Lincoln Industries recognizes that company culture is key to success
January 15, 2008
TPJ-The Tube & Pipe Journal® recognizes that Lincoln Industries is an industry leader. Lincoln Industries' combination of business management, employee focus, and community participation has earned it the first-ever TPJ Industry Award.
Lincoln Industries recognizes that company culture is the key to success.
One is a full-service fabricator. It prides itself on offering product design, packaging, and every process in between—engineering, manufacturing, plating, finishing, and assembly. It even offers logistics management. It's a complete package the company calls Integrated Finishing Services®. A short drive down nearly any U.S. roadway is enough to glimpse the company's products, such as the exhaust systems on Harley-Davidson motorcycles and Peterbilt and Kenworth 18-wheelers.
The other company started out as a one-person shop that specialized in providing chrome-, silver-, and gold-plating services for all manner of housewares: teapots, lamps, and so on.
What could these two companies possibly have in common? As it turns out, quite a bit. In fact, they are the same company. Located in Lincoln, Neb., and founded as Lincoln Plating in 1952, the company has grown to become the largest metal finishing company in the U.S. Renamed Lincoln Industries in May 2007, it has become vertically integrated to the point that it provides fully assembled finished products. However, it hasn't strayed far from its roots. The bulk of its output has some type of surface treatment, or as Vice President of Sales and Marketing Matt Nyberg describes it, the goods it manufactures are finishing-intensive products.
Despite the change from specializing in housewares to specializing in manufactured goods, and despite the big expansion in the services it provides, Lincoln retains much of the entrepreneurial spirit associated with a one-man shop.
TPJ-The Tube & Pipe Journal® recognizes that Lincoln Industries is an industry leader. Lincoln Industries' combination of business management, employee focus, and community participation has earned it the first-ever TPJ Industry Award. The award is based on how well the company fulfilled eight criteria divided into three categories: operations, marketplace, and community. Operations criteria include shop floor improvements, safety, and training. Marketplace criteria include business growth, customer satisfaction, and new products and services. Community includes the company's support of manufacturing as a future career choice and philanthropic activities.
The award will be presented at the TPJ Symposium on March 14 in Lake Buena Vista, Fla.
Vertical integration allows Lincoln Industries to manage and control nearly every step of the manufacturing processes of the products it supplies. The exhaust stacks are bent, polished, plated, and ceramic-coated at Lincoln Industries.
It was a family-owned proprietorship from the beginning.
"It started out as a one-person operation doing custom work," said Nyberg. The business model was simple. "An individual dropped off a teapot or a lamp or something like that, and it was a matter of silver- or gold-plating it or, in some cases, chrome-plating it. The early years were built on custom plating for people."
To augment its custom work, the company later expanded its services to include plating for manufacturers. Over time the balance shifted in favor of industrial work. Located within a few hundred miles of manufacturers such as John Deere Co., New Holland, Claas, Caterpillar, Husqvarna, Kawasaki, and Thermo King, the company didn't have to look far for industrial clients.
"In the early 1970s, as Marc LeBaron [the current chairman and CEO] got involved in running the company, it transitioned into a regional plating company, serving far more businesses than individuals," said President Hank Orme. "Over the next several years, the individual portion of the business—the custom business—trailed off and died. The manufacturing side of the business really flourished, and by the mid- to late-1980s, we were the largest plating company in the region."
Along with the new role came a few new duties, mainly supply chain management. Lincoln strengthened and reinforced its customer relationships by developing and coordinating the flow of materials and services. It wasn't just any old link in the supply chain; the company's expanded role made it a strategic link for many of its customers.
Taking on the role of supply chain manager laid the groundwork for the next big expansion.
A New Strategy. About 10 years after LeBaron led the company out of the custom plating business, Lincoln's executive team got together to assess its position and look at the company's future. At that time it set an ambitious goal for the company's growth: 15 percent per year. It also evaluated potential growth for the plating market in the region. It didn't take long for the executives to realize that the company's growth goal exceeded the market's potential. Lincoln's management put some serious thought into expanding the services it provided and carefully analyzed the structure of the industry.
"Management recognized that the industry generated a thin slice of product in which the plating is the key to that product's performance," Nyberg said. "It's either aesthetic in the case of chrome or functional in the case of products that you rarely see, products plated with hard chrome, sulfamate nickel, or, in some cases, ceramics. Capturing the market for these products made perfect sense to us because the finish is the key to the performance, therefore the finish is the key to quality, therefore the finish is the key to the cost—both the direct cost of manufacturing and indirect cost of quality. So a finishing company ought to be the lead supplier on these types of products."
In other words, Lincoln wanted to change its focus. Rather than be a part of the supply chain, it wanted to be the entire supply chain.
