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Manufacturing News
April 16, 2003 Vol. 10, No. 8

1327 WordsPage 5

The Inside Story Of Wiremold's Success: How An Aging Company Turned Itself Around

Better Thinking, Better Results: Using the Power of Lean As a Total Business Solution By Bob Emiliani with David Stec, Lawrence Grasso and James Stodder. The Center for Lean Business Management, Kensington, Conn.; 305 pages; $31.50 at Amazon.

"Better Thinking, Better Results" is a powerful story of how a failing traditional American manufacturing company used production philosophies, principles, practices and policies developed by Toyota to become a "lean" enterprise, a firm successful by every financial and human measure. The subject company is Wiremold, a major supplier of electrical and digital distribution wiring, cabling and equipment. Principal author Bob Emiliani brings us the voices of the leaders who between 1990 and 1999 took Wiremold from a firm losing money and customers and on its way out of business, to a vibrant industry leader efficiently delivering customer value while making a lot of money. Emiliani and his co-authors assembled dozens of hours of recollections by the principal Wiremold executives and added context and explanation to give us a fascinating tapestry of this business transformation.

This book is more than a good story. It teaches. While there are a hundred books on what a lean manufacturing company looks like, the nuts and bolts of how you turn a traditional business into a lean business is little reported. Art Byrne, Wiremold's CEO, spiritual leader, teacher and straw boss of the changeover, comes from a tradition of methods for changing industrial cultural that traces back to Japan and Tiichi Ohno. If you don't already know, Ohno was the guiding spirit and force behind the Toyota Production System. He was a hard taskmaster. Tales still circulate of his imperious teaching techniques and demeaning treatment of employees, trademarks of a style he defended as necessary to overcome comfortable habits of traditional manufacturing. Ohno's style of kaizen is known as "suzumura-style" or "scary style." The present president of Toyota, Mr. Fujio Cho, favors a softer approach known as "Cho-san-style," translated as "human style".

It is not surprising then that several of Ohno's disciples also left Toyota after Ohno's departure in 1978. Three of them, Mr. Yoshiki Iwata, Mr. Chihiro Nakao and Mr. Akira Takenaka, went on to form a company called Shingijutsu to continue in the master's footsteps. Shingijutsu consultants were active in the United States almost from its inception in 1987. Those three and other Ohno students who subsequently joined them have had an enormous impact on the styles of change masters in this country. They have had long relationships with Pratt & Whitney, Boeing and Danaher, among other firms. They teach by leading kaizen in the factories of their U.S. clients. Their methods shock Americans. They immediately move equipment and machines and throw out inventory to remedy waste. They are legend for impatience with people slow to accept change, famously calling them "concreteheads." But they leave deep, ultimately positive, impressions, ways of thinking and changes that stick.

Some converts in Shingijutsu's American clients have become well-known virtuosos of change to lean: Mike Joyce out of Pratt & Whitney, who became responsible for lean at Lockheed Martin; George Koenigsaecker out of Danaher, now a principal at Simpler Consulting taking on an ambitious transformation of the U.S. Army's maintenance facilities; Bob Emiliani himself out of Pratt & Whitney and now at Rensselaer; and Art Byrne out of Danaher, who took on the CEO job to turn around Wiremold. Altogether, this is a remarkable group of practitioners who have influenced a generation on how to implement lean production.

Emiliani is best when letting the Wiremold people tell their own story. In chapter 7, "Growth Through Acquisitions," we find an insightful financial story of the change required by lean as told by Orry Fiume, Byrne's financial man. It alone is worth the price of the book. Wiremold acquired 19 companies. In each case, Byrne would show up on the factory floor or in an office on the first day of Wiremold ownership and lead a kaizen activity to show serious and engaged intent to transform to lean. Fiume gives us a ten-year financial analysis for an acquired business transformed by Wiremold to a lean enterprise. He compares that to an analysis of the company had it continued with traditional business methods.

Those side-by-side comparisons make the most compelling case for lean production I have seen.

After five years, the traditional business returns only $33 million of the $80 million purchase price and is staggering under the burden of servicing the debt taken to make the acquisition, leaving little room for misstep. By contrast, through Wiremold's transformation, at the end of five years the company would have no debt, versus $47 million projected for the traditional business. Sales growth would be 10 percent to 12 percent compared to 4 percent for the traditional. It would have less than half the space; 64 percent higher operating income, 35 percent fewer people and 75 percent less inventory.

With the kinds of results reported here and elsewhere, no rational person can doubt the enormous financial benefits of applying the philosophy, principles and thought processes of lean to traditional businesses. Manufacturing & Technology News Editor Richard McCormack's new book "Lean Machines" has in-depth interviews with pioneers in industrial lean (including Byrne) who quote similar results.

There are two implications for you. If you are not earning profits exceeding the market return on capital equivalent to the market value of your business, you will either go out of business or be sold to recover the market price for more efficient use. If sold, you should hope for a lean buyer who will transform your business to one that can pay off the acquisition debt. A lean transformer is the more likely buyer; such firms can afford to pay more for businesses.

The authors are at their best telling the Wiremold story. I found them tedious when they strayed from the story line. Emiliani's repetitive flacking of his own published papers irritated. The introduction asserts that the book "is not theory." Yet in the chapter "Real Lean Vs. Imitation Lean," the authors promote their own theory of change under kaizen, which I found questionable and certainly not part of the Wiremold experience. This self-indulgent hypothesizing detracts from the book's credibility.

Regrettably, too, the authors' style is too black and white, damning all that is traditional and welcoming all that is lean. I would have liked to have read a more balanced critique of the Wiremold experience. The authors are unstintingly uncritical of Art Byrne and the Wiremold team. And never do they really tell us what goes on in a kaizen activity.

The book declares that the Toyota Production System is a management system. It is patently not. Certainly the philosophies and principles and thought processes for change can be applied in offices and other business venues outside manufacturing -- the book delivers a delightful example of doing kaizen on field reps' car trunks. But calling the Toyota Production System a management system inflicts more confusion on a business community that is still trying to figure out whether Six Sigma is a statistical method or a body of preferred management practices.

But these are minor annoyances. Although expensive at thirty to forty dollars for a book that looks like it was printed using a cheap Xerox machine, this book is worth your while. Your biggest cost for any book is the opportunity lost cost of your time to read it.

If you are a business leader, you can do few things of higher value for your time spent than to let yourself be taught by this engaging story of Wiremold and Art Byrne. "Better Thinking, Better Results" is the right title. Making a firm lean is not a physics problem; it is a thinking problem. If you want to think better about industrial efficiency, this book is a great place to start.

Oh, and be sure to read the chapter endnotes. Emiliani has them packed with lore about Toyota, lean and American virtuosos of change.

--Reviewer Fred Stahl can be reached at fredstahl@earthlink.net.


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