Either results in a loss of productivity and engagement, and inevitably, an unfulfilled and unhappy staff – and frustrated

and time-poor manager. When you recognize the “flavor” of the individual employee, and prioritize your time accordingly, you position them for the highest potential for success— for themselves and for the company.

Critical People These can be obvious—the real superstars who consistently under-promise and over-deliver, but they can also be not-so-obvious, those quiet achievers or Steady Eddies. They may never be superstars; in fact, they may be barely above mediocre—but they are consistent and reliable. They may also be those staff members who hold important intellectual property or jobs no one else wants to do. They may

have great customer relationships or know a lot about the organization itself. In any case, you don’t want to lose them. You should prioritize your time so that 80 percent of it is spent dedicated to these people for three main reasons: • Allowing them to mentor with and learn from you will help 22 INDUSTRY TODAY

FEATURE THREE FLAVORS

them grow and develop in their own career; • If you don’t give them the time and attention they deserve (and may crave), they may not understand how important they actually are, which can lead to frustration, hurt feelings and even a sense that they aren’t appreciated. The number of

people who walk into recruiters’ offices looking for a new role because they didn’t feel appreciated by their boss is astonishing—and easily avoided; • The third reason was discovered by the Gallup Organization. Their research showed that if managers spent 80 percent of their time with the top

10 - 20 percent of their staff they would become even more productive and engaged. As the saying goes, “a rising tide lifts all boats.” If you empower those of your staff who really want to perform they will help you manage the others. By spending more time with your Critical People, you will INDUSTRY TODAY 23

FEATURE THREE FLAVORS

Kim Seeling Smith is an international human resources expert and author of the forthcoming book, Mind Reading for Managers: 5 FOCUSed Conversations for Greater Employee Engagement and Productivity. With her expansive knowledge of human capital practices in today’s market, Kim helps companies build healthy work environments and increase employee engagement and productivity in our digitally connected, globally oriented world. For more information on Kim Seeling Smith, please visit http://igniteglobal.com.

increase productivity, manage your time effectively and have more engaged staff and increase retention rates.

The Squeaky Wheels At the other end of the spectrum you have your Squeaky

24 INDUSTRY TODAY

Wheels. It’s often said that “the squeaky wheel gets the grease,” and perhaps that’s a good thing in a mechanic’s workshop. In a business environment however, it’s a recipe for poor management, high staff turnover and low productivity.

There are a couple of types of Squeaky Wheels: the high-performers who are also high-maintenance, and those who squeak because they present either a performance or a behavior issue. Spending an over-abundance of time with

FEATURE THREE FLAVORS

these employees will become problematic, and again, sends the wrong message to staff. So what about your Squeaky Wheels? Should you just ignore them? Possibly—but in a business setting, a more proactive approach can be beneficial to the collective team. There are three scenarios you can utilize: • Hold a formal conversation to set more clear objectives or key performance indicators, and give them the necessary training required to accomplish them and hold them accountable for doing so; • Determine their internal motivators, or Currencies of Choice, and use those to inspire them to a higher level of

performance or better behavior; • Move them on. Let them squeak on someone else’s bus.

The Fat Middle This “flavor” is comprised of the remaining 60-70 percent of your workforce. Miraculously, when you devote the majority of time to your Critical People and avoid the urge to grease the Squeaky Wheels, the Fat Middle takes care of itself. The good ones desire to feel the inclusion and attention they see managers giving to the Critical People. They tend to become more engaged and to develop more quickly, especially if the manager empowers the Critical People to help train, mentor

and motivate the Fat Middle. Within six to eight months of managing his team by their individual “flavor,” Mike was back working a reasonable work week and spending his time working with the CEO on strategy—exactly what he was hired to do. As an added benefit, employee retention went up as a result of the staff being deployed properly, working together much more effectively and enjoying their own jobs to a much greater extent. By identifying and classifying the types of his employees, he righted the overall course of the company. And you can do the same with yours.

INDUSTRY TODAY 25

FEATURE TRADE SECRETS

Manufacturing a Trade Secret

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FEATURE TRADE SECRETS

developed and you hire a lawyer to pursue it. Welcome to bet-the-company litigation. Even as you initiate the legal process, your competitor is undercutting your prices on virtually every account and your customers are leaving in droves. Your company did not historically have a robust intellectual property portfolio. In retrospect, however, a few manufacturing process improvements by your engineers led to an unprecedented competitive advantage, and the company’s crown jewels are now on the line. For most companies, litigation over theft of trade secrets is something that occurs only once (if at all). Unfortunately, if someone does eventually steal your company’s trade secrets, you do not get to choose when

28 INDUSTRY TODAY

that happens. In the moment of truth, the future of your business may well depend on what steps you took to protect your trade secrets and prepare for possible litigation beforehand. If you go back to my hypothetical, imagine now that you learn the following troubling facts from your lawyer: (1) your employment agreements contain poorly drafted language that arguably limits the protection of your trade secrets to one-year after employment is terminated; (2) third-party vendors were frequently allowed to inspect your manufacturing process without non-disclosure agreements; (3) your employees received no training on the protection of trade secrets or confidential in-

formation; (4) there is little or no security at your manufacturing facility and people come and go as they please; (5) the only internal document that references trade secrets refers to some antiquated paint formula; and (6) there is a picture of sensitive manufacturing equipment on the company’s website. By law, a company must take “reasonable measures” to protect its trade secrets from disclosure. A jury may hear these facts and conclude that your company has no trade secret in the manufacturing process at issue. Now, do not get me wrong. Trade secret law in most states is plaintiff friendly. With the right legal counsel, you may be able to

FEATURE TRADE SECRETS

“Thieves respect property. They merely wish the property to become their property that they may more perfectly respect it.” -GK Chesterton

successfully navigate all of these obstacles during the litigation and protect your trade secrets. However, this is not garden variety litigation. The future of your

business may be at stake, and most of these problems could have been avoided with a little bit of planning and advice. The starting point for protecting any trade secret is recognizing that your company has actually developed protectable trade secrets. Many manufacturing companies do not know that they have protectable trade secrets in their manufacturing equipment and processes, or they fail to properly identify them and therefore do not tailor their policies and procedures to protecting them. Some manufacturers will identify their trade secrets, but they do not implement the protections necessary to prevail in the event of litigation. Successfully running this gauntlet of properly identifying and protecting manufacturing trade secrets is essential to maintain-

ing a competitive advantage. To constitute a trade secret, the information that you are seeking to protect must satisfy three criteria: (1) it must not be commonly known or available to the public; (2) it must provide economic value, actual or potential, from not being generally known to or readily ascertainable by competitors in the industry; and (3) it must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy. First, a protectable trade secret must not be commonly known by or available to the public. As such, manufacturing equipment and processes that are well known by multiple competitors in the industry or that are the subject of existing or expired patents do not constitute

INDUSTRY TODAY 29

FEATURE TRADE SECRETS

a trade secret. In other words, manufacturing methods and know-how that can be obtained in the general public are not secret by definition, and they are therefore not protectable.

Combination Trade Secrets

In my experience, this require-

ment leads many manufacturers to erroneously conclude that they do not have protectable trade secrets in their manufacturing equipment or processes. When you walk into almost any manufacturing facility, the vast majority of the manufacturing processes that you find will involve an arrangement or compilation

of equipment, the components of which can be bought off-theshelf from third-party vendors. If you ask the plant manager whether the process constitutes a trade secret, they will commonly laugh and say that all of the equipment was purchased from a catalogue through a variety of third-party vendors. This is a critical mistake. Admittedly, an off-the-shelf piece of equipment from a third-party vendor does not constitute a trade secret. However, under the Uniform Trade Secrets Act adopted in at least forty-eight states, a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but where the unified design, process, and operation of that equipment or process in a unique combination affords a competitive advantage. This is known as a combination trade secret. In evaluating the existence of a manufacturing trade secret, the question is often not whether a given component of the manufacturing process was designed in secret and is therefore unavailable to the public. For a combination trade secret, the

Daniel C. Norris is a Partner in Alston & Bird LLP’s Litigation and Trial Practice Group. Mr. Norris is a trial lawyer representing plaintiffs and defendants in complex commercial litigation, including litigation arising from intellectual property rights, products liability claims, and commercial contractual disputes. For more information on protecting trade secrets or litigation involving trade secrets, the author can be contacted at daniel.norris@alston.com or 404-8817826. Mr. Norris can also conduct a proprietary information audit for your company. http://www.alston.com/files/docs/Proprietary-Info-Audits.PDF 30 INDUSTRY TODAY

FEATURE TRADE SECRETS question is whether the combination of equipment and/or process steps that constitute the manufacturing process (or a portion thereof) is secret or conversely whether it is generally known in the industry. In my experience, many manufacturers configure their equipment or manufacturing process in a unique way that is unknown to their competitors, and it is therefore potentially protectable as a trade secret. The law on combination trade secrets is sweeping and provides broad and favorable protections for manufacturers.

Economic Value

In addition to creating something that is not generally known, a trade secret owner must also demonstrate that the company

derives economic value, actual or potential, from the trade secret not being generally known to or readily ascertainable by its competitors. Admittedly, the law does not require that the economic value of a given trade secret be ascertainable with certainty. In fact, mere “potential” economic value is sufficient. However, efforts to track profit margins, market share, manufacturing costs, improved product performance, and research and development costs on a product and/or process specific basis will go a long way toward proving the requisite economic value at trial. Finally, the economic value of a given trade secret can be further demonstrated by showing that lost sales went directly to a competitor that is accused of misappropriating trade

secrets. If your manufacturing company has potential trade secrets, you should audit the systems in place for tracking economic data to ensure that your trade secrets will be protectable in the event of litigation. Finally, as noted above, a protectable trade secret must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The starting place for any trade secret protection regime is the drafting of appropriate provisions in employment contracts for any employees with access to the trade secrets. Drafting employment contracts to prohibit the use of confidential information and trade secrets can present pitfalls for the unwary. Under most state laws, confidential information is a form

INDUSTRY TODAY 31

FEATURE TRADE SECRETS of business information that can be protected from disclosure in an employment agreement even though it does not rise to the level of constituting a trade secret. Because the type of information that can be protected as “confidential information” is broader than what can be protected as trade secrets, most state laws require an employer to limit the duration (among other things) of any provision prohibiting the use of confidential information after employment. If language protecting trade secrets is rolled into this same provision, it can have the inadvertent effect of limiting the time during which your trade secrets will be protectable. By contrast, in virtually all states, a properly drafted and independent provision in an employment contract prohibiting the employee’s use of trade secrets can have an unlimited duration as long as the trade secret remains a secret. This distinction is significant for two reasons. First, the unlimited duration for protection of trade secrets

32 INDUSTRY TODAY

makes those protections far more valuable than prohibitions on the use of confidential information. Second, if trade secret protections were limited in duration (intentionally or inadvertently), a thief could argue that the mere failure to prohibit the use of trade secrets for a longer period constitutes a failure to take “reasonable measures” to protect the trade secret. This discussion illustrates only one of many potential pitfalls in the drafting of employment contracts designed to protect trade secrets from misappropriation. Surprisingly, many manufacturers give little attention to the drafting of these provisions in their employment contracts. When probed on the subject, they believe that lifetime process engineers or other blue collar employees will not leave the company and/or would not take the risk of starting their own business. This is a mistake. Many cases involving theft of trade secrets actually implicate competitors or business part-

ners that hire critical employees from another company for the not-so-subtle purpose of obtaining their process and engineering expertise. Although the law does not impose strict requirements for what constitutes “reasonable measures” to protect trade secrets, it is certainly prudent and generally necessary to go beyond implementing the protections available in employment contracts. Any review of trade secret protection protocols must look at a number of additional factors, such as (1) physical and data security, and (2) employee policies, procedures, and training.

Physical and Data Security

To protect trade secrets, it is critical that manufacturers take steps to insist on physical security for their operations and virtual security for their computer systems and electronic data. Manufacturers should not allow customers, vendors, former

FEATURE TRADE SECRETS employees, or even the general public to access sensitive portions of their manufacturing plant or operations without requiring non-disclosure agreements, the screening of highrisk visitors, visitor confidentiality agreements, restricted access policies, and written policies and procedures for implementing and managing these systems consistently. Manufacturing and sensitive data facilities should have perimeter fencing, security cameras, key card access, security patrols, and other physical security measures in place. Computer systems should incorporate robust security systems, including password protections, restricted access features, data theft monitoring, etc. With the increasing use of mobile computer technologies, wireless devices, and cloud computing, companies should have appropriate mobile computing policies in place to protect company data and control its use and access by employees from high-risk mobile

platforms. Many of these measures can prevent the loss of sensitive trade secret information before it happens. However, even if it does not stop the initial theft, these systems will be powerful evidence in a trial for misappropriation of trade secrets.

Employee Policies and Procedures

In many cases involving theft of trade secrets, the company did not stress confidentiality, protections for trade secrets, or otherwise train employees regarding the handling of intellectual property. In the absence of training and vigilant security measures, many employees feel like it is okay for them to re-create their former employer’s technology in their own business. In the information age, the next generation of workers has been trained since birth to believe that it is okay to share anything on the internet, regardless of who created it or where it came from. This culture also necessarily influenc-

es workers’ views of intellectual property and any “restrictions” on their use of information once they leave their place of employment. To effectively limit trade secret theft or to enforce trade secrets in litigation, it is critical for manufacturers to routinely train their employees and have policies and procedures in place governing their use or disclosure of confidential and trade secret information during their employment. In the end, no one security measure will uniformly prevent theft of trade secrets or ensure that the information will be protectable as a trade secret in litigation. However, the more effort that is exerted in this area, the more likely your company is to either avoid or successfully navigate bet-the-company litigation over theft of trade secrets. If litigation does become necessary, skilled counsel is required to avoid a number of landmines that could put your company’s crown jewels at risk in front of a jury. Choose wisely.

