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2011

For the past three years, manufacturing must have seemed like a high-stakes poker game to some people. It also seems the game has been played only two ways—fold, or go all in.

There is a third way to play, of course. It takes a lot more work and a lot more patience, and it won’t always yield positive results on every play, but it is a surer way to build your chips. You have to place your bets in the right places, at the right moments.

Manufacturers around the U.S. and around the world are succeeding in manufacturing because they have placed their bets on the right aspects of their business. They cannot control what other players have in their hands. They played the cards they are dealt and seized the opportunity to improve when it came along.

Our 2011 Top Plant winner, NACCO Materials Handling Group of Berea, Ky., is an outstanding example of placing your bets in the right place at the right time. NACCO bet on its people to help grow the organization.

NACCO manufactures lift trucks for Hyster and Yale, and the lift truck business is a good bellwether for what’s going on in the rest of manufacturing. That business improved as other manufacturing sec-tors began to perk up, and NACCO’s Berea facility increased its workforce by 40% in 2011.

NACCO did more than just add bodies, however. Understanding that a flexible workforce would

allow the company to continue to grow and change, it also placed a big bet on extensive worker training.

Co-op and internship programs with Berea College and Eastern Kentucky University give students a chance to

see what a career at NACCO can be like. That also has helped facilitate growth.

Rather than just sit back and pro-tect the chips it had, NACCO Materials Han-

dling Group placed its bets on its people, and grew as a result. At a time when some seem reluctant to bet on manufacturing, NACCO Materials Handling Group is a great example of how it can be a winning strategy.

– Bob Vavra, Content Manager

2 • December 2011 plant engineering

Building a workforce helps NACCO Materials Handling Group build profits—and world-class lift trucks.

Hire and higherBy Jack Smith

plant engineering December 2011 • 3

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While some businesses closed their doors during what some economists described as “the worst economic crisis since the Depression,” those that remained faced immense challenges over the past three years.

One manufacturer that not only survived the recession but became stronger in the process is NACCO Materials Handling Group Inc.’s (NMHG) Berea, Ky., plant, the 2011 Plant Engineering Top Plant winner. NMHG designs, engineers, manufactures, sells, and services a comprehensive line of lift trucks and aftermarket parts marketed globally under the Hyster and Yale brands.

“It’s a great honor to win the Top Plant award,” said Tim White, plant manager at NMHG’s Berea plant, who gives the credit to the workforce at the plant. “I would put this workforce up against any workforce, anywhere. We’ve weathered a very rough storm. We were lockstep with our workforce going through it. It wasn’t always good news, but we came out of it and we’re stronger because of it and we’re seeing results.”

John Gardiner, vice president, Americas Manufac-turing at NACCO Materials Handling Group, Inc., understands what NMHG can gain from looking at where it is and where it needs to go on its continuous improvement journey. “I think the Berea team needs to reflect on what they have achieved and celebrate this mile marker and energize themselves for the future,” Gardiner said.

Although the recession was rough for many manufacturers, NMHG took advantage of the opportunity to get set for the recovery. “We used the slow time to continue to drive improvement,” said Gardiner. “Those who are ready when (the economy) comes back will be the winners.”

And winners they are.

Putting people back to workNearly every manufacturer felt the impact of the recession,

which forced most companies to make production and workforce cuts. The Berea plant reduced its production schedule from two

shifts to one and experienced multiple workforce reductions, according to White.

But NMHG posit ioned i tself to respond to the economic rebound. During the sluggish economy, the company

explored its options for the future. “When the recession hit, we started making plans for the recovery,” White

said.As the economy started to recover, NMHG

saw increasing demand for its products—enough demand to justify rebuilding its workforce. The number of team members at the Berea plant increased from 502 in 2009 to 722 in 2010—more than 30%.

Hiring was gradual. “We looked for market stability,” said White. “We were conservative with

bringing people on. As we saw stability, we brought people back to work.”

White estimates that the NMHG facility in Berea has slightly more team members now than before the recession. Within the past year, the plant also resumed second-shift operations.

