The secret of success for Alexandria Extrusion Company lies in its radical
approach to the organization of production, as company President Tom
Schabel tells Sarah Bower
Alexandria Extrusion Company (AEC) operates in a very tough marketplace.
Tom Schabel estimates that there are approximately 200 rival aluminum
extruders in the US, of which his company is in direct competition with
20 to 25. Alexandria Extrusion Company also competes with many companies
which buy in and machine extrusions. “Not as many as there are
convenience stores,” he comments, “but it’s darn close.” He
is not, however, a man to feel threatened by this. Other manufacturers
may complain of cheap imports from Asia; AEC has been exporting there
successfully for 15 years and was once named Minnesota Exporter of the
Year.
What, I asked, lies at the root of his assertion that he sees the future “getting
rosier”? His reply focuses on two key components of any business—its
customers and its workforce. Founded in 1966, Alexandria Extrusion Company
has a tradition of serving a broad market base, with customers drawn
from medical equipment manufacturers, makers of power tools, electronics,
office equipment, and recreational products such as parts for boat manufacturers. “ We
still have significant, different customer bases that we serve, and that
allows us to weather some of the economic storms as well as to fully
utilize our equipment and our people,” Schabel explains. “We’re
a contract manufacturer; we have no product of our own, so our future
is totally dependent on working with our customers, helping them design
product that’s more cost effective, has a greater usage for their
market, and higher aesthetics... Our approach is to focus on particular
markets, to research those markets, understand where they’re headed,
and where their problems are...and attempt to come up with solutions.” The
dominant markets are currently medical products and power tools, but “we
typically say we don’t want any market to be more than 30 percent
of our entire revenue stream, and at this point in time there’s
probably no market that’s more than 20 percent.”
As a result of its research, Alexandria Extrusion Company has focused
on reducing lead times. “Our driving philosophy is to reduce lead
time on any process, whether it’s an estimate, an accounts payable
calculation, or manufacturing product,” Schabel says. “First
to market may be very important to customers. For every week they can
take out of their design cycle, they may save thousands of dollars.” AEC’s
engineers have developed a unique spreadsheet formula which enables customers
to make a preliminary estimate of the cost of a new product early in
the design stage, before even beginning to discuss their design with
the company. The chief engineer of one medical equipment manufacturer
with which AEC does business has likened the system to having an additional
engineer on his staff, and estimates that his design cycle has been reduced
by half.
Once a design goes into production, Alexandria Extrusion Company has
adopted a system of cellular manufacturing to keep up the pressure on
lead times. Beginning five or six years ago, Schabel explains, “the
first cell we put in was our extrusion process. It’s a very large
piece of equipment requiring staffing by anything from three to seven
people. Each one of those crews owns a particular customer base...those
are their customers, they’re the experts on the way those products
would be manufactured and they control the process from setup through
packaging and sending out to the customer. The intention is, within a
cell, to give them maximum exposure and flexibility so that you minimize
the time that product or that process has to be handed off. Every time
we hand it off, we compromise control and effectiveness.” The cellular
approach has been so successful it has also been extended to the administrative
area, combining customer service, production control, engineering, and
sales personnel in single cells focused on a particular customer base.
In some cases, lead times have been reduced by as much as 90 percent.
Alexandria Extrusion Company is implementing Quick Response Manufacturing
with the cooperation of the University of Wisconsin. “Alexandria
Technical College, which is one of the top ten schools of its type in
the country, has helped facilitate these changes,” says Schabel.
Any initial workforce resistance is overcome by means of a thorough training
program. “Going from a traditional environment to this requires
change,” Schabel explains. “Some people embrace it and some
people run from it...we’ve taken a great deal of time to educate
and communicate why the change is necessary, have customers come in and
talk about the value to them.” All participation in cells is voluntary,
but Schabel is full of praise for the workforce. “Our tag line
is, ‘People Making a Difference.’ We’ve got a trained
workforce from a small community that really put their heart and soul
into what they’re doing.”
No workforce or system, however, has any worth to a company or its customers
unless the quality of output it produces is of the highest. In this area
too, Alexandria Extrusion Company enjoys a culture of striving to be
best. “We have a continuous improvement mentality,” says
Schabel. “We were one of the first aluminum extruders in the US
to get ISO 9000 registration. We were the first to go to ISO 9001:2000.
That tool continues to make us look at what we do and why we do it.” The
company also utilizes the Baldridge quality standard, and this has twice
won it the Minnesota Quality Award. Quality is also significant in relation
to working conditions. As Schabel explains, it is company policy to consider
its 280 employees as “ internal customers,” entitled to “purchase” the
best possible working conditions from their employer. This has led to
the pursuit of “an aggressive safety improvement program,” which
won AEC the MNSTAR Award for Safety 2003, an award previously held by
only 11 Minnesota companies. Alexandria Extrusion Company has a long
and distinguished pedigree and a positive, creative way of looking forward
to the future. As president Tom Schabel says, “we do a lot of groundwork
and we break new ground every day.” |
