Nu-Way Industries finds the formula to take on competition from China
January 13, 2004
During the depths of the manufacturing slowdown that has cost the fabricated metal products sector nearly 300,000 jobs since 2000, Steven Southwell, president of Des Plaines, Ill.-based Nu-Way Industries Inc., faced a depressing challenge from one of his multinational OEM customers??either meet the ??total cost of acquisition? achieved in China or purchase the part from the Chinese supplier, inventory it, and incorporate it into the family of parts supplied by Nu-Way.
|This Finn-Power Express Bending Cell, which automates complex bending and reduces tedious and costly work stages, has last bend negative capability and fully automatic operations cycles—from loading the sheet to unloading the bent parts.|
"I have a precision sheet metal shop and I'm going to buy parts from China that I'm making here every day, day in and day out?" Southwell said. "I needed to go and see for myself what was going on over there."
Nu-Way was forced to purchase parts from China to keep the business. But by August of this year, the only Chinese parts flowing through the company's operations were those in inventory.
"Delivery hasn't been a problem," Southwell joked, "because they want you to buy a year's worth of inventory at a time. In the near future we will eliminate the product coming from China and make it here. We're currently just drawing down inventory."
The key to meeting the Chinese challenge lies in a mindset that has been at the core of Nu-Way since its inception in 1968 by company founders George and Joe Howard.
"It wasn't much more than a garage welding shop," Southwell said. "George Howard's forte was welding."
George Howard's vision of how to be successful would grow Nu-Way from its garage shop beginnings into the vertically integrated, technology-focused supplier of precision metal parts, metal housings, and electronic enclosures it is today.
|The Shear Brilliance flexible manufacturing cell is a new-generation machine that provides a fast path in fabricating sheet metal parts. It uses the lean manufacturing concept to consolidate manufacturing processes into one operation.|
It started with the early decision to invest in turret punch press technology (the company purchased the second DIACRO VT 36 turret machine shipped into the Chicago area), which initiated what would become a history of investing in technology. The company name itself exemplified the approach—with this new turret technology, George and Joe Howard embarked upon fabricating the "new way."
In 1982 the company occupied 40,000 square feet of manufacturing space in Des Plaines. Over the next two years it would expand to 60,000 sq. ft., the maximum allowable, given its land constraints.
In mid-1990 it opened a 48,000-sq.-ft. paint shop at a separate location. The logistics of transporting product back and forth became unwieldy, and in 1993 an old Hughes Aircraft facility located a stone's throw from O'Hare International Airport was purchased to house all the company's processes in one location.
|This automated Finn-Power flexible manufacturing system allows Nu-Way to begin with a full-sized sheet, load, punch, form, unload, stack, robotically transfer the part to the automated bender, bend, and unload the finished part without a human touching it during production.|
Southwell, a sheet metal modelmaker at the time, mentored under what he calls "true craftsmen." "[These were] guys who never produced a part using more than 50 percent of the tolerance," he remembered. "I changed jobs back then just to get experience, just to see how things were done." Southwell arrived at Nu-Way in 1977 as the company took on a contract to build automatic guided vehicles for Lear Siegler and found that it had bitten off more than it could chew.
The experience he initially gained at Nu-Way was in CNC programming. The company had invested in some of the first computer-assisted turret programming systems, then in some of the first CNC press brakes made by LVD. Then came laser cutting, as early as 1984, followed by painting and assembly. Eventually the experience Southwell gained positioned him to purchase the company, along with Mary Howard (founder George Howard's daughter) in February 2001.
Shortly thereafter the impact of globalization confronted the new owners and they found themselves purchasing parts from China that they should have been making in their U.S. facility.
"We were now competing with both local job shops and foreign competition with labor cost advantages," Southwell explained.
"We had our eyes on emerging panel bending technology long before George retired," he continued. "It was exciting to watch those machines develop. But we had a few challenges in terms of being able to implement them. First, we needed high volumes to justify the investment. Second, you need a large area to house it. It wouldn't fit in our existing facility. George, at the time, was conjuring up ways to take the roof off the building, and he persisted in pursuing this concept even after he retired."
|Finn-Power's press brake integrates a bending robot for flexibility and productivity. This unit provides unmanned bending and part handling at maximum speed, quick product and program changeover, and consistent parts.|
The reality of having to buy parts from China was a turning point for Nu-Way. The market had begun to deteriorate in the fourth quarter of 1999. The company had been caught up in the telecommunications bubble spanning the mid- to late-1990s. Another multinational customer was forcing it to establish a "global footprint"—supply parts anywhere and everywhere. Southwell established a partnership with a fabricator in Australia and then traveled to Europe and China seeking similar venture partners.