INDUSTRY TODAY 33

PROFILE • LAMONS

34 INDUSTRY TODAY

LAMONS • PROFILE

PROFILE • LAMONS

36 INDUSTRY TODAY

LAMONS • PROFILE

ALLOY & STAINLESS FASTENERS Alloy & Stainless Fasteners (ASF) holds industry assemblies together with Lamons’ extensive worldwide network when industry requirements demand special metal fasteners (bolts, nuts, studs, sockets and bent bolts) that are custom made for a variety of corrosive environments, high strength applications, high and low temperature service situations, and custom fastener dimensional needs. ASF services alongside Lamons with quick delivery to meet industry’s needs in construction, breakdowns, turnarounds, maintenance and need-it-now 24-7 fastener requirements.

that when most of their customer base would order gaskets from them, they would also be in need of bolts as well. “It gave customers a one-stop-shop option, increased the efficiency and quality of our business, and aptly fed our overall desire to grow our company into a global player.” It was ambition that largely fueled the company then, and Lamons hasn’t looked back

since, expanding its customer base, product line, and overall global reach in becoming a ‘go-to’ option for companies all over the world. And yet, while a hunger for increased business is what initially spurred the company’s growth, it’s been consistent innovation and strategic expansions that have sustained the steady flow of orders coming in and going out of Lamon’s production facilities.

Global Appetite Given that they cater to a global audience, and operate in a business where speed of delivery is key, the company has established satellite facilities around the world to ensure that when a need arises for an order

INDUSTRY TODAY 37

PROFILE • LAMONS

DID YOU KNOW? Lamons main headquarters are in Houston, and the facility, measuring 220,000 square feet, represents one of the largest metallic gasket manufacturing plants in the world. But that’s not the only highlight, as the plant’s roof is adorned with 3-D rendering of the American Flag, making it the largest-ever depiction of the U.S. banner.

of gaskets or fasteners, there’s a Lamons building right around the corner. “A huge part of our business relies on our ability to deliver product immediately, as generally gaskets and bolts aren’t thought of until the very end of a process,” he says, adding, “in response to this, we have set up a branch network around the world that are stocked with the proper equipment and skilled labor to produce locally and get the product to the cus38 INDUSTRY TODAY

LAMONS • PROFILE

“When you look at the types of gaskets and fasteners we provide today, our product line and production capabilities are more complete than any other related company out there.” tomer quickly.” He says that when looking at businesses like Exxon and Dow Chemical, one will find that at the majority of their branch locations, which include Brazil, China, and Europe, is the presence of a Lamons facility nearby. Reflecting this strategy of impacting both domestic and foreign markets was the company’s recently purchasing of Thailand-based Tat Lee Ltd., a manufacturer and distributer of standard and specialty gas-

kets, as well as the opening of a brand new local manufacturing facility in Pascagoula, Miss. “We have the largest market share of spiral wound gaskets in the U.S., and we remain committed to feeding that stream of business, but have also embraced the importance of an international presence as well,” he says, adding, “if you looked at us 15 years ago, our presence outside U.S. borders was minimal, but we clearly have shifted towards a much INDUSTRY TODAY 39

PROFILE • LAMONS

Bolts • Nuts • Studs • Sockets Your Specials are Our Standards Over 150 Material Grades

Over 250 Machines

www.GoASF.com 40 INDUSTRY TODAY

24-7 “SOS” Service

LAMONS • PROFILE

“We have the largest market share of spiral wound gaskets in the U.S., and we remain committed to feeding that stream of business, but have also embraced the importance of an international presence as well.” farther-reaching impact across the world’s markets.”

Producing Innovation Encompassing these secondary service facilities, are the company’s four main production plants spread out across North America, with two located in Houston Tex, a third in Golden, Colo., and the fourth in Sarnia, Canada. “Our business is associated with fast turnaround, and these facilities have the machine and man power to handle it,” he says, adding, “we ensure efficiency by segre-

gating our internal processes, between hot orders that need to happen quickly and scheduled orders that may be larger in volume, but have longer lead times.” Kolb says they have recently employed a bevy of lean initiatives to polish their production practices, and have made strong investments towards becoming a vertically integrated business. “There were a lot of products we traditionally relied upon other suppliers to manufacture for us, which was a liability not in our best interests,” Kolb says, adding, “When you

look at the types of gaskets and fasteners we provide today, our product line and production capabilities are more complete than any other related company out there.” Lamons’ latest acquisition consisted of a sheet gasket material manufacturing

BELLEVILLE INTERNATIONAL Belleville International is honored to partner with Lamons, a high caliber industry leader with exceptional application knowledge. Together, we are dedicated to delivering excellence in part quality, service, and engineering support to all customers. Belleville disc spring washers are capable of providing the greatest amount of spring force in the tightest design space with minimal spring movement. This design is ideal for maintaining the proper tension in integral systems, preventing leaks and emissions in any environment, especially where thermal expansion and contraction, or vibration are concerns. As an ISO certified manufacturer of top quality disc springs, belleville washers, flow control components and a wide range of custom machined parts, Belleville International is able to accommodate your industry, material, and production standards. We have an experienced team ready and able to provide innovative solutions for your application. Contact us today with your manufacturing needs at 877-235-5384 or visit our website at www.bellevilleintl. com.

INDUSTRY TODAY 41

PROFILE • LAMONS

operation based in Bangalore, India. This facility formerly identified as Basrur was a small family owned business which was known for high quality and supplied major OEMs such as Bosch and Cummins. With a major focus on the automotive sector and with stringent TS certifications, Basrur is synonymous with high quality at a com-

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petitive price. A unique attribute for Basrur is that it is a relatively new operation and asbestos based products have never been processed there. Among other sheet gasket manufacturers in the world, this is a unique characteristic which influenced Lamons decision to move forward with the acquisition. In early 2014, Lamons Basrur was

relocated into a state of the art facility capable of handling the increased volume associated with Lamons’ global network. “We continue to add larger calendars for increased capacity and add equipment to meet our customer demand” Kolb states. And that product line has only continued to expand, with Lamons developing several groundbreaking products just within the last year. One of these products is the Fire Safe Isotek™ Defender™ Isolation Gasket, which Kolb refers to as, “our most successively-launched product in the history of our company.” The Defender™ FS’s design and technology primarily focuses on a premium Kammprofile design,

LAMONS • PROFILE

which maintains high compressive strength while also proving its worth as a material for bolted joint assembly using ASME flanges and related clamp loads. The integral core design is made based on the EN 12560-6 specification, the Kammprofile, and has shown the lowest recorded leak rates associated with any isolation gasket design available in the market today. In addition, Lamons also recently unveiled a new Matrix line of biaxially oriented PTFE (polytetraflouroethylene) gasket material. Designed for use in critical piping systems where superior chemical resistance and performance is needed, the resultant biaxial orientation of the material creates a unique

strength where both the longitudinal and transverse directions are equally strong. “The result of it all is a premium gasket material that gives users excellent creep and chemical resistance,” Kolb says.

Engineered Growth The new line of sophisticated products represent Lamons’ strong commitment to continuous research and development, a facet of the company Kolb attributes to both an innovative team of engineers, and the strategic decision of having branch locations so close to their customers around the world. “We have the strongest applications engineering team in the world, and because we work so closely with the end users in such a vast variety of markets,

it gives us great perspective of current and future needs,” he says, adding, “feedback from the customer is key to our success and we reflect that in the way we improve upon our products.” For Lamons, it’s a company that has come a long way, and for as much growth as they’ve experienced, it appears as though they are far from slowing down. “Looking across our product line, we’re really unmatched by anyone in the world right now, in terms of breadth of product,” Kolb says, concluding, “to know that we started as a small, humble gasket company in Houston, Texas and have grown into what we are today, it’s something the company and our employees are extremely proud of.”

INDUSTRY TODAY 43

PROFILE • HOUGHTON

It’s been nearly 150 years since Houghton International was founded back in 1865, with the company’s roots beginning in the service of the United States government, providing metal corrosion inhibition products and solutions. Much has changed and progressed since then, as the company has evolved and built upon its continued success through both a respect for tradition and an emphasis on innovation to become a world leader in metalworking fluids. Chuck Faulkner – Market Development Manager, Hank Limper – Technical Program Manager, John Burke – Director Engineering, R&T, Dave Slinkman – Vice President R&T, Neil Winterbottom – Director Operations FLUIDCARE™, and Dianne Carmody – Director Marketing Americas of the company all come together to talk about the historical progression of Houghton International, the various industry-changing elements they have brought to a number of different markets over the years, and why their dynamic business approach has them poised for an even stronger future. Steve Engelhardt reports. 44 INDUSTRY TODAY

HOUGHTON • PROFILE

oughton International initially launched its business in the 19th century with the release of its Cosmoline® rust preventive, a product that was unprecedented at the time. “Our development of Cosmoline really served as one of the foundational blocks of our business,” Limper says, adding, “it became a reference point going forward and allowed us to expand into a wider range of

products through its performance and popularity.”

Tracking History Limper says that when he looks back at the history of Houghton, he can point to three “chapters” that serve as cornerstones of the company’s journey and its overall identity today. “The development of Cosmoline certainly serves as the first one, and its success led to a deep, ongoing relationship

with the US Government,” he says, adding, “fast forward to the 1950s, we found ourselves again in contact with them, and the nature of the job led to what I see as the second major chapter in Houghton’s history.” He says that the U.S. Government came to Houghton in 1954 in response to accidental explosions and fires that were occurring onboard aircraft carriers after World War II, as upgraded INDUSTRY TODAY 45

PROFILE • HOUGHTON

catapult systems were being implemented and tested. The most serious of these disasters was on the USS Bennington claiming over 100 lives. “These ‘peacetime’ fires were being ignited as a result of flammable mineral oil hydraulic fluids and hydraulic systems, and the U.S. Navy came to Houghton to see if we could develop a solution for a grave problem that resulted in tragic loss of life,” Limper says, adding, “in short Below: Aluminum sheet manufactured using the latest aluminum finishing technology.

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order, Houghton was able to develop a fire-resistant hydraulic fluid, and through its success, it soon spread and was adopted throughout the U.S. Fleet.” Houghton’s success with the military soon became known by a broader audience, and all of a sudden the same fluids they had designed and manufactured specifically for the federal government, were then being demanded by industrial businesses in the private sector. “We received an influx of orders from steel mills to food processing plants, where hydraulic-related systems were in heavy use, and the risk of fire

could mean endangering their employees and lead to significant loss of human life, production and profit as a result,” says Faulkner. Houghton’s solicited and successful entry into the private sector proved to be instrumental in providing them with a dynamic market for what would become a dynamic line of products. A big issue in the 1960s through 1990s, across major industries including automotive, aerospace, fabricated metal goods and others was the rapid deterioration or ‘souring’ of metalworking fluids, causing them to be dumped and

HOUGHTON • PROFILE

“We continuously work with our product stewardship group to ensure Houghton’s new product developments deliver offerings that are renewable and sustainable from an environmental health and safety standpoint.” -Dave Slinkman recharged at an excessive rate and a high cost. “It resulted in a lot of waste being generated by these factories and creating a situation that neither the company nor the surrounding community desired,” says Slinkman, adding, “so basically what you had were metalworking fluids that had to be supplemented with significant amounts of ‘sump-side’ additives designed to prevent growth of various microorganisms including fungi and bacteria, and when these fluids were no longer effective, they were being disposed of at significant rates, resulting in a potentially harmful situation to the environment that was also very costly.” And so the third chapter was written in Houghton International’s history, when they developed revolutionary technology to produce metalworking fluids that minimized or eliminated the need for sump-side Right: Houghton provides products to the mining industry that have low environmental impact and improve worker safety. INDUSTRY TODAY 47

PROFILE • HOUGHTON

additives. “We created a more independent fluid that didn’t have to rely on additives, lasted dramatically longer and provided an odor-free operation. The result was our company quickly became recognized for our leading edge biostable technology allowing us to expand our business into a number of other countries, and leading to what today is a global leader in metalworking fluids.” More recently, Houghton

has continued its momentum, acquiring D.A. Stuart, a leading provider of specialty chemicals and related services used in metalworking applications, in 2008, giving the company an established presence in India and expanding its steel industry business. 2011 was a busy year as well, as the company acquired Royal Dutch Shell’s MWO business, whose product portfolio strengthened Houghton’s geographic footprint with

MORE ABOUT FLUIDCARE: Houghton’s FLUIDCARE™ chemical management service optimizes chemical use in company’s plants by ensuring that they use the right fluids, in the right amounts, in the right way. FLUIDCARE’s team includes certified chemists, experienced engineers, and production managers who look at situations from every angle to streamline processes, increase plant efficiency, reduce waste, boost output, and dramatically reduce overall costs. FLUIDCARE’s program helps plants: •

Minimize waste;

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Reduce downtime;

•

Improve tool life;

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Prevent contamination;

•

Simplify waste treatment;

•

Control health, safety, and environmental risk.

48 INDUSTRY TODAY

its 3 additional European facilities and gave them a deeprooted presence in southeast Asia. This year, the company acquired Henkel’s North American Steel Mill business, including an expanded product line and vital resources in sales, technology and business development to serve existing and new customers in the steel industry. Through all these strategic acquisitions and expansions, Houghton International represents a company that is deep in both its historical roots and its impact and influence it has on the global marketplace today.

HOUGHTON • PROFILE

Innovative Identity The breakthrough product line is known as the Hocut 795 series metal removal fluids and through its twelve different variations, serves as the company’s flagship solution for industries ranging from automotive to aerospace to fabricated metal goods. Slinkman says that the product’s effectiveness is a direct result from the investments the company puts into its research and development efforts. “We consider research and development as an extremely important

area that contributes significantly to our overall identity,” he says, adding, “Our investment into the sciences, an intimate partnership with our customers, and a deep understanding of the overall processes of each industry is really what sets Houghton apart.” This differentiated value proposition is displayed further in their recent patenting of an aluminum acid etching technology prior to anodizing, a finishing method Slinkman says that unlike alkaline etching, produces a superior matte fin-

ish while significantly reducing aluminum removal and sludge waste. “It’s a much more efficient process that enables our customers to put a final finish on aluminum extrusions used in architectural aluminum, producing higher quality and significantly improved aesthetics,” he says, adding, “We see ourselves continuing to successfully convert customers away from older, caustic-based technologies because of the reduced waste, improved quality and increased operational efficiencies in this process.”

