It’s not all bad news in the world of metalcasting: 2009 has been a landmark year for Miller Centrifugal Casting. In August the designer and manufacturer of near-net shape castings was acquired by Eisenwerk Sulzau-Werfen (ESW), giving it a global platform through which to market its unique catalog of high-quality, high-value products.
Those castings — copper, nickel, cobalt, iron, and aluminum alloys, in irregular and concentric shapes, up to 120 inches diameter, and weighing up to 30,000 lb. — are just a part of the impressive story of MCC’s progress over the past five years. The company is also an excellent example of human resource management, in particular through its gainsharing program. MCC President Ian Sadler is a longtime metalcasting executive with additional expertise at evaluating and applying workforce-management programs. We asked Sadler to explain the success of gainsharing at MCC, and what other metalcasters may learn from it to chart their own gains.
The Five Structural Supports
As a large North American producer of steel mill rings and sleeves, many of our products are used in the rolling of shaped products for building and rebuilding infrastructure. Science tells us that structural supports are the essential building blocks for solid infrastructure development, but have we ever applied that concept to our businesses? In a philosophical sense they, too, have structural supports that are sometimes in need of repair or replacement.
At MCC, we set out to rebuild the organization in 2003, giving special attention to five key structural supports – workforce morale, employee satisfaction through a revamped compensation program, eliminating waste (our version of going lean), quality and customers.
Support 1: Workforce Morale
Workforce morale was top of the list. A complex issue to address, it is intricately linked to emotions, attitudes, and confidence and loyalty levels. Simply put, rebuilding morale demands a human approach. Instead of looking at MCC’s workforce in terms of numbers and output, we began responding to our workforce as individuals. Because the company had been operating under bankruptcy protection, funds were lacking to invest in maintenance and capital improvements. Essential equipment was badly in need of repair. Breakdowns were common and tempers often flared as blame was placed, usually unfairly.
To begin addressing workforce morale, our management team developed a philosophy that employees were to be treated in the same manner as valued customers; and it became management’s job to walk the talk of the Platinum Rule, foster honest communication, spend face time on the plant floor and equip workforce members with decision making power. Slowly, with nearly two years’ consistent effort, trust (which we discovered is the key ingredient to rebuilding morale) began to take hold.
We learned that trust also was the essential ingredient for the “real” collective buy-in that would drive MCC’s successful transformation. Putting out a call for courage, our vision was to comprehensively take company performance to exceptional levels; and we took great care communicating this vision to employees.
Support 2: Employee Satisfaction
Evidence abounds that pay-for-performance works (when employees can directly influence their pay levels through behavioral modification), and this proved to be true at MCC.
Working with a consultant, we implemented a gainsharing program in early 2005 that was designed with a full slate of checks and balances. To date, it has never been modified in any manner. The program has significantly benefited the company and its employees. Within four years, MCC’s annual revenues increased by 162% and we attribute much of that success to our pay-for-performance system.
Today, MCC has a high-commitment, high-performance workforce, and our gainsharing program serves as our primary scorecard. A critical component to maintaining motivation is communication. MCC has weekly meetings with employees to keep them informed about progress and scorecard status, and we make it a point to celebrate successes and to show recognition for exceptional performance.
Workforce team members adjust their behavior according to market priorities such as quality and delivery, in order to collectively improve gainsharing outcomes on a month-to-month basis. We go to great lengths to explain how safety and teamwork influence gainsharing results.
As people often are naturally competitive, we found the gainsharing program encouraged a teamwork approach, enabling MCC’s members to focus on “upping the bar” and improving throughput. How can we do better? How can we get more through the shop? These are the types of questions our employees ask themselves while always conscious that work must be done in a safe and quality fashion.
Support 3: Eliminating Waste
MCC’s transformation also demanded that we look hard for waste in every arena of business operations. Moving forward on a platform of trust, our team set its sights on eliminating waste companywide, with the well-communicated end goal of working smarter, not harder.
Catalyst Connection was instrumental in guiding MCC through a lean manufacturing initiative that made sense for our company, even addressing specific internal operations.
We hired a controller, for instance, who improved MCC’s IT and information management systems. Of significant benefit to the company was shifting from a standard cost system to an actual cost system that equipped us to measure the financial performance of every job. Over time our unit labor cost, which had been the highest cost driver, was replaced by material costs as the number one cost driver.
Support 4: Quality
Quality is a core structural support for any manufacturing business, and as part of MCC’s turnaround we strategically invested in equipment and technology that would have a direct quality impact. Equipment upgrades, a portable CMM for close-tolerance production and a hand-held material X-Ray analyzer, which greatly reduced the occurrence of bad melts, are just a couple of examples.
This month, MCC gained its ISO 9001 certification. The continued quest for quality has literally become embedded in our culture since quality goals are communicated (ongoing and effectively) and also impact very significantly on our gainsharing outcomes.
Support 5: Customers
Customers, most importantly, can be a central structural support to business success, but in reality the support is bi-directional. The degree to which a company strengthens its internal structural supports directly influences how well it can serve its customers.
Part of MCC’s multi-year transformation involved embracing change, which was based on (confirmed) customer needs and wants. By taking the time to sit and talk with customers and really “listening,” MCC gained direction and insight on how it needed to evolve in order to forge stronger customer relationships. Identifying and alleviating whatever “pain” customers were experiencing was a primary goal.
Tips for a Turnaround
Orchestrating a business turnaround is a process that takes integrated strategies, teamwork, time and unfailing commitment. As a believer in sharing ideas and continuous leadership improvement, it was helpful for me to be involved with Vistage, a group of CEO’s that meets monthly to focus on leadership development.
Thinking through this turnaround journey, what surprised me most is how much people really are influenced by whom they see as the leader – and that even in the midst of tough circumstances they are willing to commit and make sacrifices if a leader’s vision is compelling enough. That said, leaders must be sure their vision is the right one.
Would I have done anything differently? Yes: I would be quicker to let go those staffers (whether management or employees) who are unable or unwilling to buy-in and embrace change. Sometimes employees appear to be on board for change when in reality they may be hindering progress or even sabotaging the process. Leaders need to keep their eyes and ears open to identify and release them for the sake of the entire business.
Going Global, Remaining Competitive
MCC was very recently purchased by Eisenwerk Sulzau-Werfen (ESW), representing a logical part of the consolidation process at work within the entire steel industry. As a global export leader, ESW exports 99% of its roll production (MCC only exports 10% of its products currently). Although we will continue operating independently with very different product lines, the companies will work together on technology and on expanding overseas markets for MCC.
Looking ahead, a new and exciting journey begins – integration of our cultures , new technologies and best practices. With almost 250 years behind its name, ESW teaming up with MCC’s leadership, will blaze new trails for long-term sustainability.
Ian Sadler is the President of Miller Centrifugal Casting Co., which has specialized in casting and finishing high-grade, centrifugally cast ferrous and nonferrous products for over 40 years. Currently, he also is serving as President of the AIME.
| Recommended Reading High Altitude Leadership: What the World’s Most Forbidding Peaks Teach Us About Success, by Chris Warner and Don Schmincke. The Essence of Leadership, by Mac Anderson. The Speed of Trust: The One Thing That Changes Everything, by Stephen M. R. Covey, with Rebecca R. Merrill. The Goal: A Process of Ongoing Improvement, by Eliyahu M. Goldratt and Jeff Cox. |