Line Transfers Help Maintain Focus On Core Competencies

Manufacturers today are fighting a constant battle to stay competitive without losing control of vital processes to offshore component vendors. Many of the advantages for a manufacturer to maintain its own captive foundry, fabricating, machining and painting facilities have all but disappeared. In many cases, outside resources now fill these needs more efficiently and cost effectively.

There is, however, a profitable alternative available to companies considering abandoning at-risk or unproductive manufacturing lines. Line transfers allow companies to concentrate on the part of the business they do best, leaving the old-style vertically integrated manufacturing model for a leaner process, while keeping jobs on-shore and still remaining competitive.

The process is more than a sub-contractor relationship, but rather it is a partnership resulting in higher profits for both parties. Benefits include lower part prices, elimination of high-cost labor, improved machine uptime, extended equipment life and lower capital costs.

One company specializing in line transfers is Flinchbaugh Engineering, Inc. (York, Pennsylvania). It acquires existing cells and, aided by engineering and production specialists, makes needed changes to keep the lines productive. Over the past 22 years, Flinchbaugh has engineered and implemented 11 major line moves from major OEMs.

According to company Sales Engineer Jeff Sterner, the approach is especially valuable for companies being squeezed by offshore competition. “Transferring the manufacturing to us allows a business to focus on its core competencies. Companies take advantage of everything from lower part prices to improved machine uptime, reduced labor and capital costs and bottom-line improvement,” he says.

Among businesses that have recently turned to the company is Mack Trucks (now Mack Volvo of Hagerstown, Maryland). With a post-acquisition reorganization, floor space was re-allocated to accommodate new engine production. As a result, there was insufficient room to manufacture valve lifters, a diesel engine component historically produced there.

After reviewing the options, it was agreed that Flinchbaugh would take over the line. With its lean processes and 24/7 capacity, the company has become the sole source for the new part, reducing labor costs significantly in the process.

AxleTech International (Oshkosh, Wisconsin), a maker of large axle housings, was downsizing and wished to get rid of its manufacturing operation in order to focus on assembly. Because Flinchbaugh already had equipment of the exact type used by AxleTech, transferring the Wisconsin company’s line to Pennsylvania permitted Flinchbaugh to efficiently meet increased demand, even as AxleTech physically downsized.

“We took its fixtures, its tooling, and its CNC programs—everything it had developed for that part—and transplanted it all here. We were able to meet its target price while improving its process,” Mr. Sterner says. He adds that Flinchbaugh is poised to acquire several new lines within the next 18 months.

According to Michael Lehman, company president, the line transfers that work best are those for manufacturing components that are then assembled into OEM equipment or final products. In 1985, Caterpillar (Peoria, Illinois) was the first company that transferred a line to Flinchbaugh. Since then, Flinchbaugh has managed line transfers for numerous other manufacturers, all of whom have realized significant cost reductions.

“If people knew about line transfers, they would realize how much more efficient and effective it would be for them to check out manufacturing options in their own backyard first,” Mr. Lehman asserts. It’s the off-shore versus on-shore debate that’s now starting to heat up, and a key component is to keep jobs here in the states at the same time that a company can cut costs and be competitive.

“We are able to take the equipment that a company has been using and is about ready to trash, and through our engineering expertise, we are able to revitalize the line and get many more years of productivity out of it.” Mr. Lehman credits his employees for their experience and expertise in making equipment come back to life.

In addition, Mr. Lehman notes that many companies have crippling legacy costs in their labor situations. By transferring the production line for manufacturing components, Mr. Lehman states that a company can rid itself of those headaches and still keep jobs here in America.

“Contrary to some initial fears people may have, line transfers are good for jobs,” Mr. Lehman adds. “Most often, people are retrained in a plant that transfers out a line. At the same time, we’re able to add jobs here at our plant and keep both sets of jobs here in the states.”

The reverberations of the decrees to cut manufacturing costs have a far-reaching impact on every organization, its employees and eventually the American economy. To relieve some of the cost-cutting pain rather than shipping work overseas, companies should be seeking ways to keep the work stateside. Line transfers may be a step in the right direction.