"In 1991 we initiated our first finishing-intensive product, and since then we have been going further and further in this direction," Nyberg said. "We still are a regional plating company, and this is a good business for us, but more than 90 percent of our business is in providing finishing-intensive products. Where we used to coordinate the supply chain for these products, we have taken over more and more of the process, and we have become the supply chain for these products."
The Crown Jewel. In 2005 Lincoln approached several heavy truck manufacturers about some necessary changes in diesel engine exhaust systems. It was widely known that an Environmental Protection Agency regulation change in 2007 would restrict the amount of pollution generated by diesel engines. Nitrogen oxides would fall from 2 parts per million (PPM) to 0.2 PPM; particulate matter would fall from 0.10 PPM to 0.01 PPM.
Relying on its extensive plating experience and some collaboration, Lincoln came up with an internal ceramic coating to protect the chrome from the higher temperatures and prevent it from discoloring. At the time Lincoln was the only supplier to provide exhaust tubes that were chrome-plated externally and ceramic-coated internally in high volumes.
While it already had worked its way upstream to become a fabricator, Lincoln hadn't developed expertise in every fabrication process under the sun. For this project, it purchased several new machines to increase its capabilities. Before long it had a machine capable of bending tube up to 8 inches in diameter and other machines to handle all of the necessary cutting, deburring, punching, and reducing needed to manufacture the exhaust components.
"This is the most vertically integrated project we have," said Director of Operations Randy Kinney. "Everything except manufacturing the raw tube is under our roof."
A key to quality for cosmetic parts is polishing. Lincoln Industries' capabilities include manual, semiautomated, and automated polishing. The process used depends on part configuration, volume, and cosmetic and functional specifications.
As it transformed itself from a custom plater to a regional plating company and then to a finishing-intensive-goods provider, Lincoln matured into a modern workplace. It acquired international certifications and developed extensive expertise in manufacturing processes; its management team garnered enough experience and savvy to devise appropriate growth strategies; and it learned to manage risk.
Certifications. Today Lincoln is an ISO 14001-, ISO 9001-, and TS 16949-certified company. For the diesel exhaust project, the company started from scratch to create process failure mode effect analyses (PFMEAs) and control plans. It also defined visual work instructions (VWI) for its tube fabrication processes and implemented lean manufacturing practices such as value stream mapping and kaizen events to maximize efficiencies.
Analyzing, Researching, Planning. Looking for opportunities to expand is a matter of thoroughly analyzing the industry, carefully selecting opportunities, and meticulously managing the risks. It's also a matter of engaging suppliers and customers whose corporate culture mesh well with Lincoln's.
"This strategy that we have employed, and deployed, was the result of our partnering with strategic suppliers and strategic customers," said Orme. "It's a matter of identifying the right suppliers and customers, understanding their needs and requirements, and making it easier for them to do business."
Managing Risk. How much risk does a finishing company take on when it branches out into additional processes, such as it did for the diesel exhaust project? Plenty. But Lincoln manages risk with several tactics: cross training people to spread knowledge and experience throughout the organization; hiring experienced people if the company branches out into a new technology in which it has little or no experience; and relying on the can-do attitude that is the essence of the company's culture.
"When we say, 'This is what we're going to do,' our people grab onto the new opportunity with a passion," Nyberg explained. "Integrating new projects is easy because we have a culture that accepts the challenge and they want to do it."
Lincoln Industries' attitude isn't so much a matter of "Will this work?" but "Let's make this work." It's a perspective that seems to have developed long ago and remains an important force in the company to this day. This outlook defines Lincoln, and its culture is one of the company's most important assets.
"The company's culture is sophisticated, and it has several components," Nyberg said. "The main thing is a winning attitude. It's also a very caring place. People care about each other here. I have been in quite a few factories, and I've never seen people smiling, waving, and talking to each other the way people do here at Lincoln Industries. It is unique. I have never seen it as good as this. It's hard to pinpoint exactly what has caused the culture to develop like this, because many things enter into the equation."
Certainly, the company's first 20 years play into it, when it was a small shop run by an entrepreneur involved in providing a service that required a great deal of skill.
Nyberg thinks that although the company's focus changed as the custom plating portion died out, the culture from five decades ago is alive and well.
"Oddly enough, plating was very much a craft at the time the company was founded," Nyberg said. "The people here were craftsmen. Each person was responsible for taking initiative, developing innovations, and having accountability for the end result. Manufacturing in the 1950s was machine-driven, but Lincoln was people-driven."
This people-driven orientation hasn't changed.
