February 25, 2011
White Castle’s metal fabrication subsidiary has abided by continuous improvement principles for decades—long before Toyota became a major player in the United States.
Were he alive today, Billy would be proud of his family's metal fabrication company. That's what everybody called him: Billy, not sir, not Mr. Ingram, and certainly not his full name, Mr. Edgar Waldo Ingram. He demanded no such formalities, only a job done well—systematically. Ingram was fanatical about systems. Detail-oriented probably would have been an understatement. He liked systems so much that he made it part of his company's name: White Castle System.
Yes, White Castle, home of the 5-cent hamburger (see Figure 1). At least that was the going rate in 1934, when the iconic restaurant chain opened a metal fabrication company on its 10-acre home office campus on West Goodale Street in Columbus, Ohio. From the road you can see White Castle's corporate office, its entryway adorned with the familiar porcelain façade inspired by the castle-like Chicago Water Tower. But behind is a 250,000-square-foot building with mechanical stamping presses, shears, plasma cutting and laser cutting machines, press brakes, gas metal arc and gas tungsten arc welding booths, grinding, and powder coat lines (see Figure 2).
It's called PSB Co., a White Castle subsidiary with features of both a product line manufacturer and metal fabrication job shop. It makes cooking fixtures and furniture for the restaurant chain; has a long-term contract with Scotts Co. LLC to fabricate lawn spreaders; and has garnered numerous other fabrication contracts from sectors including automotive and agricultural equipment. The operational array must be managed under one roof and follow improvement methodologies that abide by what has guided the company for decades, Ingram's improvement methodology—the White Castle System.
White Castle managers have a booklet of heavy-stock, cream-colored paper. On the cover a seal reads actorum memores simul affectamus agenda, Latin for "mindful of things that have taken place, at the same time we strive after things yet to be done." Above that is something a bit less academic: "All this from a 5-cent hamburger!"
PSB Sales Manager Joseph Carrizales has a copy too (see Figure 3). "White Castle was founded by the great-grandfather of the person I report directly to," he said. "He basically started the company with $700 in bond money, and in 90 days he was able to pay everything back. It was kind of amazing."
The booklet tells White Castle's history and business philosophy, and according to the narrative, in some respects the founder was the Taiichi Ohno of hamburgers. Ingram demanded a cook make a burger in a certain way and on a specially designed griddle on which burgers were (and are) essentially steamed. The company calls the process "steam grilling," which distributes heat evenly and retains the burger's juices. (Coincidentally, the White Castle booklet cover has the motto and seal of The Newcomen Society, which promotes the study of technological history, and steam is an important part of it. The group is named after Britain's Thomas Newcomen, the inventor of the steam engine.)
Starting in the 1930s, a White Castle cook would reach for pans made of what was then sold under the Allegheny Metal brand name, known today as stainless steel. The pans holding onions and other fixings were all within arm's reach. The cook had all the tools necessary to make a burger nearly within arm's reach. The workstation design promoted easy movement and maximum efficiency, a model of workplace ergonomics. What Ingram helped design was in effect a cell, but for a burger instead of a fabricated metal part. The method was born prior to the Great Depression, before there was even a Toyota Motor Co., much less a Toyota Production System.
When the first White Castle hamburger restaurants opened during the 1920s—decades before McDonald's—most perceived hamburgers as carnival food: an occasional indulgence but not the most healthy or sanitary, and certainly not something mothers should feed their children. Ingram set out to change that perception, and overcoming it eventually led to PSB's existence.
His first step was the name: White signifying "clean," Castle implying "strong." Early restaurants were made of cinder block, stucco, or white-enamel brick. Still, the real estate landscape in the 1920s wasn't set up for the new concept of chain restaurants. The early facilities had no parking lots; owners were reluctant to lease out only small parcels of their land for longer than 30 days; and it was never certain whether they would extend leases. This obviously challenged growth: Why invest in a new building when the landlord might force the place to close up shop after a month?
In 1928 L.W. Ray, who oversaw construction for the new company, had an idea. What if the buildings were portable? That way, if a landlord didn't extend a lease, or if it made business sense for White Castle not to renew, the company could disassemble the building and move it elsewhere.
