Aerospace Manufacturer $50mm Sales Revenue

An aerospace pioneer had been a significant part of the world's aerospace community for more than seventy years, having designed and built many of the world's most famous and unusual aircraft. The company was an industry leader, not only producing high performance aerial target systems, unmanned aerial reconnaissance vehicles (UAV's) and the subcontract assembly of airframe structure, but also in the development and manufacture of ordnance products and small jet turbine engines.

The aircraft industry in the United States had changed dramatically. Two major manufacturers, Boeing and Northrop-Grumman, had significant backlog and insufficient capacity to meet their current orders.  This gave this company an opportunity to become a major fabricator and assembler of commercial airframes. 

In order to pursue this opportunity, the company needed to to restructure its manufacturing operation to improve profitability.  To accomplish that the company needed to upgrade and expand its manufacturing capacity with modern, advanced-technology equipment.  A capital budget was submitted for new equipment, but the request was put on-hold pending an independent assessment of the need for the equipment, and the benefits it would bring to the company.  Rockford Consulting Group. was retained to perform that independent assessment. The objectives of this effort were to:

• Review the  manufacturing and fabrication equipment and assess the state of condition
• Determine if the existing equipment should be upgraded, and if so, with what?
• Estimate the effort and the benefits, and
• Determine how to proceed

We reviewed the age, condition and technology of the equipment, and discovered a major cause of poor utilization.  The average age of the 39 pieces reviewed was 29 years.  Over 50 percent of the equipment were in excess of 30 years old.   Because most of the equipment was unable to perform multiple operations, set-ups were frequent.  This was compounded by low quantities of component parts being manufactured. 
 


Older machines tended to breakdown more often due to excessive wear.  Downtimes were long because of machine breakdowns.  This also consumed plant capacity.  But since old machines tend to prevent substantial gains from occurring, rebuilding old equipment would not support a flexible and fast environment.  The old equipment was not capable of producing higher RPM's required for short cycle times.  The spindles simply would not turn fast enough. The effect of old equipment and equipment that was in poor condition can be seen in the chart below. 

The utilization of equipment identified averaged 45%.  We discovered that machine capacities were imbalanced. But more significant was certain pieces of equipment were under capacity, limiting the ability of the current equipment to meet year 1 and year 2 shop loading requirements, and forced the operation to outsource the overload at a higher cost.  The limited capacity also prevented the manufacturing operation from meeting year 1 sales projections without outsourcing the overloaded hours.

Of 39 machines evaluated, over 60 percent of the equipment were rated fair (5) to poor (1) condition.  Two machines were rated as (0) and needed to be scrapped.  One was a 1963 G&L 5-axis profile mill, that had 4 percent load hours and was being off-loaded to other equipment.  The second machine was a 16 year old Ekstrom Carlson Router.  This company no longer made these machines and parts were becoming unavailable.  We proposed to replace this machine in the capital plan with a (4) spindle 3 axis Shoda.

The NC machines required major expenditures to completely retrofit.  Cost estimates for these 11 machines would have been approximate $4 million of which $1 million would have gone to retrofit a 5-axis profile mill.  This cost expenditure was questionable and further analysis indicated a new machine could be purchased for $600 K .  Our revised plan was to retrofit 7 of these machine for a cost of $2,450 K.  This equated to approximately $1.5 million savings.



Most of the other pieces of equipment required maintenance to be performed in order to produce aerospace  piece parts to drawing specifications.  Major expenditures were required for the Knapp-Lee and Lindberg furnace for heat treat operations.  Another maintenance expense was for the Verson Europa Press to upgrade the bladder system design.

As we continued our evaluation, we discovered that total lead times were long.  For example, value-add time was low compared to the total time through the factory.  For a simple time and material order to pass through the factory from receipt to shipment, 28 days were typically consumed.  Yet 14-15 minutes of this time was actual consumed by spindles cutting metal from a component (value-add).  The remaining time parts were waiting for something to happen. The study revealed that the total of a fixed price contract extended from 26 to 54 weeks at the extreme.  This throughput time is indicative of a slow business process, presumably reflective of long lead times experienced in government contracting.