Southland plant managers undertake restructurings; Ameron cuts its salaried management staff by 20%.

When J. Russ Phillips signed on as general manager of Goulds Pumps Inc.'s City of industry manufacturing facility in 1988, he was forbidden to watch and learn.

The plant, far from being a model of efficiency, was actually facing the possibility of being shut down by the top brass at the company's Seneca Falls, N.Y., headquarters due to its inefficiency.

"I was given an ultimatum by the president: straighten things out, or the plant would be shut down in year," Phillips recalled.

The quality of the plant's product output -- pumps for the petroleum industry and for municipal water works -- was not in question; the average lifetime of a Goulds' product is 30 years. Unfortunately, it seemed to take nearly that long to deliver a product to a customer: 23 weeks, or nearly six months, on average. On top of that, only 17 percent of the deliveries were taking place on time.

"We had customers screaming in frustration," Phillips said.

Goulds, which has annual sales of about $650 million, decided a restructuring of its City of Industry plant and its other facilities was in order. Consultants were hired to help Phillips out. The conclusions:

* Implement a total quality management program, or TQM. That entails revamping the management and manufacturing processes to gain immediate improvements and make continual improvements part of the company's culture. TQM typically seeks to achieve those improvements by dividing the manufacturing work into separate work cells with open communication among employees.

* Restructure the factory floor accordingly.

* Build only enough product to accommodate actual orders.

The end result was that Goulds' order-to-delivery time has been cut drastically, to an average of less than 11 weeks. The percentage of on-time deliveries improved to 92 percent.

"Late deliveries aren't tolerated any more," Phillips said.

As for the bottom line, Goulds' City of Industry plant, like its other plants, has increased its annual revenues by a third, to about $37 million. And its annual operating profits have doubled. The plant's work force was cut from about 210 to 160 through a combination of layoffs and attrition.

While Goulds has successfully finished its restructuring, Pasadena-based Ameron Inc. has just begun one.

James S. Marlen, appointed Ameron's president and CEO in June 1993, said he went right to work on restructuring Ameron. The company manufactures fiberglass pipe, industrial coatings, ready-mix concrete and other construction materials, and had 1993 sales of $453.3 million.

While Ameron was profitable, its operating income stood at $10.6 million before restructuring write-offs, compared to $16.4 million in 1992 and $27.7 million in 1991. Various factors, including a lingering recession in the western U.S. and Europe, had weeded out competitors and made the business climate more fierce, according to Marlen.

"It was an essential requirement that we restructure," he said. "We were turning a fairly decent profit, but had we not changed, it would be a totally different picture two or three years ahead."

Over the past year, Marlen and his team cut Ameron's salaried management staff by 300 positions, or 20 percent. Ameron's streamlined corporate structure was also decentralized, broken into four separate divisions, each with its own president. Those four divisions are: protective coating systems, fiberglass pipe systems, concrete and steel pipe systems, and construction and allied products.

"The lines of responsibility weren't as clear as they could be in terms of staff and operating lines; communication wasn't as efficient, and I sensed that team spirit wasn't good," Marlen said.

On the manufacturing end, Ameron shuttered four U.S. plants -- two of them permanently -- and closed two others in England and Spain. A steel fabrication plant in Colombia is on the sales block. Some other operations were consolidated.

At the same time, money for research and development is being increased.

Marlen -- who is engineering the restructuring without the help of consultants -- would not disclose annual savings resulting from his restructuring. He projected, however, that Ameron's net profits will increase about 20 percent in 1994. (Ameron's after-tax 1993 income was $7.3 million -- up 22 percent from 1992, but a one-time $31.5 million charge for restructuring wiped that out.)

Marlen and Phillips agreed that restructurings such as the ones they engineered at their respective companies are necessary to fare well in the future.

"Even though our industry has diversified to global competition in the past decade, it has become much tougher because everybody is involved in improving themselves," Phillips said.

Indeed, a recent survey of Southern California manufacturers -- conducted by the Heidrick & Struggles executive search firm exclusively for the Business Journal -- echoes Marlen and Phillips. Of those responding to the survey, 95.3 percent agreed that improving the product pipeline and time-to-market of products is essential. Both Goulds and Ameron took steps to improve those processes.

Marlen and Phillips expressed slightly different views on the implementation of total quality management. While Phillips said his primary goal was to restructure Goulds' manufacturing operation in a one-time shot, Marlen said he sees restructuring as a gradual but never-ending task that encompasses both management and blue-collar employees.

"Our facilities are pretty much state-of-the-art, but there is always room for improvement," Marlen said.

He added that ISO 9000 certification -- a certification by the Belgium-based International Organization of Standardization that the recipient company's manufacturing processes meet certain pre-determined standards -- is necessary for Ameron to function, and the company already has it for some of its key plants. ISO 9000 certification is often considered crucial for making inroads into foreign markets.

"We have certification for fiberglass manufacturing and for coatings. It's definitely a requirement to do business in Europe, and in some areas of the United States," Marlen said.

Goulds has applied for ISO 9000 certification and expects to receive it for all its plants in mid-1995, according to Phillips.

"It's not crucial for our business, but it does help us climb another rung in our competition," he said.