Flexibility key to manufacturers’ success

WITH around 50% of the recreational vehicle (RV) market in Australia, Jayco has achieved what many manufacturers can only dream of.

With all its RVs designed and built in Australia, Chris Ryan, Jayco's production manager, says one of the company's key reasons for success is its flexibility and its ability to react quickly to the market.

"Bringing a product from concept to the market place promptly is a key area for us, and always has been.

"Over the years, as we have grown, we have maintained our flexibility. We haven't got the bureaucracy that many similar size companies have.

"It means we can make decisions and make changes quickly. We pride ourselves in being a dynamic company," Ryan said.

Since commencing in 1975, Jayco has built over 120,000 RVs and is one of Dandenong's largest employers with around 800 employees.

"When we moved into this new factory, which was a greenfields site back in 2007, we designed our five production lines with the ability to ramp up and down quickly, by adding or taking away stages.

"For example, we can go from producing 55 camper trailers a week to 65 in less than a week without significant changes to the layouts," Ryan told Manufacturers' Monthly.

While not heavy investors in automation, he says the company instead looks at best practice within the industry from around the world.

"I have just returned from Germany where I was looking at new machinery and more importantly how manufacturers there produce their vehicles.

"How they build their furniture is one key area of difference I noted, with a focus on the production line being a customer of that department.

"Currently we produce our furniture components and send them to the cabinet shops, instead we will now kit up in the four sections and present complete units to the production line, so that everything needed to build a piece of furniture is kitted up on the one trolley. 

"That comes down to nesting and a change in philosophy as far as our machinery is concerned," he said.

Ryan said the company is constantly looking for ways to become more efficient and reduce the labour content of the production process where it can.

"That does not mean eliminating employees. It means redeploying that labour on more developmental projects.

"We are presently looking at our engineering and our transition from model to model, with replenishment also high on our agenda.

"For example, we are looking at increasing our use of Kanban in the production process," he said.

Ryan explained that the company does not build stock units.

"Instead we build to order in batches, but we have reduced our batch sizes from 60 or 70 down to 25 and will probably reduce that even further in time.

"It's a case of gently, gently, in small increments, rather than go through a massive change all at once."

To improve efficiency, Ryan says the company is increasingly using 3D CAD in its development department and has bolstered its resources in its R&D department regarding labour and equipment.

When it comes to options, Ryan says caravans are very different to cars in that they a person's home away from home and many want to put their own customisation and tweaks on them.

"Feedback from our dealers and our end customers highlighted the need for flexibility in design to meet customers individual requirements. This moved us to use modules so customers can design their own caravan, within certain limitations.

"We looked at our most common requests and designed modules to accommodate those requests. This move has streamlined our manufacturing process, and we no longer produce custom vans as such.

"As a mass manufacturer that was one way we could compete in the market," Ryan said.

"We have customers that are 5th/6th time Jayco owners and we are able to accommodate most requests within our boundaries. This is a good indication that have the mix about right."

If Ryan had a magic wand, he would like to see the government do more in terms of support for innovation and easier access to government funding.

"It is very difficult to find out where there is money available for grants.

"We also struggle with finding training courses in the area to develop people within our company; lean manufacturing for example," Ryan said.

Bucking the trend

Another Australian manufacturer that is bucking the trend is high integrity steel castings manufacturer Keech Australia who over the past three years has doubled turnover and increased skilled employment. And like Ryan, Keech's CEO Herbert Hermens says flexibility plays a major role in his company's success. 

"Our ability to adapt quickly and to focus on our customers are the key reasons for our on-going success. 

"Over the past three years we have been transforming the company from a traditional foundry to a global provider of innovation, services and products – all from our base in Bendigo, Victoria," said Hermens. 

"What sets us apart is our commitment to actively invest in this business, and therefore in our regional community. In the area of process efficiency and sustainability alone, we are investing millions of dollars to ensure this business will be sustainable into the future." 

"We have more or less finished our first tranch of our investment which was about $3.5m into our second foundry, and we are just about to start work on our major foundry which is a $10m plus investment. All up it will be an $14m investment over the next few years," he said. 

Hermens admits he still suffers sleepless nights over the investment, especially as demand from the mining sector appears to have slowed a bit over the past month or so, but he remains optomistic. 

"While the slight fall in the Australian dollar against the US dollar has helped a bit, it remains a challenge when it is sitting anywhere over a dollar, however we are responding to that by what we are doing. 

"In recent times we have launched a new innovative cast lip, which is the front part of those huge buckets used on mine sites around the world. They weigh around the 10 to 12 tonne mark.

"It has been an enormous undertaking by the company, with a lot of R&D and is something we are truly proud of  
Hermens explained that when manufacturing the lips it is important to get the design and the metal flow right "with everything happening at once".

"We have taken our experience from all around the world and adopted it into this development program, and the product is getting very good feedback from the market. 

"As we are investing around 7.5% of our revenue on R&D, these are fairly heavy commitments," Hermens told Manufacturers' Monthly

But rather than investing heavily in world-wide patents to protect the company's IP, Hermens relies on being the first mover, 'develop it quickly and get it on the market' is his motto. 

"Sure you should get as much IP protection as you can, but the reality is a couple of minor changes to the product is all that is needed (to get around a patent). A company's ability to innovate around you is huge," he said.

Hermens says China is still very relaxed about copyright, "it's in their culture". 

"They believe that physical goods belong to people, but not theoretical goods. A patent per se does not exist in their minds," he said.  

"For me, the challenge in Australia is in developing production processes that maximise the efficiency of the capital employed. 

"At present we have about 160 employees, but that can jump up to over 200 as there is some seasonality involved. 

"We have a heavy investment in capital and to have these investments penalised arbitrarily for working outside some notional set of hours, harks back 200 years and is not relevant today.

"It does not mean paying people less, it just means making sure you pay people for the value of their contribution."

Despite Hermens call for a more flexible and efficient approach to resource allocation, he remains very optomistic about the company's future.

"Clearly exporting is an opportunity for us, even with the present exchange rate. We have a unique product, and are a solid commited company that is building in Australia.

"We are very focused on what we are doing and confident of our future, despite the ups and downs of this market," Hermens said.