Eventually Ray developed a patented design for a building framed with cold-rolled steel channels, on top of which were white porcelain panels (see Figure 1). The idea ultimately led to White Castle's metal fabrication division, the Porcelain Steel Buildings Co., or PSB, in 1934 (see Figures 4 and 5).
1934 certainly wasn't any picnic. Only a year into Roosevelt's New Deal, the economy was climbing slowly out of the depths of the Great Depression. But the company had one advantage: It was debt-free with a good cash position. Paying back that $700 in bond money in 1921—the year the company launched—was a smart move.
Like other manufacturers during World War II, PSB couldn't produce goods that didn't support the war, so the fabricator took on contracts for amphibious vehicles, or ducks, that were integral in the Pacific Theater. By the end of the war the company, like others, dealt with serious material shortages, so production managers had no choice but to make products with materials left over from the war effort. As luck would have it, O.M. Scotts & Co. of Marysville, Ohio, could use just such a product. The fledgling company needed lawn spreaders, and PSB needed work that could be done with available materials. The first spreaders produced at PSB were retrofitted gun barrels with wheels and spreader mechanisms attached.
As White Castle restaurants became permanent structures, the need for metal buildings waned, but PSB continued to fabricate restaurant fixtures and equipment. It also won other short-term contracts (at least relative to the one with Scotts) from various companies in transportation, aerospace, and agriculture. Those small contracts made up the final piece of PSB's hybrid business model.
In the 1930s PSB existed purely as a service center to support the growing White Castle restaurant business. Today, said Carrizales, "that represents only 5 percent of our business."
The company partly acts as service center for the White Castle organization, which today consists of restaurants, a bakery division, a meat processor, and a frozen food division. For part of the year the company acts as a product line manufacturer, as a top-tier supplier for Scotts' lawn spreaders. And it acts as a job shop, with numerous contracts from various industrial sectors.
The hybrid approach shields the company from dramatic ups and downs in the economic cycle. During the Great Recession, PSB's job shop business fell off a cliff—and yet total White Castle System sales increased. White Castle restaurants did well as families chose inexpensive burgers over fancier fare. As restaurants opened, workers at PSB were called upon to fabricate more fixtures and stainless steel cooking equipment. This included equipment not only for new White Castle facilities, but also for several newer chains owned by the White Castle family, including Deckers, a sandwich shop; Laughing Noodle, which serves noodle dishes; and Blaze, a barbecue chain.
The approach presented manufacturing challenges that went against the grain a century ago. Ingram's managers didn't look to Henry Ford for guidance. Such mass production would have caused part-flow nightmares for PSB's diversified business.
"We have a spreader business, which is an ongoing type of business. We've got long-run jobs compared to short-run, and then we'll get a sequence of a series of small jobs," Carrizales said, adding that sequencing them all can be difficult. "This is why we're always working and innovating our [production] methodology."
This is where the White Castle System comes into play. In essence, managers cherry-pick elements from various improvement methodologies, including lean manufacturing and the theory of constraints.
Thanks to the lawn spreader work, the shop has enough volume to justify multiple coil-fed mechanical straight-side presses, the largest being a 600-ton machine (see Figure 6). The 84- by 50-in.-bed machine has a 16-in. stroke and can hold a die between 11 and 23 in. wide. For other jobs, the company uses one of its eight other presses (see Figure 7). If blanks require additional forming, the jobs feed directly into the adjacent press brake area. Opposite the brakes are two 2-kW CO2 cutting lasers, a CNC turret punch press, and a plasma arc cutting table.
The bending area is the center of the company's cutting and forming manufacturing cell. Keeping with the kitchen analogy, the company's 13 press brakes would be the griddle. Feeding into them—instead of onions, pickles, and meat patties—are cut parts from the laser, plasma, and presses.
PSB production managers examine bottlenecks, or constraints, more like job shop managers than product line manufacturers. Demand shifts from one small job to another, and so can the shop floor bottleneck, which basically governs part flow for the entire plant. The constraint may be a moving target. For instance, if a job requires bending, production managers may treat the press brakes as the constraint. Its work-in-process is carefully maintained, and material isn't released until the WIP reaches a certain point. As one can imagine, various presses punching blank profiles as well as two lasers could easily flood the brake area with unwanted in-process inventory.