INDUSTRY TODAY 49

PROFILE • HOUGHTON

“Our investment into the sciences,an intimate partnership with our customers, and a deep understanding of the overall processes of each industry is really what sets Houghton apart.” -Dave Slinkman 50 INDUSTRY TODAY

HOUGHTON • PROFILE

While efficiency is key, safety is held in even higher regard at Houghton, when designing their products. “The nature of our industry is that regulations surrounding the use of raw materials that can or cannot be used get tighter each year,” Slinkman says, adding, “We continuously work with our product stewardship group to ensure Houghton’s new product developments deliver offerings that are renewable and sustainable from an environmental health and safety standpoint .” Non-ferrous and Zirconium Below: Hocut® biostable metal removal fluids are used in numerous applications and end-use markets.

Phosphate-based technology are also part of Houghton’s expansive line of products. Recently, the company developed a cutting-edge fluid technology known as NOA™ (Non Oleic Acid). The chemistry of the product is unprecedented in that it is the first aluminum hot rolling lubricant that is not oleic-based, while still maintaining and even surpassing the performance of the standard rolling lubricant technologies available in the market, eliminating the negative impact of metallic soap generation. With respect to Zirconium Phosphate, Houghton brings a technology to the market place that challenges the presence of traditional iron phosphate by offering significant savings

for companies in a number of areas, including energy requirements, environmental impact, water usage, operational efficiency, and waste generation. “Our surface finishing capabilities take a solution-driven approach comprised of worldclass products and services that gives our customers an overall competitive advantage,” Slinkman says, adding, “we pride ourselves on innovation and product development, and have developed an application expertise that we believe is unmatched.”

Customer Focus The application expertise Slinkman discusses has allowed Houghton to not only bring industry-leading products to

INDUSTRY TODAY 51

PROFILE • HOUGHTON

their customers, but also cutting-edge service in areas such as waste-treatment and recycling system design. “Twenty years ago, many companies had staff in-house to handle these needs,” Burke says, adding, “nowadays, as companies have become leaner, they don’t have these resources anymore and what we do is come in and fill the void, taking them through every step from start to finish in a number of programs.” He says that Houghton is the only metalworking fluid company in the world that offers recycling design and waste treatment. Most of this work is done

52 INDUSTRY TODAY

through Houghton’s chemical management service, FLUIDCARE™. Winterbottom says they “conduct a comprehensive audit of the customer’s metal working and manufacturing processes, including an evaluation of their value streams, EHS and operational processes in relation to their fluid management requirements. Through our FLUIDCARE group we are able to implement operational improvements providing both cost savings and environmental benefits and provide our customers with the necessary service, where a customer may lack the appropriate in-house personnel

or expertise.” One recent example, was when one of the largest automotive companies in the world solicited Houghton’s waste treatment services a few years ago, needing a ‘one size fits all’ solution for their vast number of global sites. “I was put onto a team with five other of the customer’s employees, and we met many times to design a system that would recycle and reuse the water being used at each plant,” Burke says, continuing, “there were a lot of variables to consider with regards to differing international standards at each site, but we were able to work together and

HOUGHTON • PROFILE

develop a total recycle design system of zero discharge that could be applied to each of their metalworking facilities.” The system has the potential to be highly successful for their partner, and when the customer recently rolled out their annual innovation awards, Burke and Houghton International received top recognition. “We were the only outside company with representatives nominated for the award in innovation, which was an aggregate competition amongst the company’s global workforce,” Burke says, adding, “to not only be nominated but then to actually win the award

from a company as prestigious as it is, I think it speaks a lot towards the talent, dedication, and environmental adaptability that is present here at Houghton.” And that’s really what Houghton sets out to do in each of the partnerships it enters into with its customers. “The ability to establish deep-seeded relationships with our customers and bring them capabilities they otherwise wouldn’t have access to is what really drives us forward as a company,” Carmody says, “whether it’s through our high performing products and services, the applications expertise of our personnel, our

global reach, or a combination of all three, we know that we are bringing solutions and services of high value to our customers that go beyond what a standard chemical supplier brings to the marketplace.” It’s a confident feeling for companies when they can come in and bring the best product and services to the table, and Houghton International is a company that not only has traditionally done that in the past, but looks to continue to do so for many years to come. www.houghtonintl.com

INDUSTRY TODAY 53

PROFILE • AKEBONO

54 INDUSTRY TODAY

AKEBONO • PROFILE

INDUSTRY TODAY 55

PROFILE • AKEBONO

kebono embodies today what it truly means to be an active, and successful global business, as Smith says, “We could be leading a program in Europe, handling the engineering for it in Japan, and performing the testing in North America.” One of the Japanese-owned company’s most distinguishing traits is their strong presence in all three of what Smith calls “elements of the foundation brake system”. “Differentiation in braking used to be achieved through qualities like stopping power or distance,” he says, adding, “nowadays those factors have pretty much become the standard, and the new ones are much more specific, aspects like residual drag, noise and vibrations issues that are felt or heard when stepping on the brake pedal.” Smith says that being able to not only sup-

ply but also work with these elements, which are brake calipers, rotors, and friction materials, enables them to identify these emerging differentiators much more easily, and produce a much more effective product as a result. “For every program, we are looking to clearly exceed the expectations of our customers,” he says, noting, “meeting the requirements of the market is no longer enough, and I think the people here at Akebono realize that and keep that in mind whenever they produce or develop braking components for our customers.”

A DYNAMIC DUO Since Akebono and McLaren teamed up in 2007, here’s a look at the success they’ve had in Formula 1 racing: Grand Prix contested: 129; Wins: 34 (26 percent win rate); Pole Positions: 30 (one pole every 5 races); Point-winning finishes: 188 (3 out 4 races in the points). 56 INDUSTRY TODAY

AKEBONO • PROFILE

“We could be leading a program in Europe, handling the engineering for it in Japan, and performing the testing in North America.” Formula For Success Smith says that even though Akebono has made a name for itself in the mainstream market with automotive OEMs and the aftermarket, he believes one of the most impressive accomplishments to date is their continued success experienced in

the Formula-1 racing circuit, referencing their extensive partnership with the McLaren Mercedes Formula-1 team. One of their biggest contributions to McLaren over the years has been their successful development of an electronic ‘brake-bywire’ rear brake control system that aids the braking effort at the rear, negating the need for the driver to constantly alter the brake bias, which assist in optimizing brake performance. First joining forces in 2007, the two companies announced an extension of their partnership in February, with McLaren elevating Akebono’s status to ‘Technology Partner’. The move will lead to Akebono designing and integrating an all-new braking system in response to recent changes in Formula-1 regulations. The extension marks the third time the two companies have agreed to stay in business with Since 2007, Akebono has been supplying brake calipers and brake master cylinders to the McLaren F1 team as Technology Partner. INDUSTRY TODAY 57

PROFILE • AKEBONO

wone another, something Smith regards as particularly special. “Being a technical-based company at our core, to be able to have sustained success in the motorsports market, where everything is driven down to a science, where marketing aspects are stripped away and only the best products make the cut, it’s something that reaffirms our belief in our team’s innovation and strengthens our company technical identity.” He says that the extension coming in 2014 was especially notable for him and his company, as there have been a slew of new F1 regulations that call for improvements in braking systems, and their need to be integrated with the rest of the vehicle in a much more significant manner. “This partnership really makes a lot of sense, because given our history and comfort in working together, changes and develop-

“For every program, we are looking to clearly exceed the expectations of our customers.”

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AKEBONO • PROFILE

P1 with our road car systems in it,” he says, adding, “I think our passion for the performance market and our continued relationship with a company like McLaren will go a long way for us in growing our presence in these areas in the future.”

Greener Pastures And that’s what Akebono is always focused on: the future. It’s shown not just in their products, but also in their long-term commitment to the future of Center: Ai-Ring, Akebono’s proving ground / test course in Iwaki-City, Fukushima, Japan; Left: McLaren P1 high performance car at the 2013 Geneva Motor Show, Switzerland; Right: Akebono supplies all three elements of the braking system on the McLaren P1: brake caliper, rotor and friction material.

ments can be made much more easily and smoothly.” In lieu of their success in Formula 1, Akebono has seen demand for their products in other McLaren cars, including road car and further competition programs. “We’re supplying the McLaren 12C GT3 racecar, and they also recently announced the launch of their McLaren INDUSTRY TODAY 59

PROFILE • AKEBONO

their industry as a whole. In fact, travelling back a couple of decades to the mid-90s, Akebono participated in a study through the environmentalist organization Sustainable Conservation that focused on determining and eventually limiting the enBelow: Environmentally controlled chassis dynamometer measuring noise, vibration and harshness.

60 INDUSTRY TODAY

vironmental effects of brake friction materials. “We were concerned as to where exactly our old brakes and friction material was going, and we found it was ending up on the roads, where the rain would wash and mix it into the storm water, which was having an impact on the surrounding environment,” Smith says, adding, “we responded to this by getting involved with Sustainable Conservation and

working with them to improve brake quality and minimize the impact that high performance brakes were having on the environment.” Akebono was instrumental in the process, assisting in defining the legislative outlines, as well as conducting the necessary testing on the brakes to determine the exact source of the issue and improve the overall quality. The net result of the

AKEBONO • PROFILE

process was the identification of copper’s negative environmental affects in friction materials and a subsequent plan that would eventually phase copper out of all friction materials in brakes. “There is a legislative requirement that will go into effect in 2021 requiring friction material to have a restricted amount of copper in it, and by 2025, that law bans all copper in friction material.” Smith says that

these dates may seem far away, but acknowledges that “there are current benefits of copper in friction materials, and the appropriate replacement materials need to be researched and understood before we completely phase it out.” And Akebono is doing just that, as eleven years ahead of schedule, the company has recently begun producing its first OE application with copper-free

non-asbestos organic material. “I don’t believe that any other brake manufacturer, even those who solely supply friction material, have been able to do this yet,” he says, adding, “yes, we are a commercial organization, but we also take great pride and commitment towards having a minimal footprint on the environment, and I think in this case it really benefitted us from both standpoints as a company.”

INDUSTRY TODAY 61

PROFILE • AKEBONO

Integrating Innovation Akebono’s willingness to explore new ideas and work with organizations and individuals worldwide was displayed again recently in their partnership on urban law enforcement vehicles in the United States, involving an upgrade in braking systems for a police vehicle. “Police vehicles in the United States are typically in the form of current production vehicles, which then have a significant amount of weight added to them through equipment, such as computers, radios, and lights,” Smith says, adding, “often times all this weight is added without making modifications to the braking system, which understandably leads to issues in its performance.” He says that a vehicle manufacturer came to Akebono with a request for an upgrade in their braking system, although with one catch; they weren’t willing to modify any of the vehicle’s wheel designs, meaning phys-

62 INDUSTRY TODAY

ical space would be limited and Akebono would have to fit their components into an predetermined design. Smith says that instances like this, while not typical, are met with ease by his company, due to their “three element approach, which really allowed us to probe each aspect of their system with a full understanding of how everything would impact each other.” He says that through their combined elements approach, they were able to rapidly install a complete new braking system that integrated smoothly with the existing police package. “In the Michigan State Police trials, a competitive vehicle test in February, our hard work was actualized when the vehicle we worked on finished as the clear leader in the braking trials,” Smith says, adding, “I think this was an instance where some

of our competitors may have struggled, given the same opportunity, because they can’t follow the three element approach in the manner that we have and continue to do.” Akebono, while immersed in the brake business, is a company that has its foot firmly on the gas pedal, speeding forward into the future. “The company shows a quiet strength, but we have a lot to celebrate, Smith says, concluding, “I think in terms of our technical depth, and the talent of the individuals working here, we’re one of the best stories never told.” Well, at least they used to be. Right: Akebono Engineering Center in Farmington Hills, Michigan; Below Left: Akebono high-performance braking system used in Formula-1 racing.

AKEBONO • PROFILE

Celebrating 25 Years of Partnership in the Brake Industry Recently awarded Akebono Supplier of the Year Award Batesville Tool & Die, Inc. 177 Six Pine Ranch Rd - Batesville, IN 47006 www.btdinc.com

Sakthi Automotive Group is part of the family owned Sakthi Group based out of India. Sakthi is a world leader in Product Design, Casting Technology, Machining and Assembly of Safety Critical Components for Global Automotive OEM’s and Tier-1 manufacturers. The Company has the capability of supplying Light Weight Aluminum & Ductile/Gray Iron Chassis Safety Critical and Powertrain Components with manufacturing locations in India, China, North America, Europe and soon South America, Sakthi has the global manufacturing footprint to support our global customers like Akebono.

For more information contact: Sales@sakthiautousa.com

INDUSTRY TODAY 63

PROFILE • AUBURN GEAR

AUBURN GEAR • PROFILE

million dollar-plus companies,” he says.

PROFILE • AUBURN GEAR

a production plant that spans 250,000 square feet, employs around 150 individuals, and is comprised of two different stations where raw materials, castings, and final products flow through. Smith says that while they have some inventory premade to always avoid having a quantity of zero, almost all of their products are designed and manufactured in their production facility at the time an order is placed. “We’ll get an order, say, from a distributor, and we can guarantee that they will receive their order in a 24-48 hour window.”

A Product You Can Trust Quality control is also a key part of Auburn’s manufacturing

process, from the beginning to the end. Smith says that when developing a part, “we dissect every aspect of its functioning,

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66 INDUSTRY TODAY

AUBURN GEAR • PROFILE

down to the car and the make it will be applicable to,” adding, “we put our products through three tiers of testing and have V6 and V8 full rear engines that can truly gauge their effectiveness.” He says that even after the product prototypes have gone through this comprehensive process and are ready to be manufactured on a large scale, his plant workers will still take a certain number of parts out of a batch and bring them to their testing center again to ensure that everything is lining up the way they planned. “Before our products get into the end users’ hands, they can be assured that it has gone through a bevy of tests and can be guaranteed not to fail.” And while the quality of their product is perhaps their biggest focus, Auburn Gear also offers a warranty program that is quite unlike any of its kind. Covering

the standard one-year manufacturers warranty, they also offer their DREX program in addition. The DREX program adds three years of additional coverage on top of the four year, equating to four years of product coverage. And because Auburn Gear replaces every broken part with a brand new one, the warranty restarts for another three years each time a new part is ordered. “We really want our users to feel confident in what they’re getting, and if something should go wrong, they’re getting an equally good part with equal the coverage.” When it comes to their actual product function, limited slip differential is their field of expertise, with an assortment of patented and designed products that are unlike anything else in the marketplace. For example,

their ECTED (Electronically Controlled Traction Enhancing Differential) Max Locker, employs a “two differentials-in-one” system, as Smith says. “It’s a flip on the fly mode, so you don’t have to stop your vehicle, get out, and locks your hubs,” he says, adding, “there’s nothing you

Auburn Gear’s gear based products thrive in the automobile and construction markets.