“We called back some of the people who had worked for us previously,” said Steve Lawson, human resources manager at the Berea plant. “And we got a vast majority of them back—even though some were working at other places. Our work culture

Neil Simpson adds a part to the drive train assembly at NMHG. As the economy improved, the company gradually brought back work-ers and expanded training.

William Miller works on the hood and seat installation for a lift truck at the NACCO Materials Handling group plant in Berea, Ky.

4 • December 2011 plant engineering

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allows us to be the employer-of-choice in the area. We don’t have to seek very hard to get applicants.”

White agrees. “When people say they work at NMHG, people know this is a good spot to work,” he said. “It’s somewhere that you want to be, not somewhere that you have to be.”

Employee training gets a liftIn addition to refocusing its staffing approach, NMHG also

prepared for the economic recovery in other ways—including the launch of eight new product lines. “We implemented a manufacturing execution system (MES),” said Gardiner. “We introduced new products. We have design changes coming through on our products on a regular basis.”

One of the most significant ways NMHG drove its continuous improvement during the downturn is training. “We recognized that if our projections were going to come true, we needed to change the way we train people,” said White.

NMHG increased training time from 10 hours to 80 hours per person, which must be completed before performing work in the plant. The new training program was already in place when the company began rehiring. “The first people to come back were previous employees,” White said. “Even though they worked here before, they went back through the training.”

In addition to basic employee job requirements, the training emphasizes safety, quality, delivery, cost, morale, and environ-ment. “We ensure that all production employees are capable of performing their assigned jobs,” said Rodney Wilson, engineer-ing services manager at NMHG. “We start the training with a qualified peer and then have their work reviewed by a certified trainer from the human resources department.”

“We had people who would volunteer to go to second shift to help train new people coming in,” Gardiner said. “We have changed a lot, and we had to bring those people back up to speed. There were a lot of positives. People who left and came back saw the improvements.”

Training provides job-satisfaction benefits as well. Darnell Hill, one of NMHG’s trainers, has worked at

the Berea plant for 34 years. The aspect that Hill likes most about his job is: “I get to interact with people while we are training. I get to learn their views on training and learning.”

Lowering environmental impact lowers energy costsNMHG developed an energy committee to discover ways to

lower the company’s environmental footprint. As manufacturing engineering services manager, Wilson leads the energy commit-tee, which is comprised of leadership members from all of the company’s North American locations, making the team both local and divisional.

The energy committee’s target when it launched in October 2008 was to reduce the company’s utility usage (electric, water, natural gas, and landfill) by 10% year over year. NMHG exceeded its initial goal by reducing its utility usage 12.2% in 2009. But it didn’t stop there. In 2010, NMHG beat its 5% target by reducing usage 8.5%. And in 2011, the company is well above the 5% target with an 11% reduction so far.

NMHG discovered that while reducing its environmental impact, the company also reduced its energy costs. “When the energy committee started the audit program, we targeted some of the low-hanging fruit,” said Wilson. “We looked at simple ways to reduce energy usage such as turning off lights, monitors, fans, welding machines, and other types of equipment that could be turned off when not in use.”

Depending on the specific industry, air compressors can account

Christie Gross tightens a part on the 1-3 ton main assembly line. Company officials said they wanted to be prepared for when the economy rebounded.

NMHG has its own skilled welders on site. “When people say they work at NMHG, people know this is a good spot to work,” said Tim White, plant manager at NMHG’s Berea, Ky., plant.

plant engineering December 2011 • 5

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for most of a manufacturing facility’s electricity usage. NMHG shuts down its nonessential air compressors dur-ing off shifts and weekends as part of its energy reduction program.

Lighting is another area where energy use can be reduced. NMHG reduced office and conference room lighting by 50% and parking area lighting by 75% in 2009. “For each fixture that had four fluorescent lamps, we reduced the num-ber to two,” Wilson said. “We actually disconnected fixtures in some of the office areas. We reduced the number of light fixtures per pole from four to one in our parking lot, while maintaining adequate lighting levels.”

The Berea plant installed motion sensors to control the lighting in offices, conference rooms, and restrooms. “This year, we launched a program to replace around 1,100 metal-halide lighting fixtures with T8 fluorescent fixtures and lamps,” said Wilson. “We have at least a 20% increase in lumen output in areas where we replaced the metal halides with fluo-rescent T8s. From day one, metal halide lamps start to degrade. Around three or four weeks into a brand new metal halide, there’s probably 15% to 20% reduction in output.”

