Case Studies

Structural Steel Fabricator

Situation

In an effort to drive them to profitability, the company had consolidated 2 adjacent plants into one plant with one management team. One plant produced structural steel for commercial buildings. The other plant fabricated and repaired components for the steel making industry. Neither plant was profitable before the consolidation and the pair was not profitable after the consolidation. Additionally, the supply of qualified welders and draftsmen was very tight in the nearby area. Lack of profitability along with lack of qualified workers to support growth was putting the future of this newly consolidated plant in jeopardy.

Solution

In an effort to control labor costs, previous management had gotten rid of all ‘non-value added’ personnel like fork lift operators and overhead crane operators. Also, all consumables, like welding wire, welding tips, and pliers, were locked in a cage to be issued only to a welder upon request. A quick analysis revealed that the percent of time welders spent actually welding steel was around 40%. 

That same analysis revealed that hiring lower priced fork lift operators and overhead crane operators along with welder trainees to retrieve consumables would increase that welding time to about 75%. 

To address the supply of draftsmen and welders, a consortium was formed by the company with the local technical college and several economic development and workforce development agencies. The company designed the training curriculum and the testing and approved the instructors. The technical college administered the training. The agencies provided additional funding that allowed the students to receive a stipend during training.  All successful graduates were guaranteed jobs with the company at a predetermined wage.

Impact

By filling the ‘non-value added’ positions, the plant nearly doubled its throughput with only a 10% increase in labor cost. The plant was profitable within 30 days.  The drafting and welding classes successfully turned out enough students to supply the company’s ongoing needs.