INDUSTRY TODAY 67

PROFILE • AUBURN GEAR

have to do except flip a switch to lock and engage the vehicle, and then flip it back and you’re back in limited slip mode.” In essence, if the locking fails for any reason, users will still maintain limited-slip mode and can ensure that every wheel on their vehicle will maintain traction no matter the conditions. Smith says his products are engineered to enable success no matter what the conditions are, because sometimes it may not be safe, or even possible, for individuals to get out of their vehicle and make adjustments to their gears. With the Max Locker, in particular, Smith says that he put two of them on his ’93 Jeep Wrangler, and buried the vehicle up to its windows in snow. “The wheels were fully

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submerged, but with the twoswitch mode and four-wheel drive, I was able to get out just fine. It really just takes you to a new level when comparing it to the capabilities of factory lockers.”

New Product Preview Auburn Gear’s products equated to success for them in 2013, where Smith says they saw strong growth as a company overall, particularly in their aftermarket sector, where they “grew their market share by over $500,000” Keeping their foot on the pedal, Smith says that his company is more excited than ever, as they are set to unveil a whole new range of products in 2014. Smith says that this new line of products really excite him

and his company, because “we have been developing them for the past two years and now that they’re finally hitting the market, it’s something we feel will be very successful and enjoyed by users in the marketplace.” When developing these new products, in addition to their established line, Smith says that a good portion of his company’s research into the marketplace comes from simply surveying the current customer base, identifying current strengths as well as needs, and then reporting back to their engineers seeing if, through their skill and innovation, they can come through for them. “Certain needs will prove to be occurring in greater frequency, and we see those and go back to

AUBURN GEAR • PROFILE

AT-A-GLANCE: ECTED MAX LOCKER The ECTED Max is a selectable traction device; an on/off switch is mounted near the driver. When “off” – the clutch pack, which is located behind the side gear, provides limited slip mode. As torque increases, the separating forces within the differential gears increase, causing the clutch pack to be compressed and thereby providing bias torque to the high traction wheel – your performance limited slip differential action. When selected “on”, current is sent to the electromagnetic coil. The coil is retained by a clip that fits over one of the bearing cap bolts, making it non-rotational. The coil rides on a ball bearing, and the ball bearings spin with the differential case. The coil creates a magnetic flux so that the pilot cone is pulled into engagement with the differential case. This frictional engagement causes the bearing balls to ride up on a ramp machined into the side gear. This radial travel of the balls also causes lateral movement of the side gear. The lateral movement of the side gear applies a force onto the center block. The center block has an elongated hole that the center pin fits through, allowing it to float. The center block applies force to the opposite side gear, compressing the clutch pack giving the user a solid axle assembly – the spool/ locker performance you desire at the strip or off-road. our engineers to see if we can fill the void.” At the end of the day, Auburn Gear has used its established name to launch its initial success, but is also effectively keeping its finger on the pulse of its current market and adapting ahead of everyone else. It’s a recipe for success. With a reputation for quality, and a new line of revolutionary products set to shake up the market in 2014, Auburn Gear figures to maintain its position as a leader in the automotive industry, while also extending into many areas in the future as well. INDUSTRY TODAY 69

PROFILE • RAISMAN

Look to manufacture of motor and machine parts. One of Latin America’s most innovative engine component companies shut down domestic facilities and outsourced production to China. Reuben Ford finds out more about the strategic move, which brings Brazilian engineering back to Brazil. 70 INDUSTRY TODAY

RAISMAN • PROFILE

ounded over 30 years ago, the Siverst Group was the first company in Brazil to develop engine parts resistant to the alcohol content of gasoline. Constant investment in innovation and quality has maintained a solid and competitive market position for the group both nationally and internationally. Today, the Siverst Group comprises Raisman Autoparts in Brazil and the United States as well as a joint venture and distribution center in China. With extensive product lines of parts for the automotive, civil

construction, lawn and forestry and marine industries, Siverst and Raisman components are developed, designed and projected in Brazil, yet for the last eight years made almost entirely in China. “Over the last few years, we have reinvented ourselves, deactivated production in Brazil and transferred manufacturing to China. It hasn’t been easy, but to remain cost-competitive, especially in the international market – it was necessary. We expect accelerated growth from 2015 as a result of these steps,” affirms Company President and

founder of the Siverst Group, Ismael Trevisol.

Pioneer and Partner Siverst began life as a simple workshop in its founder’s garage in 1983. Trevisol’s first product was a carburetor needle – in fact, the first Viton-tipped carburetor needle. Viton rubber, which is highly resistant to fuels, provided the market with an important differential and Siverst soon began developing similar components. For six years the prospering company supplied steering shafts to Yamaha Motorcycles INDUSTRY TODAY 71

PROFILE • RAISMAN

“We have reinvented ourselves, deactivated production in Brazil and transferred manufacturing to China.”

and also made membrane carburetors for Husquavarna Chain Saws. “In 2009 we started exports to US companies such as Pacer (motor parts and accessories) in Pensacola Florida,” Trevisol adds. Siverst Indústria de Peças Ltda is now part of group that includes Raisman Indústria de Componentes Automotivos Ltda (founded in 1987) and Raisman Corporation Ltd (founded in 2007 in Miami, Florida). Like Siverst, Raisman manufactures an extensive range of power parts and products – especially in the garden, lawn and forestry divisions. Raisman

CODIME is proud to distribute Siverst® motorcycle parts and Raisman® tools and equipment. Our company fully manages the acquisition of products made abroad by approximately 350 different suppliers located in 35 countries. From our warehouse we distribute our products to over 2,500 clients in various lines of business within the manufacturing industry and trade sectors in Brazil.

Visit us online

www.exicon.com.br 72 INDUSTRY TODAY

RAISMAN • PROFILE

Corporation is the group distributor in North America. “In 2005, when we initiated production in China following our engineering and technology, we had the opportunity to develop more products, in particularly for motorcycles. In Brazil we manufactured twelve families of products, 178 items in total. In 2014, we launched 62 lines comprising 1551 products for motorcycles alone,” Trevisol explains. In the gardening and forestry sector the group has also developed more than 4,000 products, which attracted interest in China and established the joint venture named Land. Launched in 2012 in Yuyau, China, the Land venture produces machinery and equipment for the sector worldwide using Brazilian technology. In 2013 the group opened its distribution center in Ningbo China to facilitate logistics operations.

Investing in Expansion Moving operations to China was and is an important investment for the Siverst Group. “Currently only 5 percent of our products are made in Brazil, 95 percent Raisman produces an extensive line of parts for the lawn industry. INDUSTRY TODAY 73

PROFILE • RAISMAN

PROFESSIONAL PROFILE: ISMAEL TREVISOL Ismael Trevisol, a qualified industrial technician, is the founder of the Siverst Group. A supporter of the pro-ethanol governmental campaign in Brazil, which added ethanol to gasoline in 1982, he is a pioneer in durable power engine parts. He was the first to develop components resistant to the ethanol content of gasoline. The Siverst Group was founded in his garage and now exports to 50 countries worldwide. are produced in China,” Trevisol confirms. Lower costs and a firm focus on innovation, expansion and development have created a vast line of power parts capable of running with up to 25 percent ethanol in gasoline. Silverst’s extensive line of motor parts includes suspension, steering,

cylinder, piston, brake, transmission, gear and electric components. Raisman manufactures carburetors. The kits made in China are distributed throughout Brazil, Latin America, the United States and Asia. Aimed at improving gardening and forestry equipment, the

Land Joint Venture produces cutters, leaf-blowers, water pumps, chain saws, sprayers and lawn mowers as well as other related machinery. Trevisol summarizes production: “Our main differential in relation to competitors is the quality of our products. Although produced in China, our companies have innovation in their DNA and engineering, projects, technical specifications and quality control are all carried out in Brazil. The team in China implements production stipulated by the group in Brazil.” The Siverst facility located in Canoas, Rio Grande do Sul, Brazil covers 24,000 square Raisman’s distribution centers provide logistics support.

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RAISMAN • PROFILE

meters and houses the group’s South American companies. Distribution centers in São Paulo and Santa Catarina states provide logistics support. “Engineering is a primary area of investment. The recent development and launch of new products are important developments for us this year,” Trevisol says. Products are exported to more than 50 countries worldwide, including the United States, Central and South America and more than 30 countries in Europe.

Changes and Challenges Moving factories to China marks strides forward in production

for the Siverst Group, while side-stepping the challenges of manufacturing in Brazil. “High interest rates, taxes and unpredictability make production growth in Brazil an uncertainty,” Trevisol clarifies. He admits that the changes have not been easy and were based on economical manufacturing without compromising quality and maintaining a competitive advantage in an increasingly complicated market. Trevisol is also confident that the company strategy, so far a success, promises future growth, particularly from 2015: “With all our changes being finished this year, we are also restructuring the commercial and sales departments in prepara-

tion for the challenges ahead. A promising outlook. The Siverst Group has developed leaps and bounds from the garage of its founder. Successfully avoiding hurdles, the companies, all of family origin, have taken brave steps to secure a brighter future. Engineered in Brazil, made in China, Siverst, Raisman and Land Joint Venture are a global group – Trevisol concludes: “We have the possibility to supply the whole world with quality power parts and competitive prices.”

COMPANY PROFILE - SIVERST GROUP Companies:

Siverst Indústria de Peças Ltda. (Brazil).

Raisman Indústria de Componentes Automotivos Ltda. (Brazil).

Raisman Corporation Ltd. (Miami, Florida, United States).

Land, Zengiang Maquinay Ltd. (Joint Venture) (Yuyau, China).

Distribution Center China (Ningbo, China).

Products:

Machine, equipment and engine components for construction, automotive, lawn and forestry and marine industries .

Head Office:

Canoas, Rio Grande do Sul state, Brazil.

Founded:

1983. INDUSTRY TODAY 75

PROFILE • DOUGLAS MACHINE

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DOUGLAS MACHINE • PROFILE

2014 marks the 50th year Douglas Machine has been in business, and while the company began in humble roots, today it represents a North American leader in the design and production of high-quality packaging solutions for paperboard, corrugated, and shrink film. In a conversation with Industry Today, Steve Lipps, vice president of sales and marketing, and Mary Ellen Kerber, marketing manager, talk about the unique path the company has taken over the years, the philosophy that has guided and enabled them to distinguish themselves amongst a crowded market, and why their performance in 2013 has them excited about the future of Douglas Machine and its impact across additional markets. Steve Engelhardt reports. INDUSTRY TODAY 77

PROFILE • DOUGLAS MACHINE

“A lot of customization, specific to a company’s system and needs, go into our machines, and we find much our of success and sustainability of our machines comes from this tailored nature we offer.” -Steve Lipps

n 1964, three individuals, Bud Thoen and brothers Paul and Vern Anderson, initially founded a machine shop with the goal of providing a local packaging resource for the 13,000 residents of the town of Alexandria, Minn. “We figured if we could build a company and hire maybe five to seven local individuals, it would be a business that was mutually benefi78 INDUSTRY TODAY

cial to us and the community.” Today, Douglas Machine employs over 700 individuals, a tad higher than the previous figure they had initially hoped for. And while the company today is 100 percent employee-owned, the original owners were instrumental in achieving what today is still an extremely communal, and faithful business.

There and Back Again Lipps says that during the 70s and 80s, Douglas Machine surged in business and was expanding and innovating in an exponential manner, with the company expanding its production facilities and taking on greater roles with food and beverages giants like Coca Cola. Then came 1986, when a UKbased equipment processor

DOUGLAS MACHINE • PROFILE

ABOUT THE DOUGLAS MACHINE FOUNDATION: In addition to running a business, those at Douglas Machine created a non-profit philanthropy branch in 2007 called The Douglas Machine Foundation. The foundation’s objectives are: • To improve the quality of life in surrounding Minnesota communities;

called Aluminum Plant & Vessel Company Limited (APV-PLC) bought out the company and took it on as a wholly owned subsidiary. “It looked like that was it for the name Douglas Machine,” Lipps says, but adds, “however, after a few years APV-PLC had a strong decline in their overall business and an opportunity emerged for the Douglas Machine division they

• Support Douglas Machine employees giving to United Way, social services, education, and faith-based organizations through a gift-matching program. had taken on, to be sold once again.” Enter, the Anderson brothers, the same two individuals involved in the founding of the original company. Paul and Vern Anderson saw their chance to reclaim what they had created, and bought back the company in 1993,

and the name Douglas Machine was once again competing in the market as an independent brand. “They bought it back through venture capital, and after paying off the investors, they decided to turn the company into an entirely employee-owned business,” he says, INDUSTRY TODAY 79

PROFILE • DOUGLAS MACHINE

Above: Axiom® ARC Case/ Tray Packer. noting, “That decision has really spurred our company onward from a motivational standpoint, because they could have chosen much more lucrative options, but opted to maintain the tradition and identity of the original company by placing ownership in the employees’ hands.” Kerber says the decision has had a profound impact on the company and its products, saying that the employees at Douglas Machine today “repay the faith bestowed upon them by dedicating their craft to our 80 INDUSTRY TODAY

products and services, and operate under the notion of ‘treating others the way you want to be treated’.”