This year, the Berea plant worked with the Madison County Industrial Board to host an energy summit. School systems, banks, hospitals, and other local peers attended the summit to hear how NMHG reduced its energy usage and environmental impact by taking some very small actions.

Wilson said the energy summit was very successful. “We were able to work with some of our local peers who had gone

through both failures and successes. In fact, the lighting that we’re changing out now is a result of the summit.”

The Berea plant has made other significant achievements in reducing its environmental footprint, including:

n Standardizing and monitoring office temperatures at 68 F during the winter and 74 F during the summer

n Working with its electrical energy provider to develop a better understanding of peak electricity usage in order to appropriately

schedule load sheddingn Implementing a recycling program across

the division.Recyclables are collected on-site and trans-

ferred daily from point-of-use containers to a bulk storage hopper for periodic transfer to a recycling center. Recycled materials include:

n Sheet plasticn Steel

n Cardboardn Woodn Aluminum cansn Glass bottlesn Plastic containersn Office paper.

Neighborhoods resolve issues, problemsThe Berea plant created what it calls the neighborhood process

in response to a corporate quality survey that indicated opportuni-ties for better communication and engagement. “We wanted to increase the engagement on the shop floor,” White said. “There are hundreds of great ideas out there.”

“We communicated the results of the survey and talked about the items they addressed,” said Lawson. “We held focus groups on how to address problems. People saw the need for change and created a process and set of tools by which they can com-municate issues, concerns, and challenges. The focus groups were very positive; the result of those meetings became the neighborhood process.”

The neighborhood process—a first for NMHG—provides the opportunity for team members to meet with their support teams each week in a supervisor-led meeting. Each department

Ralph Arvin works on the hood assembly at NMHG. Beyond its hiring and training success, NMHG also has made energy and environmental issues a core competency at the plant.

Workers in the paint area see a lot of the iconic yellow paint of the Hyster and Yale lift trucks manufactured at NMHG.

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or major functional area is a neighborhood.Through the neighborhood process, each team

member has the opportunity to be heard and receive information about plant operations. Teams iden-tify improvement areas, create action plans, and determine when items must be completed. The top eight issues are prioritized and tracked.

The neighborhood process has proven to be a valu-able asset for the Berea plant as well as for all of NMHG. Lawson said the plant has implemented around 1,100 items. Nearly 700 of them relate to safety and quality, according to White.

The neighborhood process is also good for employee morale. Steve Goosey, an assembler at the Berea plant, has been with NMHG only about a year. What he likes most about working for the company is the way it cares about its people. “The neighborhood process shows us that management is open to employee ideas.”

Wilson said prioritization and accountability are other signifi-cant results of the neighborhood process. “We choose the first eight things we want to work on. Everyone knows that’s what we need to focus on first. We’re holding ourselves accountable to knock those things off the board.”

White said the only person who can take something off the board or consider it closed is the person who put it on.

The underlying glue that holds this process together is com-munication. White said people can bring up issues and will get feedback and status on them. “Team members know that if issues are brought up using the neighborhood process, they will

be taken seriously. It has streamlined our communi-cation as well as the work and support functions.”

“Knowing where an issue is in the process is half the battle,” said Lawson. “This keeps people engaged and believing in the process.”

Driving operations, continuous improvementThe Berea plant holds a kickoff meeting at the

start of every production day to develop plans and identify potential challenges. Key performance indicators are reported to evaluate first-hour performance and escalate potential production issues.

Daily production is executed according to demand flow tech-nology (DFT) manufacturing principles, which, according to White, is the core of the Berea plant’s manufacturing system. With DFT, customer demand drives manufacturing production schedul-ing and operations based on demand pull rather than forecasted schedule push principles. DFT aligns business and customer goals, and is simple, repeatable, effective, and customer-centric.

NMHG believes that DFT manufacturing principles and 5s (sort, straighten, shine, standardize, sustain) provide the overall support for waste elimination. “In my opinion, 5s is the bedrock of any production system,” said White. “Where we have the most traction is around 5s activities.”

