As part of the Italian Fiat Industrial group, CNH UK is well placed to benefit from its parent company’s deep understanding of operational efficiency. Colin Larkin, the recently appointed plant manager at the company’s Basildon site, explains to Tim Brown the building blocks the plant is using to construct a truly world class manufacturing operation.
Created in 1999 through the merger of New Holland N.V. and Case Corporation, CNH today comprises the heritage and expertise of several agricultural and construction equipment brands. There are a total of 38 CNH plants around the world making a full range of agricultural and construction equipment including tractors, combine harvesters, grape harvesters, telehandlers, excavators, wheel loaders, backhoe loaders, skid steer loaders and many others.
CNH UK in Basildon, Essex, was opened in 1964 by Ford as a tractor and engine manufacturing facility. At that time the plant was geared more towards engine production rather than tractors with the facility producing roughly 80,000 engines and 10,000 tractors annually.
Ford sold the site to Fiat in 1991 with engine manufacturing ceasing completely in 2008. The plant has now evolved to focus entirely on tractor assembly.
Tractors are categorised and sold by the horsepower of their engine. The tractors manufactured in Basildon range from 100hp up to about 270hp, which represents the middle sector of the tractor industry. There are, however, much larger examples made in lower volumes by other CNH plants around the world. Basildon makes around 20,000 tractors per annum and exports to about 120 countries with the main markets being France, Spain, Italy and the US.
Contrary to popular belief, while tractors are most commonly used for agricultural purposes, they often complete roles in many other applications although tractor applications vary between countries.
For example, according to Larkin, around 50% of tractors purchased in the Netherlands might be used in road building and maintenance, whereas other countries such as Italy will use tractors predominantly for farm work.
“The tractor is very much the workhorse in the heavy machinery market,” says Mr Larkin. “For instance, on a highway roadwork project, which may run 24-hours a day, the tractors will also run 24-hours a day. There is a tremendous amount of wear that a tractor must endure in one year alone.
They are really quite robust machines.”
Rolling out World Class
Since the departure from the UK of other big names in the industry, such as Massey Ferguson, in favour of overseas production, CNH has emerged as the only specific tractor manufacturing plant in the UK. While opposing this trend has placed it in an enviable position in the UK, the Basildon plant has undertaken projects to reinforce its long term efficiency and viability globally through the implementation of a company-wide continuous improvement programme.
As an early adopter of the World Class Manufacturing (WCM) set of performance criteria, Fiat helped found the WCM Association and incorporate the 10-pillar strategy in 2006. Most Fiat Industrial group companies like CNH have now adopted the pillar structure for continuous improvement across its global sites.
It has been three years since the official introduction of a structured world class manufacturing platform at Basildon. In that time the plant has saved upwards of £4 million directly. “The main thing for us in the long run is that every world class manufacturing pillar touches every aspect of our process,” says Mr Larkin.
Although the 10-pillars were introduced at the Basildon plant altogether in 2008, each was introduced in a pilot area of the plant.
The pilot for the autonomous maintenance pillar, for example, was the paint floor where the vehicles are spray-coated. To complete the introductory process, CNH hired an Autonomous Maintenance pillar leader that was skilled in the area and had previously worked with Toyota. The incumbent paint floor had been in operation for 10 years and had gradually begun to deteriorate due to lack of maintenance processes. The Autonomous Maintenance leader was able to improve the processes significantly and, according to Mr Larkin, has slowly turned that team from one that just simply sprays tractors into one that now examines all aspects of how they keep their facility clean and operational. “We used to have a lot of quick, short breakdowns in that area,” Larkin says. “The introduction of autonomous maintenance has eliminated much of that and has increased our productivity. The pillar leader is now trying to take that to other aspects of the plant in line with the cost deployment priority.”
At present, there is not a single area of the shop floor that hasn’t been influenced by at least one of the WCM pillars. However, certain parts of the continuous improvement programme have had a greater level of success and employee buy-in. According to World Class Manufacturing support manager, Dean Stephenson, the strongest performing pillar at the moment is safety. “We have put a lot of effort into safety, for obvious reasons,” he says.