Productive Packaging In terms of Douglas Machine’s actual products and services, Lipps says you can find their footprint in most grocery stores and major supermarkets across the United States. “We break our business down into three different materials, those, being corrugate solutions, shrink solutions, and paperboard solutions,” he says, adding, “if you look at a case of

water or a four-pack of energy drinks on a shelf, we provide the material solutions that keep the food or beverages tightly packed together, designed in a manner that allows store managers to efficiently and effectively unload and set up their products, minimizing time and labor during the process.” He says they typically do most of their business in the food and beverage industry, in fact they have a distribution center in Alexandria dedicated entirely to a global leader in the snack industry, however they are seeing increased

PROFILE • DOUGLAS MACHINE

opportunities in other markets as well, as demand for automated packaging upgrades over manual systems begin to become widespread. One of these sectors is the pharmaceutical industry, and Kerber discusses the impact their products and services have been having on pharma-based Above: Axiom® IM Case/ Tray Packer. 82 INDUSTRY TODAY

companies, particularly through that of their TriVex RLi® top-loading solution. “TriVex’s robotic loader and end-effector picks and spreads bottles for accurate placement into cases with protective trays,” she says, adding, “with one machine, the TriVex RLi provides case erecting, pocketed bottom and top tray placement, product loading, leaflet insertion, in-line case

labeling, and case sealing.” Lipps adds that the shift from a manual operation to a robotic, full automation solution triples the throughput of a system. “The customers here are largely manual in their operation, and it can be a big initial leap for them to go from ten or fifteen individuals standing around an operation, to only one or two,” he says, adding, “a lot of customi-

DOUGLAS MACHINE • PROFILE

zation, specific to a company’s system and needs, go into our machines, and we find much our of success and sustainability of our machines comes from this ‘tailored’ nature we offer.” And that’s where Douglas Machine distinguishes itself amongst its competitors. Lipps says that the company isn’t so much focused on “reinventing the wheel”, but more

so concerned with integrating and addressing all the specific needs and requirements for a company, and bringing them into one solution. “Our typical business encounters involve us building off existing platforms for about three-quarters of the project, and the rest is customizing it all to the specific application,” he says, adding, “we don’t ‘gut’ an entire system if it

doesn’t have to be, we simply identify areas of improvement in machines and systems, and integrate it into a single solution.”

Incremental Industry Their approach is emblematic of the packaging industry as a whole. While there was a significant technology shift in the beginning of the millennium, Lipps says that most of the changes INDUSTRY TODAY 83

PROFILE • DOUGLAS MACHINE

“We don’t ‘gut’ an entire system if it doesn’t have to be, we simply identify areas of improvement in machines and systems, and integrate it into a single solution.” -Steve Lipps in their business are gradual, and ebb and flow, given the nichelike nature of many packaging companies. One of the most significant changes he’s seen, however, is the expansion of diversity in the food and beverage sector, and the struggle for companies to provide packaged materials that are compatible with the needs of superstores like WalMart and Costco, as well as smaller, local ‘mom and pop’ establishments. “If you look back at the 90s, Pepsi and Coca-Cola were pretty much the market, but today you have the energy drink sector, teas, additives to water, and even craft brewing as products that require efficient and effective packaging services and solutions,” he says, adding, “the way these products are packaged varies between the size and makeup of the store.” He says that Douglas Machine has answered this rising need by building off preexisting methods and providing machines and automated packaging that allows for as much flexibility as possible. “In the beginning, it was simply putting products in a brown box and shipping them. Today, how84 INDUSTRY TODAY

ever, you’re still putting some of those things in a brown box, but it’s being done it in a quantity that fits on the shelf of a specific store, and in a design that doesn’t require the store’s employees to use up a significant amount of time opening up the boxes and standing the products up on the shelves, which are issues that influence the way we make our machines.” Servicing is also part of this puzzle, he says, as stores nowadays are operating on a 24-hour, 7-days-a-week basis. “Service has become critical, given the ‘around the clock’ nature of today’s world, particularly in the food and beverage industries, and is an area we have invested in strongly, both philosophically and financially,” he says, adding,

“we provide limited 3-year warranties, price guarantees where we will match any outside party’s price of a spare part, and reliability assurance programs where we set up routine, ongoing preventative maintenance for our customers to ensure our machines are functioning smoothly for a very long time.” These measures taken by Douglas Machine were tangibly actualized in 2013, when the company produced a record year of profits. And between Lipps and Kerber, they both are excited for the momentum that company has going into the future. “If you’re looking at shifts in the industry, with the reduction of packaging materials and the change from cartons to flexible packaging, our robotics and top

LENZE Lenze would like to congratulate Douglas Machine on celebrating its 50th year in business. Their success has come from exceeding customer expectations and taking a partner-based approach when working with their customers. Douglas Machine incorporated the partnering concept with Lenze as we integrated our solutions into their designs. We moved beyond a typical product supplier relationship and worked together to standardize designs resulting in a reduction of material part numbers and improvements in the supply chain. Lenze, a leading global manufacturer of electrical and mechanical drives, motion control and automation technology for Motion Centric Automation, partners with machine builders for the entire machine development process – from the initial ideas to aftersales, from the control system to the drive shaft. Lenze Americas, a subsidiary of Lenze SE, is headquartered in Uxbridge, MA with an assembly and logistics center in Glendale Heights, IL. Lenze simplifies, while others complicate - We make things “as easy as that.”

DOUGLAS MACHINE • PROFILE

load capabilities compliment it quite aptly,” Lipps says. He concludes, “Our main mission is to enrich the lives of both our employees and customers, and with a duo of founders in

Vern and Paul Anderson that be- in a great position to continue to lieve in us, a line of differentiated accomplish that.” packaging and automated serAbove: Contour SPS Shrink vices that meet current and future Packing System; market needs, and a faith-based Below: Douglas Machine culture, I think we’ve put ourselves Inc. Alexandria, MN. TM

INDUSTRY TODAY 85

PROFILE • VIVENDA DO CAMARÃO

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VIVENDA DO CAMARÃO • PROFILE

For Brazil’s leading shrimp and seafood restaurant chain, shrimp stroganoff tops the menu. Serving more tables than ever, leading chefs are cooking up new dishes and the company has opened up in the Unites States. Reuben Ford takes a taster. hrimp of the highest quality at accessible prices. Vivenda do Camarão is one of Brazil’s fastest growing restaurant chains. Topping and tailing shrimps for 30 years, the company uses its head to put the delicacy on plates of diners in a country better known for barbecued beef. Leading food experts work on diversifying the restaurants’ seafood dishes, introducing new alternatives and adding to the success of the company that was built on one ingredient: shrimp. Strategic cooking based in one central kitchen serves a complete menu, which is delivered to restaurants around Brazil and since last year, to the Unites States. “We have followed changing tastes and steadily increased the number of restaurants. Af-

fordable, innovative cooking has assured constant expansion and marked our presence in Brazil and abroad,” says Managing Director and Co-Owner of Vivenda do Camarão, Rodrigo Perri.

Simple Shrimp When Vivenda do Camarão opened its first restaurant in the Moema district of São Paulo capital in 1984, its concept was clear; the straight forward idea of serving shrimp at a fair price. Previously expensive and exclusive, the concept of fast-food shrimp dishes was revolutionary to the market and the taste buds. Success led to a second restaurant in the Jardins district of the city. Subsequently, the company received an invitation to open a store nearby Morumbi Shopping Mall, which led to the creation of the Vivenda Express

mall restaurant. The Vivenda chain was born. In 1997, Vivenda opened its first franchise. “Setting up franchises expanded our markets and allowed us restaurants in more distant locations,” says Perri. The rapid growth of the chain and the opening of franchised restaurants throughout Brazil required a strategy that both guaranteed quality and brand identity. The answer was a 3,000-square-meter central processing center in Cotia, São Paulo state, where all the dishes on the restaurants’ menus are designed and produced by some of Brazil’s leading chefs and seafood experts. The CPA (Central Processadora de Alimentos) Center uses state-of-the-art equipment and technology that produces efficient, high quality meals. “The CPA constitutes an ongoing INDUSTRY TODAY 87

VIVENDA DO CAMARÃO • PROFILE

investment for our company, all of our products are developed there, so we offer the same quality control and taste in all our restaurants in Brazil and abroad,” Perri clarifies. In 2013, Vivenda opened its first restaurant in the United States under the Shrimp House brand. The two stores, both in Florida, emulate the concept of the chain in Brazil and Paraguay The Shrimp House brand sells quality, ready-made dishes.

COMPANY OVERVIEW Vivenda do Camarão is a Brazilian shrimp and seafood shopping mall restaurant chain. The dishes are prepared at a central food processing factory in São Paulo, fast frozen and delivered to restaurants throughout Brazil and Paraguay and since 2013 to the United States. With a total of 164 restaurants, Vivenda do Camarão is one of the country’s fastest growing fast-food chains, projecting revenue of $90 million in 2014. – located in shopping centers and selling the quality, readymade dishes prepared and frozen in Brazil, some of which

are adapted to North American tastes. “The North American market is an important area of

INDUSTRY TODAY 89

PROFILE • VIVENDA DO CAMARÃO

THINKING SHRIMP While the smell of steak on the barbecue is all-to-common in Brazil which boasts some of the world’s best beef – how is Vivenda do Camarão convincing diners to rethink their choices? Managing Director and Co-Founder of the fast-growing, fast food chain clears up the question: “Since the beginning, Vivenda aimed to provide quality shrimp products to the public. Before our first restaurant, shrimp was expensive and rare low prices were synonymous with poor quality. We cut out the middle man – taking shrimp directly to the dining table. We familiarized the people with the great taste of seafood and popularized shrimp. Today, consumption of seafood is rising and we feel responsible for that. Our leading dish, shrimp stroganoff is the same price as a plate of pasta or other meals available at the mall. We have made our mark with individuality, great quality and competitive pricing. We serve over 700,000 dishes a month.”

“The North American market is an important area of investment—our goal is to consolidate our brand in the United States.” Rodrigo Perri; Managing Director and Co-Owner of Vivenda do Camarão. investment. Following six months’ preparation, our goal is to consolidate our brand in the United States, by increasing our number of stores to six and launching an aggressive advertising campaign,” Perri reveals.

Flexible Kitchen Vivenda’s meals are cooked, hot-packed, hermetically sealed (impervious to air and gases) and fast-frozen in a liquid nitro90 INDUSTRY TODAY

gen tunnel. “The tunnel is practically the only one of its type in Brazil. It fast-freezes the products, preventing the formation of ice crystals typically present in traditionally frozen food. Ice expands and breaks the fibers in the seafood, interfering with taste. Our ‘Cook-Chill’ meals maintain all the natural characteristics of seafood,” Perri explains. Technology is a priority at

the central kitchen in Cotia. A shrimp-peeling machine from the United States was imported to the CPA. Costing in the region of $1 million, it is one of only two in Brazil and speeds up production time and efficiency as well as improving the quality of the shrimp. “All processes of food production are different. At Vivenda we have developed our own systems. We are the only

VIVENDA DO CAMARÃO • PROFILE

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PROFILE • VIVENDA DO CAMARÃO

shrimp and seafood readymade meal producer in the southern hemisphere authorized to export to the United States and Europe,” Perri says. In addition to quality control, two commissioned machines, exclusively designed and produced over 18 months, weigh

and measure portions exactly. The system ensures that the dishes are the same size, with the same amount of sauce in all Vivenda restaurants. The technology affords Vivenda the possibility to change and adapt its menus in accordance with market trends

and demands. “We update our menus every six months,” Perri confirms. A team of chefs works five days a week developing new dishes based on market surveys, research and customer suggestions. New dishes are tested in São Paulo and adapted if necessary be-

MORE MALLS As a shopping mall restaurant, Vivenda do Camarão accompanies the rise in number of shopping malls in Brazil. Safe alternatives to street stores, with ample parking and a wealth of choice, more malls mean more potential for the brand. The growth of Brazil’s middle class and increase in purchasing power has also had a positive effect on sales and new store openings.

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VIVENDA DO CAMARÃO • PROFILE

INDUSTRY TODAY 93

PROFILE • VIVENDA DO CAMARÃO

UNDER CONSTRUCTION Vivenda has 110 restaurants in Brazil and abroad and 54 franchises employing in excess of 1,800 people. The company headquarters is in Cotia, São Paulo. The 3,000-square-meter central food processing plant is responsible for the design and production of all the dishes on the menu. Regional offices for administration and distribution are strategically located across Brazil. The company has also announced plans to inaugurate a new 9,000-square-meter Logistics and Distribution Center in Cotia. The state-ofthe-art facility complete with temperature controlled conditions, will be a separate legal entity and is due to open in August 2014. fore national and international distribution. The structure of the CPA also allows greater diversification in menu additions. “In the begin-

ning, shrimp was our focus, but now we have added numerous other seafood options,” Perri says.

Health Food The menu now includes salmon, tuna and octopus dishes, as well as salads and risottos. “Vivenda meals are healthy. High

Our fish are naturally farmed in the pure clear waters of Rio Sapucaí without additives. Established in 1990 we are committed to providing a quality product whilst adhering to health and environmental demands. We have the ability and certification to export to the USA. Email: info@trutasnr.com.br Phone: (55 11) 5543-3860 • Fax: (55 11) 5041-2848 • Brazil

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94 INDUSTRY TODAY

VIVENDA DO CAMARÃO • PROFILE

“We are the only shrimp and seafood ready-made meal producer in the southern hemisphere authorized to export to the United States and Europe.” Rodrigo Perri; Managing Director and Co-Owner of Vivenda do Camarão. in protein, it is very important to note that our shrimp comes from specialized farms and are 100 percent free from any type of preservatives,” Perri adds. Diverse methods to guarantee freshness are also followed. High quality standards demand rigorous quality control. Vivenda adopts the HACCP (Hazard Analysis and Critical Control Points), which offer a systematic and preventative approach to food safety and preparation. “Contracts for exportation to the United States and Europe require by law the presence of a representative from the Brazilian Ministry of Agriculture in our factory. Additionally, we adhere to all technical norms and health Menu options include the signature shrimp stroganoff as well as salmon, tuna and octopus.

and safety standards,” Perri emphasizes. The food is only handled at one central location, and simply defrosted and served at the point of sale. Delivery within a 200-kilometer (125-mile) radius of the CPA is carried out by Vivenda’s fleet of trucks - for more distant locations, the company outsources logistics. “Logistics are impeccable. Preparation, loading, transport and unloading all take place in temperature controlled conditions. We oversee delivery from start to finish, with no outside influences, to avoid compromising quality,” Perri clarifies. Despite no shopping mall restaurant chain offering the same menu as Vivenda and a ban on shrimp imports to Brazil, Vivenda does not turn a blind eye to competition. “Every es-

tablishment in the food court of a mall is vying for the same diner,” Perri notes. In the United States, where competition is stronger, Vivenda has its sights set on growth. With 164 restaurants in Brazil, Paraguay and the United States (including franchises), Vivenda has enjoyed an average 25 percent annual growth for the last three years and projects revenue of $90 million for 2014. With a hand for good cooking and a firm grip on success, Vivenda has plenty more up its sleeve to continue expansion. The company keeps the orders coming in and great tasting, affordable seafood on tables in malls. When deciding where to dine more and more shoppers are choosing Vivenda.