Dan Campbell is a business analyst lead at the Berea plant. Campbell developed E-Schedule, an electronic scheduling system that generates production schedules, details product sequences, maintains inventory integrity, and performs labor reporting at key stages in the manufacturing process.

The E-Schedule system ties the manufacturing operations together according to sequence. It improves operational efficiency by eliminating manual work schedule creation and manipulation. “It’s the interface to the external schedule,” said White. “It grabs

Neil Simpson marries the frame of a lift truck to the drive train. A culture of continuous improvement has been a hallmark of the efforts in Berea.

plant engineering December 2011 • 7

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customer orders from our AS-400 system, coordinates them with the proper bills of materials, and determines the indi-vidual piece-parts we need to fabricate for the day’s schedule.”

E-Schedule isn’t the only e-manufacturing tool developed at the Berea plant. Campbell also developed the in-house MES, which is based on Windows SQL, .NET, and Visual Basic. The MES tracks activities and resources, links admin-istration to the shop floor, and integrates with other systems in purchasing, shipping/receiving, inventory control, main-tenance, and scheduling.

Because the MES is linked to E-Schedule, it triggers and controls workflow by providing detailed unit-specific build information to assembly operators.

Maintaining equipment, production uptimeThe Berea plant performs preventive maintenance (PM)

to ensure production uptime. PM tasks not performed by the end of the month are rolled into the next month and become the highest priority. “Our goal is a 95% PM completion rate each month,” said Wilson. “With the actions we’ve taken, we’re continually in the 95% to 99% range.”

Equipment operators are empowered to deal with easily resolved issues, allowing maintenance personnel to spend more time on PM activities. This operator empowerment came about as a result of the troubleshooting guides the Berea plant developed for its major equipment. Trouble-shooting guides are decision trees that outline common issues, their causes, and suggested actions or solutions.

Anyone can generate work orders when issues arise that require maintenance intervention. However, they are typi-cally initiated by supervision via a web-based CMMS which tracks the work orders and maintains PM schedules.

Uptime percentage is reported during the daily kickoff meetings. Issues are tracked through the neighborhood meet-ings. Wilson said the troubleshooting guides have resulted in more uptime because operators can react to situations immediately instead of having to wait for a maintenance team.

ConclusionWhen the economy finally began to recover, NMHG

was able to hire, rehire, and train employees. It reduced its environmental impact and introduced new lift truck models. Because the company used the downturn to prepare for the rebound, the Berea plant is lifting its continuous improve-ment efforts even higher.

At NMHG’s Berea facility, continuous improvement is driven at all levels of the organization. “We have to continue to improve to be the best that we can be,” Gardiner said. “Winning the Top Plant award is a mile marker along the road, and the journey is long.”

Jack Smith is president of BIT Writing and Editing Services and a former Plant Engineering editor.

2011

Building lift trucks in BereaNMHG manufactures both Hyster and Yale

lift trucks. Although there are similarities, each brand offers different options and features that accommodate different applications.

Because DFT enables one-piece workflow, NMHG can mix different models on the same line instead of making lift trucks in batches.

E-Schedule defines workflow by dividing incoming orders into requirements for the various components manufactured at the Berea plant. From there, the process of building lift trucks begins.

Initial cutting and burning operations are done in a com-mon fabrication area. Although this is a common area, it is logically grouped according to families of parts.

These components are moved into the welding booths where robots weld the major lift truck components such as masts, overhead guards, and frames. Although robots perform most of the welding, some manual welding tasks are required as well.

Welded components and subassemblies are then paint-ed. After painting, mast components go into the mast assem-bly area. The remaining painted components are placed on the appropriate assembly line.

Lifting capacities determine lift truck sizes. NMHG catego-rizes these sizes into three ranges for assembly purposes. Three separate lines handle lift truck assembly according to these ranges.

“When the truck is put online, it triggers various feeder cells and subassemblies,” White said. “Then we start assem-bling the truck. We prep the frame; put in the power train; and put on the overhead guards, the seat, and the covers. We put each lift truck through various quality checks and test a variety of components. From here we apply the final decals, including the last one that states ‘Made with pride in Berea, Kentucky.’”

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