If a stainless steel job requires laser cutting, gas tungsten arc welding, grinding, and powder coating, the constraint may move to the welding or grinding area, depending on the part and the amount of welding it requires. And if a job requires the assembly of various components—with some but not all flowing through the most significant bottleneck—managers must release materials at the right times to ensure everything reaches assembly on schedule, with minimal WIP.
They must juggle all these small-volume jobs with other work, and not even the high-volume jobs run consistently throughout the year. For instance, the company's highest-volume work involves those lawn spreaders, but that job is by its nature seasonal. For part of the year, the shop's coil-fed stamping press is busy forming spreader components; for the rest of the year, the machine can work other jobs.
"We know we have to build so many spreaders going into a season," Carrizales said, explaining that there's a certain level of predictable demand, which the company enjoys thanks to having a contract that spans so many decades. "So we'll start building parts and components ahead of the assembly season, to have them at the ready." This consistent schedule is balanced with the less consistent job shop and service center work.
In a way, the high-volume spreader business anchors the operation. The volume of work produces enough sales to justify investments in equipment and other expenditures that couldn't be justified from the job shop revenue alone. "We have a dedicated [part flow] for the spreader business, but we also have the versatility to run other [short-run] jobs as well," Carrizales said. "So the same piece of equipment can run spreaders as well as other outside jobs."
The job shop side of the business has increased significantly during the economic recovery, and Carrizales attributes much of the uptick to customers downsizing manufacturing. With product demand ebbing and flowing so dramatically, bringing manufacturing in-house becomes riskier. And when it comes to outsourcing, the cost difference between domestic and overseas manufacturers isn't as large as it used to be, particularly as demand for small orders has increased.
After all, few these days want to take on excess inventory.
As he explained, "We have customers coming to us saying, 'We don't want to buy this piece of equipment, so can you do this for us?' People are not taking on the risk [of equipment investment]."
This is why some of the fastest growth for PSB has been associated with some of the most expensive processing equipment: the coating lines. "We were spray painting until 1976, when we invested in one of the first powder coat lines in the state of Ohio," Carrizales said. Since then the company has opened two more coating facilities, one in Rome, Ga., and the other in Dayton, Ohio. PSB also offers electro-coating (e-coat) services, an immersion painting process in which charged particles are attracted to an oppositely charged metallic surface.
Investing in just one powder coat line can run into the seven figures, "but we've already got those investments in place," he said. "That's why we've been positioning ourselves to sell to the companies that need this service."
PSB has 75 on the payroll, a medium-sized organization in the metal fabrication business. Because of its diversity, the company had no layoffs throughout the recession. But during the next decade, management is planning for some significant turnover. A good portion of the work force has been with the company for decades, and their retirement may be PSB's greatest challenge. At least one employee has served more than four decades.
White Castle's employee benefits reward loyalty. The company has never opened franchises, and all employees are held to identical performance standards and receive the same benefits. Since 1943 White Castle has offered everyone a full pension, and if the company's financials are any guide, White Castle retirees can be reasonably sure pension payments will continue unabated.
After all these years the company still has no debt, and all five divisions bring in about $625 million in annual revenue. It has offered group life insurance since 1927, when the concept of such insurance was still new. And since 1924 White Castle has offered a cash bonus program.
The bonus size is based on two factors: gross sales and an employee's length of service.
Why gross sales? As Ingram figured, if operational employees worked more efficiently to increase revenue, managers "should handle such funds intelligently enough to make a profit." He added that "we have no right to expect loyalty except from those to whom we are loyal."
Ingram said this speaking to the Columbus chapter of The Newcomen Society. In that speech he described his management philosophy, which is the polar opposite of, as Ingram put it, "Treat 'em rough and keep 'em ignorant." Instead, he said that managers attempt to "develop in each individual a full understanding and knowledge of every activity connected with the improvement of the business, believing that the welfare and success of the group is based on the knowledge and experience of the individual."
That statement resembles principal tenets of lean manufacturing and other improvement methodologies. But Ingram said it in 1964—well before Toyota became a major player in America.
Images courtesy of PSB Co., 555 W. Goodale St., Columbus, OH 43215, 614-228-5781, www.psbcompany.com.
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