INDUSTRY TODAY 95

PROFILE • COASUL

A significant step into the poultry market by this Brazilian agricultural cooperative brings fresh technology and techniques in chicken production. Reuben Ford analyzes the effects of an innovative transition.

96 INDUSTRY TODAY

COASUL • PROFILE

oasul Cooperative Agroindustrial is one of Brazil’s most prominent farming cooperatives for receiving, processing, storing and marketing of grains. Well-known for commodities such as soybeans, corn, wheat, beans, rice, rye and oats, the cooperative also produces animal feed and has most recently invested in poultry processing. Barely three years since the launch of business of its LeVida chicken products, the brand is

responsible for over 30 percent of Coasul’s revenue and has defied industry trends for newcomers by becoming a successful household name and synonym for quality. “We changed the technology of poultry farming and as a result are in a period of accelerated growth,” says president of the cooperative, Paulino Capelin Fachin.

Grains are a Given Coasul was founded in 1969;

born from the need for better transport, storage and trading facilities for agriculturalists in the southern Brazilian state of Paraná. Today, the cooperative in São João (Paraná) has 6,464 associates and 25 grain production units. Among the services offered are complete support for the receipt, processing, storage and sale of grains plus transport services. Coasul concentrates on accommodating and facilitating its members’ businesses,

INDUSTRY TODAY 97

PROFILE • COASUL

Company: Coasul Cooperative Agroindustrial; Location:

Headquarters - São João, south-westParaná, Brazil; 28 facilities (grain processing units, poultry house, feed factories and supermarkets) in the south-west, central south of Paraná state and west of Santa Catarina state;

Revenue:

R$948.259 million in 2013 (approximately $390 million);

Staff:

2,000;

Products:

Soybeans, corn, wheat, beans, rice, rye and oats, chicken (pieces, cold cuts, fillets and processed meats).

providing technical assistance from agricultural engineers. It also has over 415,000 tons of

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storage, three of its own supermarkets, a commercial feed mill, and tools and machinery,

available for associates. “Coasul is a consolidated name in grain farming – it has

COASUL • PROFILE

THE PERSONAL TOUCH Coasul is committed to professional, social and environmental progress. The cooperative invests in research specialists and consultants to maximize its performance and support for the associates. Internally, Coasul offers training programs and post-graduation courses for employees. A dedicated technical department prioritizes responsible agricultural practices, which encourage sustainable farming through balancing production and conservation. Environmental awareness extends to the infrastructure of the cooperative. There are constant investments in improving systems and waste disposal and treatment. The department also offers advice to Coasul’s associates regarding soil preservation, erosion, water use and recycling, as well as keeping them informed on environmental legislation. The cooperative currently has a 68.4-hectare nature reserve.

“We are always innovating in all areas because they are all directly related to the quality of our chicken.” Paulino Capelin Fachin, President of Coasul. Previous Page: Cutting Room, showing automated and manual lines; Above left: President, Paulino Capelin Fachin; Above right: External view of the main building of Coasul’s Industrial Poultry Unit.

been our business for 45 years,” Fachin affirms. However, in the last three years Coasul has shifted focus and had unprecedented success with poultry farming hatching into the domestic

market with the LeVida brand in 2011. “Previously, the cooperative commercialized 300,000 tons of corn. Now this quantity is transformed into chicken feed for our farms,” Fachin explains. Coasul began exporting INDUSTRY TODAY 99

PROFILE • COASUL

HATCHING A BRAND Coasul’s chicken products are commercialized under the LeVida brand. With its headquarters in São João (Paraná state), Coasul has been in the cereals industry for more than four decades and is one of the largest cooperative in the state. Coasul’s chicken processing center is one of the most modern slaughterhouses in Brazil. It occupies 30,000 square meters and produces 7,000 tons of chicken every month, which are sold in several LeVida varieties. chicken in 2012 and in 2013 received approval from the European Union and South Africa. “We sell to 40 countries worldwide and to all states in Brazil,” Fachin says. New opportunities are a consequence of success in existing foreign markets and approvals from China and Singapore are being finalized.

Good Genetics With other brands of chicken products failing to take flight in a competitive market, what makes LeVida different? The answer, according to Fachin, is unbeatable quality across the board: “We don’t aim to compete on price, but on quality,” he emphasizes. Firstly he cites Coasul’s animal feed factory as an important differential in LeVida chicken: “Coasul produces 4 million sacks of corn a year and Right: The LeVida product range going through quality inspection. 100 INDUSTRY TODAY

COASUL • PROFILE

the best grains are selected for our own chicken feed, used exclusively by our associates and in our own production.” Coasul uses German machinery to compress corn and soy meal into pellets, which are easier and faster for the birds to ingest and contain the same nutrients as traditional powdered feed.

The factory is highly technical and unites the most modern processes available on the market – “practically the most modern in Brazil and the whole world,” Fachin adds. The cooperative’s integrated poultry house uses the Dark House system – a method that is not common in Brazil and

raises the birds in an artificially lit environment. The technique for poultry production in controlled conditions allows a larger density of birds per square meter and importantly keeps them calm and undisturbed. The technology also greatly reduces costs – providing a healthier cost to growth ratio.

INDUSTRY TODAY 101

PROFILE • COASUL

“We have changed the technology of poultry farming.” Paulino Capelin Fachin, President of Coasul. From hatching to slaughter, the birds are kept in artificial conditions minimizing their use of energy which is used for growth instead. The result is poultry of the highest standard. “We maximize genetics to ensure quality,” Fachin says. “The Dark House conditions increase production through combining the three essential components of genetics: environment, temperature and feed.” Another important ingredient of LeVida’s success is the state-of-the-art slaughterhouse and packing plant, which processes over 150,000 birds a day. The plant, which was constructed in 2010, was inspired by examples in the most technologically advanced countries and uses equipment imported to Brazil from the Netherlands. Quality is a primary concern right down to delivery. Coasul provides logistics services to the associates – using its own fleet for the most crucial transport such as collection of the Right: Packaged chicken in the final stages of production. 102 INDUSTRY TODAY

chickens and delivery of feed and trusted third parties for sending products abroad. Together, the precise, technical and quality-focused process from beginning to end constitutes a winning recipe. “The right mix of new processes and solid procedures offered to our members and customers is the reason we have succeeded,” Fachin says.

A Flying Start The strategy for sudden success is clearly effective in a market previously unexploited by Coasul. What made the grain-processing cooperative invest in chicken? According to Fachin “poultry farming was something that Coasul always had an interest in developing. The state of Paraná has many chicken producers, and chicken farming is a lighter alternative to pork or beef.” Choosing chicken, Coasul has invested heavily in excelling in the industry. “We are always innovating in all areas because they are all directly related to the quality of our chicken: corn, soya and wheat are transformed

into valuable feed,” Fachin says. The cooperative has extensive grain storage facilities and latest generation processing technology. In 2013 alone more than $25 million were invested in expanding infrastructure. The cooperative purchased machinery such as fileting technology and processors, which prepare chicken for pre-prepared and cut packs. Packaging material is bought from suppliers, but the new machinery wraps and seals the products on-site for guaranteed safety and quality. Strategic steps have made LeVida a leading brand in three short years. The number of chicken products has grown to include most recently mortadella cold cuts and sausages and other lines (such as seasoned chicken pieces) are also being extended.

Tasting the Difference All of the company’s investments are driven by reducing labor and time and increasing productivity and variety. Individually Quick Frozen (IQF) chicken uses IQF technology

COASUL • PROFILE

that freezes pieces separately and packs them together in the same bag, enabling the consumer to remove them directly from the freezer one by one. “We strive to be different and to take the best available resources to put better tasting chicken on supermarket shelves,” Fachin says. The market is not the only one to be treated to a taste of LeVida’s success. Profits have risen for Coasul, reaching $390 million in 2013 with over one third of turnover coming from chicken and Fachin predicts revenue of $460 million in 2014.

Nonetheless, growth in the industry is no mean feat. In addition to many chicken producers who have failed, the cost of maintaining poultry houses, processing equipment and production plants is extremely high, and challenged by high taxes and regulation policies. A rise in the cost of corn and soybeans took a swing at chicken farming in Brazil in 2011, which Fachin admits caused a considerable blow. However, the cooperatives careful investment inspired hasty recovery: “2012 was good, 2013 was better and 2014 will be the best

yet,” he asserts. The secret is quality. “85 percent of our associates are family businesses – small producers in a region renowned for its small farms. With the support and technology that we offer, these agriculturalists are fast and efficient and produce birds of the highest quality,” Fachin explains. Coasul has found just the recipe to change the industry – improving the taste and presentation of chicken that and putting the LeVida brand well on the way to ruling the roost.

INDUSTRY TODAY 103

PROFILE • GREENCORE

As the industrial world takes on an increasingly sophisticated, around-theclock nature, the need to eat on the go, in a healthy and efficient manner, becomes more and more of a necessity. Enter Greencore USA, a convenience food company that, although is a wholly-owned subsidiary of United Kingdom-based Greencore PLC, is making quite a few waves of its own. Liam McClennon, President and CEO of the division, talks about his company’s dedicated role in serving a more dynamic consumer, the success they’ve had in the U.S. market, and why recent acquisitions and expansion plans signal a long term presence in the face of growing demand. Steve Engelhardt reports.

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GREENCORE • PROFILE

reencore USA was founded in 2008, a move McClennon attributes to a softening private label market in the United Kingdom. “The UK private label market had experienced massive growth for a number of years, averaging between 15 and 20 percent annually,” he says, adding, “however, eventually the market began to mature and saturate, and growth began to slow a bit, and we knew we had to expand elsewhere in order to maintain our momentum as a

company.” The consensus fell on the United States, and Greencore soon established a permanent division, opening up its first production plant in the northeast. Six years later, the company oversees seven facilities, with locations entrenched in the New England, Washington D.C., Southeast, and Midwest regions. Focusing primarily on the ‘food-to-go’ business, across these sites the company produces breakfast and lunch sandwiches, lunchboxes, par-

faits, frozen foods, and sauces amongst others. McClennon himself has taken an interesting path to where he is today, working in slaughterhouses as a youth and eventually moving ‘up the food chain’ into manufacturing and general management positions, career progressions he recalls as instrumental in both his understanding of customer service, and the private food label industry overall. Later on, he moved to South Africa which led to him and a INDUSTRY TODAY 105

PROFILE • GREENCORE

few of his friends founding their own food company. “We started it from scratch and built it into a $250 million-plus enterprise, which was eventually bought out by Bakkavor,” he says, adding, “I found myself in an early retirement but still with plenty of energy, and when Greencore approached me to run their new U.S division, I jumped right in.”

Product Proficiency And it’s been nothing but success for the company since beginning operations six years ago in the United States. With McClennon at the helm, the company has averaged between

20-25 percent annual growth, and things only seem to be accelerating, with 2013 producing record revenues. Part of Greencore’s success comes from the significant amount of research and development the company commits annually towards improving its food products and operational processes. “Between independent research and customer feedback, we make a strong effort towards being consumer led, identifying and closing gaps that may exist, and doing whatever is necessary to gain shelf space for Greencore products.” He says that despite being a

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Above: Liam McClennon, President and CEO; Below: Sandwich preparation line, Newburyport. private label producer, they mimic many of the actions taken by a brand label. “Even though we are a private label, we put forth a lot of effort in

GREENCORE • PROFILE

understanding the consumer, instead of relying on our customers to do so, because we know if they’re winning in the market then so are we.”

‘Grab and Go’ Production In terms of actual production, Greencore has seven manufacturing plants spread out across the country. “All of our plants are run in a uniform manner, averaging around 200-300 employees working in each facility,” he says, adding, “while we’re focused on around-theclock production, efficiency, food quality and safety is never sacrificed, and we go to great lengths in ensuring our facilities are minimizing or mitigating the risk of product contamination.” He says these efforts include physical barriers to separate raw from cooked products, and enforcing employee regulations. With its hands in the ‘grab and go’ food industry, McClennon says their production facil-

ities need to be able to meet strict deadlines, making plant efficiency key. “With the exception of the frozen food products we manufacture, most of our facilities will get an order at around 5 or 6 in the morning,” he says, adding, “once the order is processed, our employees get to work and have the food ready to go by noon.” From there, he says his facilities spend the rest of the day forecasting the next day’s order, preparing the product line, and going through a multitude of hygienic procedures. “We are

relentless in our work, but by working around the clock, we give our customers maximum flexibility,” he says, adding, “our ambition is to have a hundred percent service each day.” And thus far, Greencore USA’s production facilities have fulfilled this duty quite effectively, so much so, in fact, that the parent company, Greencore PLC, agreed to invest in the construction of a brand new, 107,000-square-foot facility in Quonset, R.I.. “The decision serves as a huge vote of confidence towards both the company’s initial decision to enter the United States’ market and the sustainability of our future here,” he says. The Quonset facility will be the first facility that GreenAbove: Primavera chicken sandwich; Left: Habanjero prawn wrap. INDUSTRY TODAY 107

PROFILE • GREENCORE

core has invested into in over 20 years, something McClennon is particularly proud of. He says that the company invests around $100 million annually into extensions and upgrades across its international sites, but a greenfield site is something new. “The fact that our parent company, which is based in the UK and accounts for almost 80 percent of company revenue, chose to expand here in the US 108 INDUSTRY TODAY

really instilled a sense of commitment to Greencore USA.” The facility is expected to take about two years to construct and will add between 400 and 600 jobs.