“Supplementary to the drive for WCM was that we were driven in part by health and safety legislation, and by some of the accreditations that we’ve been expected to achieve. Much of the safety is common sense but we need to get leaner in the application of this common sense through the proper use of risk assessments and the formalising of procedures throughout every operation.” The management team perceives early product management to be a future area of strong focus and opportunity, says Mr Stephenson. “On the shop floor there is a certain amount of information that we, as an assembly plant, can provide to the designers to help improve products. We can have a huge influence on making a product more user-friendly to assemble. If a product is easier to build with fewer parts then it is inherently easier to build with better quality.” However, despite these specific focuses, to ensure that each WCM pillar receives adequate attention, when the plant undergoes its annual auditing process it must demonstrate improvement in all areas.
Although the plant has achieved considerable efficiency and cost savings in a short space of time, by his own admission Larkin says that before 2008 the company in general had not experienced as high a level of interest in continuous improvement as some of the other companies in the Fiat Group. However, Larkin stresses that not only have the improvements that have been made in the last three years been extremely successful, they have not necessarily required big financial investments. “One thing about continuous improvement is that we have made lots of improvements with very little investment,” he says. “People think we have spent thousands of pounds, but we haven’t. A lot of the investment we’ve made relate to things to make the layout of the plant streamlined, such as flooring, visual improvement, health and safety – such as knocking down some redundant platforms and cleaning those areas. We have moved stairs, added new racking, added more straight lines and inserted a recycling system.”
“It is a bit of a cliché but we have truly taken a lean journey,” Larkin adds. “And it definitely is a journey and it is never ending. We have demonstrated to several big companies that if you start small and apply good logic, you can gradually but dramatically change the plant and reduce the amount of process waste. Many people said that they thought this plant could never change, but those same people now return and say they can’t believe how much it has changed. We have an open door policy which means we are willing to show our transformation to anybody and everybody.”
World Class Manufacturing
World Class Manufacturing comprises 10-pillars:
1. Safety ensures the operations are as safe as possible to protect staff and prevent loss time accidents.
2. Cost Deployment investigates the losses in the plant and looks at each of the micro processes and the related costs. It assists to foster an understanding of where the greatest losses occur so that the correct pillar and right tools can be used to rectify the related problems.
3. Focused Improvement helps to ensure that when applying the remaining pillars that the correct tools are being utilised to tackle the issue in question.
4. Autonomous Activities
(b) Workplace organisation aims to organise the plant to operate in the most efficient manner possible while reducing non-value-add activity.
5. Professional Maintenance relates to the maintenance of equipment to tackle the biggest losses that exist in breakdowns and looks at how to move from being reactive to proactive.
6. Quality Control a very traditional pillar that uses data from all sources including warranty and internal to determine what defects are causing the most problems.
7. Logistics / Customer Service examines workplace organisation to ensure that an operator receives the part in the most efficient and user friendly way possible.
8. Early Product / Equipment Management looks at the launching of new products and the purchasing requirements needed while also ensuring that the team learns the full production process before a product is launched onto the production line.
9. People Development relates to the training needed to support the other activities.
10. Environment investigates environmental initiatives for waste reduction and improved environmental efficiency.
Staffing the operation
This year CNH Basildon plans to produce up 25% on last year’s total production. While 2008 was the biggest year the plant had ever experienced, the last two years have been slow which also caused a reduction in total headcount. However, the site is now experiencing a more stable order book and has recently hired 45 new workers.
Total headcount today is 850.
As a part of the People Development pillar, training at all stages has undergone considerable development. As Colin Larkin explains: “In times gone by, a new staff member would have undertaken a short induction course, then would have been put straight to work on the production line. More recently, as well as specific training aligned to their specific role, new staff now take a one-week training programme. During this time they will receive a full briefing on a tractor’s operation and what comprises the key components. We also demonstrate the importance of the worker’s role to the end product, the customer and to the business.”
One full day of their week long initial training involves shadowing someone on the production line so that they understand the tasks they will be performing. In the second week, they will follow someone until they are fully competent with the process. But the training does not stop when the operator is competent with just a single job. “We have a goal for every operator that they should know three separate job functions,” says Larkin.
“We try and train an employee for each new job role in two weeks so that in a total of six weeks an operator will know three roles. Every operator should know three jobs and every job should know three people so as to cover holidays, sick days and other eventualities. This also facilitates variation for those who prefer an alternative work pattern.”