Lincoln Industries has been recognized as a Great Place to Work®, an honor from the Great Place to Work Institute. In fact, Lincoln earned this distinction for medium-sized companies four years in a row, a feat accomplished by just six other companies. A close look at this award, and what goes into earning it, reveals more about Lincoln's culture and the factors that make this company unique.
The Great Place to Work Institute examines three interconnected relationships: the relationship between employees and management; between employees and their jobs (or the company); and between employees and other employees. In the view of Lincoln's executive team, the employees—not the executives—form the basis for the company's culture. In other words, the biggest factor is not what the company does for the employees; it's what the employees do for the company and for each other.
Lincoln's management team realizes that this culture is an important asset and it strives to protect it and sustain it in several ways.
Hiring. First, it uses a careful hiring process. Candidates are evaluated for fit, talent, and skill.
"We first look at fit," said Orme. "Would the candidate fit in with this culture? Second, we look at talent. Everybody has talent, but getting the right kind of talent is critical. Third is skill."
With regard to fit, Lincoln is wary of recruiting too many people who are alike. And it is fortunate in that it can pull in people from surprisingly varied backgrounds by dipping into the rich cultural stew that is Lincoln, Neb. Immigrants these days don't always gravitate toward a metropolis such as New York City, San Francisco, or Chicago.
"At last count we had 25 or 26 languages spoken here," Nyberg said, citing an indicator of the area's cultural mix, which assists the company in maintaining a diverse work force. It seeks people who are similar enough in temperament—people whose personalities are likely to mesh with the company's culture—but different enough in background to bring fresh and unique perspectives, insights, problem-solving strategies, and so on.
"Regarding talent, the company uses a pretty sophisticated process to determine a candidate's talents," Orme said. "We use this process when interviewing candidates for any position, from the factory floor to the officer level—we use it 100 percent.
"As far as skills are concerned, if they have them, that's great; if they don't have them, often we can teach them," Orme said. "We have what we call a Vision College. It provides skills courses as well as leadership courses."
"For jobs on the floor, we do quite a bit of team-based interviewing," Kinney said. "So a person working in a particular area will get to talk to a candidate for a job in the same area, because he knows his success ultimately hinges on the success of the people around him."
Rewards. The management team has several programs in place that promote morale and reward safety, well-being, and innovation.
Its safety and wellness program, which was instituted more than 15 years ago, encourages healthy living both on the job and off the job.
On the job, department safety inspections often are conducted by a person who works in a different department, on the theory that a different set of eyes provides a more objective inspection.
And the inspector has the latitude to go beyond merely looking for Occupational Safety and Health Administration violations.
"They are encouraged to report anything that they aren't comfortable with, not just code violations," said Kinney.
The company also relies on the services of two physical therapists. One conducts hourlong walk-through inspections in the company's fabrication and assembly areas and recommends specific stretching exercises; the other, a trigger point therapist for the polishing department, has developed a stretching program and conducts a personal care class that covers biomechanics, nutrition, and illness prevention.
The company also provides quarterly physical exams. It initially had a 78 percent participation rate; a closer look at the other 22 percent revealed that most were away from work on business or vacation. Once this was identified, make-up exams were scheduled for a participation rate of 100 percent.
The outcome of every quarterly physical exam is a set of objectives tailored for each employee. Everyone who reaches the top objective, the platinum level, is invited to participate in a three-day trip to Colorado to climb a 14,000-foot mountain together.
"Seven years ago we had six participants in the climb. Last summer we had nearly 100 people," Orme said. That's more than 15 percent of the company's work force.
The company rewards creativity, innovation, and problem-solving through its Bright Ideas program. An innovative idea can result in recognition at the company's monthly luncheon, recognition at the annual Night of Champions program, and a gift certificate worth up to $1,000.
How do employees develop practical, workable ideas? This is where the third initiative comes in.
Cross Training. The company provides extensive cross training. Driven largely for all the obvious reasons—improving ergonomics, varying job duties (reducing monotony), and so on—cross training leads to a broader and deeper understanding of every process, start to finish. This, in turn, allows the company to reach higher quality goals. Another benefit is that everyone develops a more thorough grasp of all of the processes and procedures and how they interact to turn out a finished product. This gives everyone a chance to offer ideas on streamlining and improving the company's operations.
While the culture is maintained and reinforced by Lincoln's programs, the company's executives are aware that they cannot program the culture.
"We are very aware that this culture is a jewel, and we work hard to preserve it," Orme said. "We would never want to lose it."
Is Lincoln interested in being named a Great Place to Work five years in a row? Yes, but it's not a primary concern.
"We're not trying to get on that list or any other list," said Orme. "When you take the focus off the people and focus on awards, recognition, or accolades, you're focused on the wrong thing. We're going to stay focused on the people."