Wednesday, June 1, 2005
Girding for the Fight
To boost revenue and bolster its competitive position, Sikorsky is streamlining its production and manufacturing processes and practices.
Faced with growing competition from European manufacturers and demands from customers for aircraft that are less costly to fly and easier to maintain, Sikorsky Aircraft is revamping operations to squeeze greater efficiency from its own manufacturing and those of suppliers.
Like other major U.S. helicopter makers, such as Bell and Boeing, the Stratford, Conn. company lags much of the aerospace industry in embracing "lean manufacturing" concepts and advanced quality-improvement initiatives. But like its counterparts, Sikorsky is demonstrating its commitment to such changes by essentially betting its future on their successful implementation.
The U.S. Army this year, for instance, decided to abandon a plan to have UH-60A and L Black Hawks remanufactured to the new UH-60M configuration in favor of acquiring nearly all new-build -60Ms. The service made that move in part because Sikorsky persuaded Army officials that it could build the new aircraft for nearly the same price of remanufacturing the old ones.
As a result of that change, Sikorsky will go from building 70-80 Black Hawks this year to producing more than 200 next year and a half. Col. Cory Mahanna, the Army utility helicopter program manager who oversees procurement of Black Hawks not only for that service but the U.S. Navy, other U.S. agencies and foreign customers, said he is impressed with the changes at Sikorsky to date. (At the same time, Sikorsky will be delivering about 30 S-76s a year and spooling up production of S-92 for civil and military customers. In early May, Sikorsky announced it had won a contract to provide three S-92s to fly the president of South Korea. Those aircraft are slated for delivery starting in 2007.) However, Mahanna said, the company must carry through on plans to transform its operations. "It's critical that they achieve those improvements," he said.
Sikorsky has made a similar commitment to Wall Street, stating its intention to double the level of 2003's revenue by 2008. That will require a combination of greater sales across the board and higher efficiency from its production efforts.
Sikorsky officials maintain they are enlisting everyone in the effort to improve. The company has committed that it will not lay off any workers as a result of the changes, instead vowing to retrain and redeploy those displaced from current jobs. By the end of the first quarter of this year, it had retrained and redeployed about 300 workers, company officials said. It plans to do so for another 175-200 through the first quarter of 2006.
Sikorsky also has set up an Achieving Competitive Excellence center in its Stratford plan in which, company officials said, any employee can review the objectives, the steps planned to achieve them and the progress to date in implementing those steps.
"We're shifting things from how we did them in the past to how do we compete in the 21st century," said David Galuska, Sikorsky's vice president of operations.
The foundation of that change, he and others said, is Achieving Competitive Excellence, the quality-improvement program that United Technologies Corp. Chairman and CEO David George has established as the standard for Sikorsky and UTC's other subsidiaries.
"Customers define our competitive excellence when they decide to buy our products and services or those of a competitor's," the program's 2002 mission statement states. "Similarly, investors define our competitive excellence when they choose to invest in us or in another company. Only by offering superior value to both customers and investors will our company continue to grow and prosper. Therefore, our quest for competitive excellence has no end."
The program is United Technologies' proprietary initiative to produce world-class quality through a "relentless focus on increasing efficiency and reducing waste," according to the parent company. It is built on three elements.
The first is the teachings of United Technologies' Japanese advisor on quality methodologies, Yuzuru Ito, which managers learn in week-long courses at the internal "Ito University" conducted continuously at each business unit.
The second is a system designed to help the organization identify and solve problems, improve processes and assist with strategic thinking.
The third is "the competence, commitment and involvement of the entire organization," according to the parent.
The initiative is implemented through small groups of employees who are trained and empowered to implement the standard processes across the company. By passing rigorous, data-driven assessments by internal auditors, employee groups, called cells, progress through increasingly stringent levels of certification from Achieving Competitive Excellence, or Ace, bronze to silver, then to gold.
George holds up as benchmarks his United Technologies units and employees within the improved performance of cells that have achieved gold status. As an example, the company cites Pratt & Whitney's Turbine Overhaul Services in Singapore, which logged a 102 percent increase in operating profit after being certified as an Ace gold cell.
Sikorsky has set a goal of having all manufacturing cells certified at Ace gold level by the end of 2006. Of 45 cells in its manufacturing operation, about seven were gold cells by the end of the first quarter of this year. Galuska said 15 more were expected to be gold-certified by year's end.
He said Sikorsky has its own success stories, citing the case of the cell that manufactures spindle/sleeve assemblies for rotor blades on H-53E aircraft. Two years ago, the cell was producing 19 assemblies a month and each spindle took 170 days to manufacture. The problem is that customer demand for the part was 200 a month.
Sikorsky's first foray into lean-manufacturing improvements boosted the cell's output, but only to 39 assemblies a month. Last August, the company took the cell off line. The cell's employees had all the cell's machinery and infrastructure removed and redesigned its placement around a more efficient work-flow scheme. The cell started operation 45 days later with a "flow time" required to produce a spindle/sleeve assembly of only 23 days and a production rate of 200 assemblies a month. "So in the days we took the cell off line," Galuska said, "we didn't miss a single delivery."
Sikorsky also is reconsidering how it builds and assembles aircraft. It is focusing on core technologies and processes--those things its workers do better than anyone else. The objective is to maximize the efficiency of aircraft production, for the benefit of customers as well as Sikorsky.
Operations that don't fit that category of core technologies and processes will be farmed out into a "strategic sourcing" program. One activity that didn't fit is airframe production, so that work has been outsourced to Vought in Dallas, which will make the cabin structure for Black Hawks, and Kaman in Jacksonville, Fla., which will make the UH-60 cockpit structure. Galuska said Sikorsky also is looking at competitively bidding avionics for its aircraft. "We're looking at an informal plan to finish strategic sourcing by the first quarter of 2006."
The company is focusing on three things as core competencies: one, the manufacture and assembly of dynamic systems; two, the manufacture of rotor blades, and three, systems and parts integration, flight testing and acceptance of aircraft. "If it's not that, we're strategically sourcing it," Galuska noted.
Sikorsky also aims to present a more efficient and professional image to customers. It has divided its plant into Military Aircraft and Commercial Aircraft Centers, the latter having been crafted from what had been a parts warehouse across from the aircraft production lines.
In the new Commercial Aircraft Center, all S-76 and S-92 civil helicopters will be assembled. According to the company, the 14,000-sq.-ft. commercial center is tangible evidence of its commitment to lean manufacturing and Achieving Competitive Excellence programs. The company in late March was still working to configure its S-92 final assembly line, which had just been relocated to that center from Sikorsky's Bridgeport, Conn. plant.
Likewise, the military aircraft production area has undergone much change. Sikorsky's production plans for the Black Hawk called for two parallel lines, each with eight "build" positions at which particular sets of assembly tasks were performed. But the layout of the plant floor permitted only seven positions, so one spot in each line had to serve double duty. That's an inefficient set-up and completely counter to lean-manufacturing principles. Workers on the line redesigned the area and the work flow through. The new set-up allows for three parallel production lines, each with eight build positions.
That set-up is scheduled to go into operation by the end of this month.
Galuska said that change illustrated the key challenge before Sikorsky: "We have to transform ourselves first before we can transform the product and service we deliver to customers."