CNH at a glance
Turnover: More than £1 billion
Colin Larkin – Plant Manager
Colin Larkin was promoted from logistics manager to plant manager at CNH UK in December 2010. “I started my career at the plant in the mid- 1980s as a line operator and spent three years on the assembly line, one year in machining and two years in quality. The experience in the quality department was my first true introduction to the process of continuous improvement. Moving from the assembly line I then obtained a salary position in the parts business before returning to become a quality engineer.
“After a number of years I received my first managerial position as quality manager. In the following period, I filled essentially every management position in the plant up to the logistics manager. Then, in December last year, I was promoted to be the plant manager.
“I have completed a lot of in-house and offsite training and am a qualified six sigma black belt. I’ve also completed an Open University MBA course which truly changed my way of thinking about engineering. I found the course particularly interesting in terms of the impact it had on the way I viewed the people in this business. I have always been a strong believer in maintaining your roots, and I still play golf with the guys from the shop floor regularly and stay in touch.
“There was no massive leap in my career that took me to where I am. I have done the full range of roles at the plant. Since my promotion, I have had several people on the shop floor say to me that they are pleased that I have the plant manager’s job, because they appreciate the fact that I know the business inside out and they see it as an inspiration that, in this business it is possible to be recognised and progress.”
The practice of procurement
CNH Basildon purchases around £500m worth of parts per annum from all around Europe and the UK. Although the site used to machine and manufacture the engine and hydraulic parts, today no parts are manufactured onsite.
As the plant is the assembly site for tractors in this power range, all the parts required for the finished products must be delivered to Basildon. With around 330 suppliers, half of which are located in Italy and most of the remainder being spread around Europe, great attention is paid to making sure the parts are available when they are needed.
Seven staff, who are responsible for approximately 50 suppliers each, are in constant contact with the suppliers and manage the process to do whatever is necessary to ensure on-time delivery. CNH UK has developed a strong relationship with a number of logistics companies both within the Fiat Group and external to it.
For example, CNH often relies on DHL for its most important deliveries. More than 50% of urgent inbound shipments (required within two days) come from Italy. The standard transit time from Italy is four days but for a variety of reasons the plant may require the part urgently. “In terms of next day delivery service,” says Larkin, “we frequently rely on DHL for reliability and service. Here’s an example: critical parts can be collected from southern Italy at 18:00 hours, they are then air shipped overnight and with help of the DHL Premium Service the parts are delivered by courier for 06:00 hours the next morning in time for the production line start up, with no production disturbances. In a small number of cases, outbound shipments assist dealers who require a critical part from the manufacturing plant for a repair or service. The part is collected and shipped to the dealer overnight so that he can take remedial action and get the tractor up and running at the earliest opportunity.”
Dean Stephenson – World Class Manufacturing Support
“I joined CNH about 16 years ago as a production operator and worked my way up to team leader initially in the parts and the accessories and then the logistics side of the business.
My educational background was in mechanical and production engineering so I had more interest in manufacturing production. As a result, in 2000 I joined a team headed up by Colin Larkin which focused on six sigma. That was my initial introduction to Lean. Two years later I underwent black belt six sigma training and have since carried out various roles throughout manufacturing, both supervising production lines and the flow of parts through the business.
“My role today has taken over from Colin’s previous job. I am responsible for the 10-pillars of world class manufacturing and ultimately responsible for reducing year-on-year plant operating costs by 8 per cent which is our top line objective. That has been achieved over the last three years. This year we hope to reduce production costs to the tune of £2 million through the roll-out of the projects which are all based on cost deployment.
“Our WCM development is monitored through annually conducted audits, one of which is done internally by a member of another Fiat plant, the other is an external audit which is conducted by Professor Yamashina, a worldwide authority on WCM and its processes. We are measured on a number of strict criteria and have so far reached the level of 47 points, which is three points short of the bronze medal. We hope to surpass the 50 point benchmark in the early part of 2011.”
How to build a 200hp tractor – From purchase to production and beyond
While the logistics of procurement are often handled onsite, the purchasing process is mainly controlled centrally in Italy. Every tractor is made to order and every part is pulled from that order. The order is received with a lead time of six weeks for delivery and for each order the company measures how close it is to satisfying that lead time. Figures from Basildon say that CNH UK is currently satisfying over 90% of orders in that time frame.