Growing Inside and Out While Greencore USA shows plenty of signs of strong, organic growth, the company has also been recently involved in growth-through-acquisition as

well. In February, the company acquired Lettieri’s, a food-to-go operator, and announced plans to invest over $10 million into its existing facility in Jacksonville, Fla. The move, which comes just over a year after they acquired Marketfare Foods and HC Schau & Son in 2012, is in response to a growing demand for convenience store food across the United States. “Lettieri’s brings us a product and

GREENCORE • PROFILE

“The [Rhode Island] decision serves as a huge vote of confidence towards both the company’s initial decision to enter the United States’ market and the sustainability of our future here.” processing capability that we didn’t have in our portfolio before,” he says, adding, “We’re really happy to have them in our corner now, because when you mix what they offer with what we already bring to the table, it creates a great mix that we can offer to our customers.” Greencore USA’s growth and expansion is a sign of the growing presence of private food labels in the United States. “There’s this increased understanding that having your own retail brand provides smaller stores with a point of differentiation,” McClennon says, adding, “it’s easier for store owners to compete if they know they can only buy products from a specific store, rather than the mass market brands.” He says that overlaying this trend are the needs of the modern day consumer, who generally want fresher, healthier food, that they can also get in a quick and efficient manner. “I think the kind of short shelf-life, convenience foods that we make play well into both of these dynamics, as we’re giving both the retailer and consumer what they want,” he says.

And yet, for as much as the company takes pride in its production and quality assurance capabilities, McClennon says the partnerships they engage with their customers are equally distinguishing for Greencore. “With our customers, who run a number of establishments and have to deal with inconsistencies that are unique from store to store, we really do our best to ensure that we are providing as flexible and effective of a product on our end as possible.” He describes one such instance four years ago when a customer came to him, who had been dealing with a multitude of issues across their chain of stores, and needed a ‘one size fits all’ solution. “He came to us and said, ‘I need a higher sense of safety, consistency, and better level of availability’,” he says, adding, “He asked us to provide a centralized nature of products that would maintain all the consistencies and quality of food made right in the store, while

having the efficiency and uniformity of food produced en masse in a facility.” McClennon says they had to research and tailor their products to this individual’s unique process. “We came out with a product that the consumer wouldn’t notice a change in at all,” he says, adding, “sales have grown year after year for them and it’s examples like those where I look back with great pride and knew that we made a positive impact. And that’s what Greencore USA is all about. McClennon says that he views his company, being in the private food label market, as a “guardian of [our] retailers’ brands,” adding, “we put food safety and quality above all, so that we know when our products go out of our plant, and have our customers’ brands printed on them, they can be sure that their consumers are getting exactly what they want and need.”

Left: Grilled ham and gruyere cheese panini Right: Greencore Newburyport facility. INDUSTRY TODAY 109

PROFILE • CASCADE AEROSPACE

CASCADE AEROSPACE • PROFILE

he history of Cascade Aerospace dates back to 1969, where they began operating under the name Conair Group, a specialty aviation services firm that focused particularly on aerial firefighting.

when they pulled the trigger on integrating maintenance services into their capabilities, and later on, in 2001, their success in such market was actualized, as the maintenance division broke off from Conair Group INDUSTRY TODAY 111

PROFILE • CASCADE AEROSPACE

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112 INDUSTRY TODAY

AT-A-GLANCE: C-130J HERCULES The C-130J Hercules, designed and produced by Lockheed Martin, is a four-engine turboprop military transport aircraft. Capable of using unprepared runways for takeoffs and landings, the C-130 was originally designed as a troop, medical evacuation, and cargo transport aircraft. The versatile airframe has found uses in a variety of other roles, however, including reconnaissance, aerial refueling, maritime patrol, and aerial firefighting. It is now the main tactical airlifter for many military forces worldwide.

CASCADE AEROSPACE • PROFILE

icant portion of their business, 60 percent to be exact, comes from military-related services, the other 40 percent is dedicated toward the servicing and maintenance of commercial aircraft, ranging from manufacturing readiness levels work, to militarizing civilian aircraft and engineering modifications in cargo ships and firefighting aircraft. It appears business has come full circle.

Militarization Might

and built a brand-new, 230,000 square-foot facility, functioning under the name Cascade Aerospace. Over a decade later, the company has transitioned from what started as a maintenance and servicing branch for a larger aerospace firm, to now serving as Canada’s premiere weapons

system manager for the country’s C-130 fleet. While a signif-

While Cascade’s commercial services continue to increase and excel, the company has recently attained a couple of landmark achievements on the military side of its business. The first is through a

“This is the year Cascade Aerospace takes flight” Right: Benjamin Boehm, Executive Vice President and COO of Cascade Aerospace. INDUSTRY TODAY 113

PROFILE • CASCADE AEROSPACE

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CASCADE AEROSPACE • PROFILE

“We had a team assembled and in an aircraft heading towards their location within 24 hours, and within another 24 hours, we had the plane serviced and flying again.” project with the Mexican Air Force, negotiated by the Canadian Commercial Corporation (CCC) and announced at the end of last year, will involve the undertaking of modernization and sustainment activities on two Mexican Air Force C-130K Hercules aircraft. The project signifies Cascade Aerospace’s first international military C-130 assignment and while everything has been agreed up and production is currently underway, Boehm says that getting to that point wasn’t easy. “When we first approached them with a solution for their C-130 aircraft, they were interested in what we had to offer right away,” he says, adding, “however, given the way the country’s bidding system is set up, they were going to have to go through numerous other sales agents’ bids and entertain offers that they weren’t really interested in anyways, which created a bit of an obstacle in getting the deal done in a timely manner.” In response to this, he says they reached out to the Ca-

nadian Commercial Corporation (CCC), a federal business branch of the Canadian government similar to the United States’ Foreign Military Sales (FMS) division, and had them broker the deal through the Mexican government. “Our two governments got involved and drew up a plan that would overcome the need for request through proposals (RFPs),” Boehm says, adding, “and written in the deal it was requested by the Mexican government that the CCC select Cascade Aerospace to head the program.” Boehm says that while two governments getting together to expedite a deal isn’t unprecedented in the aerospace world, it was certainly the first time he and his company had been a part of something like it. “It was significant for us because it provided us entry into a market we really could impact in a positive and sustainable way,” he says. Boehm says that because of the success displayed in their integration of weapons systems management, what began in

two of their aircraft may soon extend to more. “They really like what we’ve done and I see the strong possibility of them asking us to design an entire new plan for the rest of their fleet, something we already have extensive experience doing for the Canadian Air Force.” With the benefits already being witnessed by Mexico, he says he expects Cascade to apply similar models in other countries as well, particularly in South America, the Middle East, and North Africa.

Lockheed Liaison Cascade’s success in their military programs has also generated recent domestic achievements as well. In February, the company was given a ‘C-130J Heavy Maintenance Center’ status by Lockheed Martin, making them only one of two such centers in the world. Boehm says that this appointment is key for Cascade’s identity, as air forces around the world employ a significant number of Lockheed’s C-130J INDUSTRY TODAY 115

PROFILE • CASCADE AEROSPACE

aircraft in their arsenals, and each of these planes require a heavy maintenance center for proper certification. “We have a long history of repair, overhaul, and upgrades with military and commercial C-130J Hercules aircraft,” Boehm says, adding, “and given our extensive history as Canada’s Optimized Weapons System Management resource, we feel we are well-suited to become a global leader in C-130 Hercules support.” In addition to their work with Lockheed Martin, Cascade also recently announced its collaborative role alongside Bombardier and Marshall Aerospace in producing a multi-mission extended range platform for maritime patrol and surveillance operations for L-3 Mission Integration.

Dedicated Service Boehm says that one of the aspects of Cascade Aerospace that differentiates them from others is the strength of relationship they foster throughout the entirety of a partnership. “While the partnerships we forge are businesslike in nature, we really focus on building relationships Pictured: A 1967 C-130 receiving Maintenance and Modification including Wing-Life extension. 116 INDUSTRY TODAY

at a personal level and maintaining flexibility as a company in terms of our adaptability to a changing schedule, or alleviating a need if something sudden

comes up.” Referencing his company’s extensive work with the Canadian Air Force, Boehm talks about one instance where a

CASCADE AEROSPACE • PROFILE

couple of military aircraft had gone down during a flight mission in the northern, scarce region of Canada, and required assistance in getting back

up into the air after a maintenance issue. “The Air Force sent a few repair teams up there to perform an overhaul, but they ran out of resources

and next thing I know I’m getting a call from a base commander, asking us if we would be willing to help them out,” he says, adding, “We had a team INDUSTRY TODAY 117

PROFILE • CASCADE AEROSPACE

118 INDUSTRY TODAY

CASCADE AEROSPACE • PROFILE

assembled and in an aircraft heading towards their location within 24 hours, and within another 24 hours, we had the plane serviced and flying again.” Boehm says that while instances like this aren’t common, they represent the depth of partnership individuals and companies experience when entering into a project with Cascade Aerospace. And that’s where Cascade Aerospace soars above the rest. “We are a company that can take on an entire nose-toLeft: Avionics upgrade on C-130 Hercules Aircraft.

tail lifecycle approach to a fleet management program, including engineering second and third line repair, upgrades and overhauls, and logistical support,” Boehm says, adding, “our capacity is extremely broad and, as a result, so is the kind of project or situation we’re willing to work in.” While they take on an increasingly expansive global identity, Boehm says they never forget about the aspects of their history and their organizational makeup that have made them who they are today. “We’re a lean, nimble business that does some very high-value work, working on projects that you often would

see larger organizations take on,” he says, noting, “however, while we do work with some of the biggest names in aerospace, given our intimate size we still never forget about the needs of smaller customers and projects and because of that, I think we are well-represented across the board in the size and significance of our partnerships.” If this truly is the year Cascade Aerospace takes flight, as Boehm says, it appears they’re already on the runway with their engines blaring, ready for take off.

INDUSTRY TODAY 119

PROFILE • BOURNS CHIHUAHUA

Bourns’ Mexico branch has been in operation since 1969, a depth of presence that is rare for foreign-based companies in the country, and even more so for U.S.-owned companies, as its 45-year presence makes it the oldest of any remaining maquiladora operations in Tijuana. Sérgio Valencia, plant manager for the company’s Chihuahua facility, and Jeff Pyle, worldwide vice president and general manager of Bourns’ automotive division, talk about the company’s extensive history in Mexico, the business advantages tied to the company’s regional position, and why recent expansions and new products signal a future even brighter than their past. Steve Engelhardt reports. 120 INDUSTRY TODAY

BOURNS CHIHUAHUA • PROFILE

hile Mexico begins to gather steam as a highly viable location for global manufacturers, count Valencia and Pyle as two of those who aren’t surprised. And why should they be, given Bourns’ lengthy stay in the country, and a habit of success that has continued right up to today. “The combination of an increasingly talented employee

base here in Mexico and a regional location with proximity to three of the world’s major markets in North America, China, and Europe provides a production platform that allows us to serve and impact a large, diverse customer base,” says Pyle.

Mexican Might Bourns has two locations in

Mexico, with facilities in Tijuana and Chihuahua. Although both manufacture parts and components for the automotive industry, each site serves different purposes. “Our Tijuana plant, the initial location Bourns chose when expanding to Mexico, employs 470 individuals in automotive operations that stretch across 160,000-square-feet, and can really be broken down INDUSTRY TODAY 121

PROFILE • BOURNS CHIHUAHUA

into three main families,” says Valencia, continuing, “Walking through our facilities on any given day you’ll find our staff hard at work in the production of fuel management systems, chassis sensors, and torque sensors.”

122 INDUSTRY TODAY

Almost a thousand miles away and situated in the heart of the country is the company’s second manufacturing plant in Chihuahua. The plant, which was constructed in 1999, spans 93,000 square feet and is filled by 580 employees. “At

our Chihuahua plant, we manufacture transmission and wheel speed sensors, as well as potentiometers,” Valencia says, adding, “most of the products made here are generally going to North America and Europe, but given our production and

BOURNS CHIHUAHUA • PROFILE

shipping capabilities, both of these facilities are able to produce products for anywhere in the world.” One of the ways Bourns’ two Mexican facilities handle global demand for their products is through extensive utilization of lean initiatives and quality assurance programs. “Continuous improvement is part of our mission statement as a company, and has been an integral part of our philosophy from the beginning,” says Pyle, who adds with a laugh, “I think we were engaging in lean activities before Left: Internal view of Chihuahua, Mexico plant; Above: External view of Chihuahua, Mexico plant.

DID YOU KNOW Bourns impacts a multitude of other industries in addition to automotive, and has carved out a significant place in history in doing so. Perhaps greatest is their role in the success of the Apollo missions to the moon, with Bourns providing the sensor in the joystick control that the pilot used to set the Lunar Landing Module gently down onto the surface of the moon, as well as the pressure transducers in the astronauts’ backpacks that regulated their oxygen as they walked on the moon. people were actually using the word ‘lean’.”

A Lean Scene In fact, lean manufacturing is so important to the company, that

both facilities in Mexico have a managerial position specifically tied to continuous improvement practices. “These individuals are 100-percent focused on employing lean manufacturing INDUSTRY TODAY 123

PROFILE • BOURNS CHIHUAHUA

“Continuous improvement is part of our mission statement as a company, and has been an integral part of our over philosophy from the beginning.” -Jeff Pyle tools that facilitate manufacturing processes that are as efficient as possible,” Valencia says, adding, “whether it’s through the principles of Kaizen or the tools provided through Six Sigma, we are always looking to improve ourselves in the face of an increasingly sophisticated global marketplace.” Pyle says that an additional high degree of vertical integration complements Bourns’ continuous improvement practices, giving them the ability to manufacture just about every part of their components, and in a manner that is methodical and time-effective. The company’s manufacturing prowess was recently recognized by General Motors, with the Chihuahua facility receiving the 2013 Gold Award for Outstanding On-Time Shipping Performance. The Gold Award recognizes key suppliers that have achieved a 99 percent or higher on-time shipping performance over the preceding 12 months and Bourns’ Mexico operations, tasked with supplying wheel speed sensors and 124 INDUSTRY TODAY

transmission sensors for GM over the course of last year, achieved a 99.2 percent fill rate. Valencia says it’s not just one aspect of the process, but rather a result of all aspects of the company working effectively and in-sync with one another. “Our on-time shipping performance, quality products, and superior customer service really positions us as a leader in

Above: Jeff Pyle, Vice President & General Manager, Bourns Automotive Division; Below: Range of Wheel Speed Sensors; Below Right: Internal view of Chihuahua, Mexico plant.