"There's no way those shops can make anything like we need here in the U.S.," Southwell said of what he saw in China in 2001. "I couldn't buy an enclosure over there that would meet the specifications for what we sell here. They'll be forced to get better, and they likely will get better. It really opened up my eyes to what was going on."
That realization took Southwell straight back to the company's roots—technology is the key to success.
"Technology always wins," he stated emphatically. "Total cost of acquisition, including getting it here? I can compete."
The idea of automated panel bending technology was revisited. The decision was made, during the depths of one of the worst, if not the worst, industry downturns in history to invest almost $6.5 million in the equipment and the building required to house it. The company turned to a lineup of Finn-Power metal fabricating technologies, including its flexible manufacturing system (FMS), a punch/shear combination (with linear-drive technology, unloader, stacking system with buffer storage, and unloading robot), an inline automated bending cell, and a robotic press brake equipped with a Motoman robot. This system will be supplying the parts, among many others, that previously were purchased from China.
|A squaring table aligns sheets before loading.|
The key, according to Southwell, is the dramatic productivity improvement the system provides.
"Depending on the job," he said, "I'm getting an eightfold increase in productivity. The machine isn't all that much faster, but where it really has an impact is in its ability to increase productivity. It'll run 23 hours, compared to our turret press green-light time of 20 percent.
"This is where you need to be if you're going to compete against the low-labor-cost countries," he concluded. "Because of increased productivity, I can make 10,000 of these parts in 24 hours. What is my revenue for that day compared to my previous output?"
The system currently requires only four people per shift, and Southwell intends to run it 24/7. The punch/shear combination eliminates downtime and can be loading material, punching, shearing, and unloading simultaneously.
Southwell is the first to point out that he, like many other fabricators, is struggling in today's economic environment in spite of his investments. He laments the state of manufacturing in the U.S. and cites a number of challenges that are overwhelming many small and medium-sized fabricators.
He believes government needs to address both the rising costs of doing business in the U.S. (particularly in the area of health care) and unfair trade practices. Indeed, without an artificially undervalued Chinese currency, Nu-Way would not have faced the "total cost of acquisition" problem in the first place.
Southwell also worries about larger, long-term problems looming for his business and the metal fabricating industry.
"We need a strategy to attract young, intelligent, mechanically inclined people to our industries," he said. "The U.S. is turning its back on the manufacturing industry. There are no trade schools left. The Tooling and Manufacturing Association had 62 apprenticeships last year. This year two signed up. There is no effort whatsoever to ensure the future of manufacturing in this country.
"The American public is spoiled with cheap electronics and $1,000 plasma screens," he continued. "The only way you get that is by exploiting some Third World country. We have to be teaching kids how to make product. As I see it, there are only three ways to make money. You can dig it out of the ground. You can grow it out of the ground. Or you can manufacture product."
As for globalization, it has brought little more than marginal erosion to operations such as Nu-Way's and others'. Southwell's business is currently competitive worldwide; it supplies parts to customers in Canada, Mexico, Brazil, England, Germany, Ireland, the Netherlands, Spain, Poland, Japan, Taiwan, China, and India. But he sees other companies in dire straits.
"Guys are trading dollars to keep their doors open and hoping for a better day," he said. "I don't blame them. But you can't last long that way. The next ripple could knock you out."
His advice to fellow fabricators? "Automate the #@&! out of everything you are doing."
Nu-Way's future calls for more of the same. The company already is contemplating the potential for expanding the modularity of the Finn-Power system and turning its attention to the need to tie in secondary operations, such as automated hardware insertion, tapping, welding, and painting.
Southwell, in the meantime, holds fast to George Howard's vision. With the challenge of taking the roof off the building behind him, he ponders more feasible approaches. "I need a 12-ft., 250-ton press brake with a small bender and a laser/punch combination," he mused. "Then I could get some things done."
Nu-Way Industries Inc., 555 Howard Ave., Des Plaines, IL 60018, 847-298-7710, fax 847-635-8650, www.nu-way.net.
Finn-Power International Inc., 710 Remington Road, Schaumburg, IL 60173, 847-885-3200, fax 847-885-9692, www.finnpower.com.
Photos courtesy of Finn-Power, Schaumburg, Ill.