By Andy Owens
aowens@scbiznews.com
Published May 21, 2009

American manufacturers have the chance to regain a competitive advantage against cheaper and sometimes faster foreign companies, a top executive from General Electric said Wednesday night in Charleston.

“We absolutely can compete,” said Dan McDonnell, manager of GE’s lean initiative in the company’s transportation division. “It doesn’t matter that they have an unfair advantage. I really believe that lean is North America’s bridge to the future.”

McDonnell gave the keynote address at the opening of the Association for Manufacturing Excellence 2009 regional conference at the Francis Marion Hotel. The conference continues today with workshops and a lunch presentation by a Vought Aircraft Industries Inc. vice president and the managing director of The Carlyle Group.

The inspiration for lean manufacturing comes primarily from Asian automakers, some of which require their managers to train for two years before ever stepping foot on a factory floor. The idea is to create greater value with less effort by identifying and creating efficiencies. The principle has the chance to restore America to innovative and competitive leadership around the world, and the recession might give it an advantage, McDonnell said.

When McDonnell came to a 100-year-old locomotive plant in Erie, Pa., the factory was making one locomotive every 31 days. A GE supply chain vice president asked why it took GE that long to make one locomotive when Toyota can build a car every 18 hours. McDonnell said it was that manager’s “aha” moment and he never let it go.

The company was presented with the challenge of trimming production time from 31 days to 10. McDonnell said it began with a culture change that for some was a culture shock. Union members had to buy in, managers had to push every single employee to have similar, individual “aha” moments.

Building a car is somewhat different from building a locomotive. Commonly called train engines, locomotives have 210,000 parts, seven major subassemblies, a mile of wire, 2,400 feet of pipes and hoses and 420,000 pounds of steel.

“It’s a monster, and it took 31 days to build,” McDonnell said.

McDonnell stressed the difficulty of and commitment to lean manufacturing and the constant focus it requires of everyone in an operation. Every individual must understand how his or her job affects the end result, the mission of the company. He said that the concepts are simple but that implementation day in and day out is difficult.

“It’s simple stuff. It’s just common sense. Henry Ford was doing it in the 1920s,” he said. “We have to figure out how to do this every single minute for every single takt of every single day.”

Small manufacturers might have an advantage in implementing lean manufacturing principles, McDonnell said. They have fewer obstacles and layers of hierarchy to work through.

“I’ve done this a lot more with small companies than big,” he said. “There’s no question that it’s doable and quicker and faster.”

As an example of the value of lean manufacturing, McDonnell showed a piston pin created for locomotives built by GE’s transportation division.

Producing the pin before lean manufacturing costs the company $107 per pin. The best quote for the same pin from China was $59. After implementing “kaizen” — a waste-reduction, continuous improvement philosophy that’s the foundation for lean manufacturing — GE produced the pin for $69.

“And they’ve got their eye on another $10,” McDonnell said.

McDonnell said the recession has given American manufacturers an opportunity to adopt lean manufacturing not as a gimmick but as a way of competing in the world economy. He said having fewer locomotives carrying freight gave the company time to refine some of its processes and speed up its production ability, though the goal of a 10-day production cycle remains elusive in Erie.

“Our fate doesn’t have to be written; we can win,” McDonnell said. “There’s certainly things we’re not changing, and it’s important to recognize that. Hold on to your principles.”