BOURNS CHIHUAHUA • PROFILE

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PROFILE • BOURNS CHIHUAHUA

supplying automotive solutions for today’s market,” he says, adding, “To receive recognition from a company as prestigious as GM is, it’s highly reinforcing towards our commitment to provide superior service and industry-leading products in a manner that best supports the ongoing needs of our automotive market customers.”

Customer Focus While the name of the game may be efficiency, the company 126 INDUSTRY TODAY

also maintains an innovative identity as well, with the presence of design engineers at both the Tijuana and Chihuahua facilities. “Having a design team in-house is something that isn’t very common in our industry,” Valencia says, adding, “they are able to fully design speed sensors and are constantly working with our customers to identify improvements in validations, ensuring that the quality of the products coming out of our facilities is as high as possible.”

A strong relationship with the customer is paramount to Bourns, a sentiment most recently displayed in their announcement of a new dual ball bearing option on their 10turn precision potentiometer. The option is available in the Hybritron® servo-mount version, is capable of 10 million shaft revolutions with up to 250 grams of side load, and is specifically meant for industrial machine-to-machine applications, a designation Pyle says was a

BOURNS CHIHUAHUA • PROFILE

direct result of customer feedback. “This specialty option was developed in response to customer feedback and requests for the higher performance and reliability of a longer life potentiometer,” he says, continuing, “Adding a new dual ball bearing to our industry-leading 10turn precision potentiometer is a direct sign of our commitment to provide customers with solutions that meet their evolving application needs.” The product is to be manufactured at a

few different Bourns facilities, including the Tijuana plant in Mexico. Bourns serves a global audience on a daily basis, and its presence in Mexico plays a significant role in maintaining its success. “I think when you look at our automotive division as a whole, we are really proud of our ability to service customers everywhere in the world,” Pyle says, adding, “We strive to bring quality products to our customers in a timely manner,

and our presence in Mexico is central towards achieving that goal.” As a company that is self-sufficient in delivering high-quality, low-cost products to every corner of the world, Bourns is a success story that looks to continue writing itself well into the future.

Above Left: Internal view of Chihuahua, Mexico plant; Right: Range of Transmission Speed Sensors. INDUSTRY TODAY 127

PROFILE • DAYTON-PHOENIX

he earliest railways employed horses to draw carts along the track (and is the origin of the term “horsepower” to calculate engine performance). So when a horse got too tired or old to pull its weight, no big deal, just replace it with another horse. We’ve come a long way since those days, of course. But, when the horsepower of a modern day diesel electric locomotive begins to fade, it can be an expensive proposition to replace it with a new one. Which is why many railroads prefer to overhaul their locomotive’s engine and electrical systems. And when they do, they prefer to have their locomotive electrical systems and HVACs overhauled by Dayton-Phoenix. “Because we have 75 years 128 INDUSTRY TODAY

of railroad experience and are an OEM supplier of locomotive electrical systems and associated mechanical systems, Dayton-Phoenix is the first choice of railroad companies to service, refurbish and remanufacture their locomotive components,” notes Charles Rivera, Director of Sales and Marketing. “Our customers can be fully confident they are getting the same or improved quality components compared to new OEM components, allowing them to haul their valuable customers’ freight to consumers.” He adds, “The average repair shop uses what it has on hand, not necessarily what is the best for the long life and durability demanded by the railroads. The repair shop might repair a component with whatever parts they

DAYTON-PHOENIX • PROFILE

The Dayton-Phoenix Group, Inc. (“Dayton-Phoenix”) designs and manufactures motors, heating and air conditioning and braking systems for customers in the railroad and off-highway vehicle industries. Such expertise makes this veteran Ohio manufacturer the leading choice for locomotive component repairs and overhauls. David Soyka reports on how Dayton-Phoenix contributes to putting old locomotives back to working on the railroad.

INDUSTRY TODAY 129

PROFILE • DAYTON-PHOENIX

have available to them, such as applying epoxy to fill the gaps

on electric motors. On the other hand, Dayton-Phoenix compo-

Dayton-Phoenix Group divisions and subsidiaries provide a broad range of quality products and services to the freight and passenger locomotive and off-highway industry segments. Whether as an OEM supplier, service repair and remanufacturer or engineered systems provider, Dayton-Phoenix builds on a history as a leading provider of electrical and locomotive components for industrial and railroad markets that dates back to 1939. Company facilities in Ohio and Indiana combine for 14 acres under roof of engineering and manufacturing capabilities. The product line encompasses a wide range of auxiliary generators, air products and timers, cab cooling and heating components, dynamic braking resistors, fan assemblies, motors, motor-driven air compressors, pole pieces and miscellaneous mechanical categories. 130 INDUSTRY TODAY

nents are completely inspected and reworked to OEM stan-

Dayton-Phoenix is a strong believer in program planning, in anticipating customer needs rather than reacting to them.

Dayton-Phoenix Group has supplied quality locomotive components to the industrial and railroad markets for over 75 years. And now the latest in HVAC technology is ready from your Dayton-Phoenix Team.

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DAYTON-PHOENIX • PROFILE

dards to eliminate the defects others cannot resolve. Due to our OEM manufacturing capabilities our customers benefit from these components that are more capable then our competitors. Furthermore, since we’re making these types of components on a daily basis, there are no additional expenses or shipping delays for us to get the highest quality components for repair and satisfy our customers.” Rivera concedes that while use of high quality components costs more, it more than pays for itself by reducing maintenance intervals and potential failures, as well as time and productivity lost when a locomotive must go off-line for repairs. “To take just one example, we use the same high quality insulation system for our remanufacturing locations that we do in building a brand new component,” Rivera points out. “That higher quality insulation means a repaired motor lasts three to four times longer than a motor repaired with repair procedures and insulation systems used by other suppliers.” International in scope with a presence in 75 countries but an emphasis on North America, Dayton-Phoenix maintains two manufacturing facilities with 700,000 square feet ded-

icated to new and remanufactured locomotive components. One of the remanufacture facilities is at its headquarters in Dayton, Ohio, and the other in Gothenburg, Nebraska. An additional manufacturing facility in West Lafayette, Indiana, manufactures new dynamic braking systems that may be part of a locomotive refurbishment pro-

Shown above: Electric motors are subjected to extensive routine tests prior to final assembly. gram. Dayton-Phoenix is ISO 9001:2008 certified and currently employs about 500 employees.

Investing in Quality “We’re strategically located to INDUSTRY TODAY 131

PROFILE • DAYTON-PHOENIX

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DAYTON-PHOENIX • PROFILE

As an OEM supplier of locomotive components and associated mechanical systems, Dayton-Phoenix is the first choice of railroad companies to service, refurbish and remanufacture their locomotive electrical and HVAC systems. service our freight and passenger locomotive customers,” Rivera notes, “but we’re always looking for the best ways to meet customer needs and are open to considering additional locations. In the meantime, we continually invest in new equipment and processes to ensure optimum efficiencies and provide the highest quality work. We continue to invest in the

latest machinery, including robotics, to stay competitive as the industry leader. Also, Dayton-Phoenix has an in-house engineering design staff employing state-of-the-art test facilities to provide customers with the latest advances for all our locomotive parts.” In addition, Rivera points out, “We’re strong believers in program planning, in anticipat-

ing customer needs rather than reacting to them. We look at trends and we assess the state of customer locomotive fleets. We make certain that we have sufficient stock on hand along with the necessary staffing, so we always have the resources required to proactively respond to a customer as efficiently and cost-effectively as possible.” “How much work we have to do frequently depends on how well maintained the locomotive was in the first place,” Rivera notes. “The major Class I railroads maintain their fleets on regular service intervals of three to six years, at most, depending on duty-cycle. That means with Dayton-Phoenix products Left: “HVAC” test station performs all systems (heating and cooling) verification tests prior to the case being closed for shipment; Below: Locomotive cab mounted underfloor heating ventalation and air conditionaing unit. (“HVAC”). INDUSTRY TODAY 133

PROFILE • DAYTON-PHOENIX

you won’t be looking at a major overhaul for 12 to 15 years!” Rivera emphasizes that all technicians are thoroughly trained, undergoing a rigorous 12-week certification program developed by Dayton-Phoenix. “It takes a unique individual with certain aptitudes to work on the winding of electric motors used on today’s locomotives,” Rivera says. “When you pull one of these motors apart, you have to deal with proper analysis, disassembly, cleaning, and the latest techniques in remanufacturing and testing that is complete with regard to every detail. When placed back into railroad 134 INDUSTRY TODAY

service, the components are expected to operate 24 hours a day, 7 days a week.” Dayton-Phoenix is also a leader in locomotive HVAC systems. Rivera characterizes Dayton-Phoenix’s rooftop and underfloor units as “workhorses of the industry”, keeping operators around the world cool in the summer and warm in the winter. “If you’re not keeping that locomotive cab cool, that’s going to lead to problems.” He adds that customers are looking to upgrade heating and air conditioning systems to take advantage of improved products offered by Dayton-Phoenix that

interface with external handheld diagnostics or contain built-in diagnostics for better maintenance, operational control and efficiency. “If our customer has a locomotive in for remanufacture and the HVAC is antiquated, as a part of our service program we will perform an upgrade for our customers. It’s better for the performance of the locomotive cab and you can get everything done at once, as opposed to taking the locomotive out of service again at a later date to provide HVAC upgrades,” Rivera advises. Such new technologies are making one of the oldest forms of modern transportation more, well, modern. “Motor drives are increasingly more sophisticated,” Rivera says. “In the old days, motors were run continuously or cycled on/off as needed. Today we have motor drives that increase or decrease motor speed as needed. That means they run more efficiently (fuel savings), with less wear and tear on the parts, which means fewer maintenance issues and less of a chance of a major malfunction resulting in a locomotive failure. We will be releasing Motor Driven Air Compressor systems by 2H’14 that will further improve railroad operations.”

DAYTON-PHOENIX • PROFILE

Staying on Track Dayton-Phoenix refurbishes locomotive components of all ages, some dating back to the 1950s. “The major reason to refurbish a locomotive is, obviously, it’s less expensive than to buy a new one,” Rivera explains. “In the North American railroad market, there are over 20,000 locomotives in service, and there are 90,000 across 75 countries worldwide. It’s a matter of economics; you simply can’t afford to replace most of your fleet. And, there’s no reason to do so. A remanufactured locomotive gives an existing tired locomotive another 15 years of life. Combine this with Dayton-Phoenix products and you get a remanufacture that is ‘as good as new’.” The good news for Day-

ton-Phoenix is that railroads continue to maintain their fleets and are all aboard with remanufacturing their locomotives using durable and reliable products. “In 2015 new emission standards go into effect,” Rivera explains. “No one really knows how much these standards will add to the price tag of a new locomotive. However, if it is similar to the trucking industry, it may slow new locomotive sales for a short period of time and encourage use of existing fleets. So the railroad companies are really incentivized to look carefully at their fleets and assess which locomotives are at or nearing their life cycle.” Once the new regulations go into effect, older model or remanufactured locomotives need not satisfy the higher

emission standards set for new locomotive engines. This will continue the rebuild or upgrading of older model locomotives that Dayton-Phoenix is prepared to support. According to Rivera, tier 4 compliance will be required for new locomotive engines, while rebuilt locomotives are likely to have a less stringent standard in the near term. “Railroads are a great industry with proven stability,” Rivera says. “Dayton-Phoenix helps the industry achieve the best ROI possible, with quality engineered products backed by our in-house capabilities to make any locomotive more efficient, more modern and more reliable. We’ve been in this business using our experience since 1939, and we remain on track with our customers to make the journey to whatever challenges are facing them.” Dayton-Phoenix invests in the latest machinery to stay competitive.

INDUSTRY TODAY 135

ADVERTISER’S INDEX

VOLUME 17 • ISSUE 4

A Aeronautical Supply, LLC......................................... 112 AFC Industries, Inc.....................................................132 Airborne Technologies..............................................114 Alloy & Stainless Fasteners..........................................40

H Hughes Peters............................................................132

B Batesville Tool & Die....................................................63 Bayer CropScience.....................................................98 Belleville International.................................................36 Briggs Industries Inc................................................... IBC

P PTM Corporation.......................................................125

C Co-Planar...................................................................125 Curran Company Inc...............................................106 D Dayton-Phoenix ........................................................130 DGI Supply a DoALL Company .............................. 114 F Formco Metal Products, Inc.................................... 122 Freightliner................................................................OBC G Grupo Exicon...............................................................72

L Lenze............................................................................81

S Sakthi Automotive Group .......................................... 63 T Terra Brasil.....................................................................91 Torrezin..........................................................................91 Trutas NR.......................................................................94 U Unilever Food Solutions............................................... 88 Universal Bearings LLC................................................66 W Wisconsin Economic Development Corporation............................... IFC

http://www.freightlinertrucks.com

http://www.unileverfoodsolutions.us

http://inwisconsin.com/

http://www.lenze.com/en/home

136 INDUSTRY TODAY

IBC = Inside Back Cover IFC = Inside Front Cover OBC = Outside Back Cover

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From start to finish we’re your partner for complete tooling solutions. At Briggs Industries we have the experience and capabilities to support your hot, cold and combination mold tooling needs, from process and material R&D to production release.

We can take you from start to finish on a variety of tooling applications: • Part Design Support • Process & Material R&D • Program Management • Prototype support for tool design, build and part runs • Production Tooling Design, build and trial runs • Production Water jet • Check and poke-yoke fixtures • Secondary trimming or assembly system/standalones • Tech support for plant installation • Engineering changes • Maintenance and repairs.

For more information on how we can support your tooling needs call us at 586-749-5191, or email us at briggsind@sbcglobal.net.