In the first instance, the order is sent to Antwerp where the tractor’s core, the driveline (transmission and rear axle), is built. Basildon then takes delivery of approximately 100 drivelines per day. From that stage on the rest of the components then follow a build-to-order process. The first stage of the production process involves the combining of the engine, which is built by FPT Industrial (Fiat Power Train) company in Italy, the driveline and the front support. From there, every other major and minor part is assembled and fitted to the tractor as it goes through the production line.
The production process at the plant is one vast, continuous line. In separate parts of the line the product moves in different ways. In one area, product is chained up and hangs from the ceiling but as the product moves towards the end of the line, the part-assembled tractor is mounted on a big pedestal.
In line with the company’s autonomous maintenance regime, the majority of the automated process is maintained in-house by CNH plant technicians.
There is some significant capital machinery at the beginning of the line in the form of some auto guided vehicles, and also in the paint shop which uses robots. The remainder of the plant is manually driven.
Significant and important changes have been implemented throughout the assembly line to facilitate the accurate and timely delivery of parts directly to the required assembly point or cell. In areas that have undergone recent process improvements, gravity-fed delivery devices were installed that are located right next to the operator and can be filled with minimal physical effort.
Despite the considerable improvements that have been made on site, Larkin and his manufacturing team know that the key to the future success of Basildon lies in continually improving shop floor processes. By continuing to raise their expectations and maintaining their achievements, the site is well on its way towards accomplishing World Class Manufacturing status at the bronze level. The end goal, beyond being able to reduce waste and cost, is to increase the volume of tractors manufactured with the same resources. Market forces willing, the CNH Basildon has its sights firmly set on returning to 2008 output levels while improving margins and continuing to launch a range of new and exciting tractor models.
An insight into CNH
New Holland was an innovator in farm equipment and machinery dating to 1895, when the New Holland Machine Works was founded by blacksmith Abe Zimmerman in New Holland. He established a prospering machinery business serving farmers from around the region. He built gasolinepowered engines that resisted freezing in harsh weather, a stone crush, wood saw and a livestock cob and feed mill.
The Great Depression and beyond
New Holland Machine continued to build stand-alone engines, farm equipment and other farming and machinery implements. But the Great Depression pushed the company to the brink of extinction in 1938. Yet in 1940 the company developed the Nolt mobile pickup hay baler, which kept the company afloat. New Holland then changed its direction to produce forage harvesters and spreaders.
In 1947 the Sperry Corporation, a manufacturer in navigation systems and a key player in building bomb sights and radar for the B-17 and B-24 bombers during World War II, acquired New Holland to form a Sperry-New Holland Agricultural division. By 1964, it had developed an automatic bale wagon that could retrieve baled hay from fields and a haybine that conditioned hay while mowing.
In the 1960s, Sperry-New Holland continued its focus on farm implements rather than tractors and bought an interest in Claeys in 1964. Claeys was a major combine builder in Europe. Within 10 years, Sperry-New Holland was the fifth-largest farm equipment manufacturing company in the United States, making it attractive for acquisition by a company interested in expanding Sperry-New Holland’s innovative technology to tractors.
The Ford Motor Co. entered the picture in 1986. Ford had been manufacturing tractors since 1907 and was largely responsible for producing an affordable mass-produced tractor that revolutionized farming. It was looking to expand its farm equipment division and purchased Sperry-New Holland to create Ford-New Holland Now building tractors with a large presence in the United Kingdom and the rest of Europe, Ford- New Holland bought the Versatile Tractor Co. in 1987. But the relationship with Ford didn’t last long. By 1991, Ford was in negotiations to sell Ford-New Holland to Fiat.
Fiat was a natural buyer with vast experience in tractor manufacturing. It produced its first tractor, the Fiat 702, in 1919. It continued with a sturdy line of tractors while conducting a series of mergers, including one with an Ankara, Turkey-based tractor company. It also developed an earth-moving machinery division. Fiat acquired a majority interest in Ford-New Holland and changed the name back to New Holland. In 1999, New Holland was merged with Case Corporation to become Case-New Holland, which became CNH Global.