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Inside the future of a machine tool builder.

In the late 1970s, something unexpected happened to the machine tool industry in the US: the invasion of low cost Pacific Rim and European machine tools, largely commodity machines. At that time, much of the US machine tool industry didn't know how to react. Some manufacturers retreated to core product lines offshore competitors hadn't targeted. Others tried to compete, often moving their manufacturing efforts offshore for cheaper labor and materials. Still others dropped out altogether.

It wasn't long before well-established machine tool builders were struggling in the competition, and losing the battle.

So, when Haas Automation Inc introduced its VF-1 Vertical Machining Center (VMC), many US builders and pundits in the metalworking trade press were understandably skeptical. How could this new, upstart company compete with offshore product?

Gene Haas worked his way up in the machine tool business, virtually from the ground up. After forming his own business, Mr Haas teamed up with Kurt Zierhut to develop the first fully programmable, 5C collet indexer in 1983. Result: Hans Automation Inc was born. Success with the VF-1 led Mr Haas to develop a complete line of vertical machining centers, horizontal machining centers, and CNC (computer numerical control) lathes, or CNC turning centers.

"We're a young company, just over 15 years," says Bob Murray, operations manager of the Oxnard, CA-based company. "Everyone--not just management--expects, and is accustomed, to growth. It's part of our culture."

At the core of Haas' company culture is the "can do" mentality. Haas views its customers as creative organizations: They build solutions themselves rather than buy them, and have no fear of doing something that's never been done before. This, according to Mr Murray, is entirely descriptive of the Haas Automation culture as well.

"In fact," notes Mr Murray "we do virtually all metalcutting operations in-house. Again, this springs from the job-shop mentality. We'd prefer to do things ourselves because we believe we can do these things better, more efficiently, and with more flexibility than anyone else. In this we see a significant competitive advantage."

Mr Murray cites two examples. Gear-making, while viewed by many as somewhat of a "black art" is something that Haas has simply said it could do faster cheaper, and more flexibly than anyone outside. Why buy gears, and be dependent on someone else's production schedule, when you can make the same gears in-house?

Second, Hans had been outsourcing coolant pumps but began noticing quality problems. Mr Murray explains: "We looked at how much we spent annually on the pumps and decided we could design and build the pump in house. We knew we could make the pump more reliable, could control delivery, and make it at a lower cost and design it specifically for use with a machine tool."

Out in the shop there are 165 machine tools, of which 62 are Haas machines. "We're a firm believer in using our own technology," says Mr Murray. The Hans shop includes screw machines, thread grinders, gear machines, gun-drilling machines, plus ID and OD (inside diameter and outside diameter) grinders. There are also a large number of robots and pick-and-place devices, which Mr Murray says "is consistent with our philosophy of not being just a machine tool company, but an automation company." Taking the automation theme to its limit, Haas has automated its tool crib and--unlike other machine tool builders--even makes its own machine control.

Haas builds an average of 5000 machines annually. Half the machined parts that go into a machine are what Haas refers to as "flow parts." These are queued up in front of the machining centers and run largely unattended. In fact, most of Haas metalcutting machines are configured to run three shifts a day--usually two shifts unattended, whether its turning centers that, can be automatically loaded and unloaded, or machining centers in a cellular pallet delivery system.

"We currently use a finite capacity scheduling program on the shopfloor and an ERP software system called DataWorks," says Mr Murray. "The finite scheduling system is used to load the machine shop; the nightly MRP run is loaded into the finite scheduling system and dispatch reports are printed each morning for the operators, so they know which jobs to run."

All parts, castings, and components are barcoded so the CNC controls are "talking" continuously in real time, to the scheduling system to verify what work is in process and what work is complete. At any given moment, any part can be located within the plant, and any process or operation can be pin-pointed, tracked and analyzed. There are currently 4000 part numbers in the system that are constantly monitored.

There are more than 700 employees at Haas, nearly 200 of which are engineers, a high percentage of engineering talent for a machine tool/automation company. Why so many engineers? Says Mr Murray: "It goes back to our commitment to growth. That requires engineering depth and capability. It's a large commitment, but it's a commitment to our future."

In addition to cost issues, there is an equal concern about maintaining high quality. Haas diligently collects service reports from every distributor. And that isn't easy, since--as most machine tool builders will attest--distributors would rather sell machines than fill out reports. However, Haas has been highly successful convincing its distributors that this information is critical to its quality program, and to their bottom line. As Mr Murray explains:

"We carefully monitor each new machine during its first 90 days of operation, a time frame where we've determined that quality issues will appear, if they are going to appear at all. Tied to this time frame is an employee incentive program that's based on the number of quality issues that arise during that first 90 days. If we meet our quality goals for a given month, each employee receives a bonus for the month. Each month the goal gets tougher. Every time we hit our goal, the bonus clicks in. Over the course of a year, that can represent 20% to 25% of an employee's salary. So, I've got 700 employees out here all very dedicated to customer satisfaction and quality."

Another unique program that Haas runs is the Adopt-A-Mill program. Explains Mr Murray: "A manager and an engineer call a customer once a month for one year to find out how that customer's machines are performing, what he likes or dislikes about the machine. The response is then fed right back through the quality program into engineering."

Another factor in promoting growth is the Haas distributor network. According to Mr Murray, right now the company is in transition from a number of independent distributors across the country to "HFOs" -- Haas Factory Outlets.

"While this may be somewhat of a radical concept in the machine tool industry," Mr Murray says, "it certainly isn't in the consumer products business. We're borrowing a page out of McDonald's playbook, or Midas Muffler, for that matter. When you walk into a McDonald's--whether it's in New York or Los Angeles--you see the same facility the employees are dressed the same, the service is the same, and the product tastes the same. The point is, there'll be no mistaking an HFO with any other distributor."

Mr Murray points out that although the HFOs will be independently owned and operated, Haas still plans to put them through some best practices training. Additionally all marketing for the HFOs will come from corporate headquarters, reinforcing the brand identity of HFOs.

"Our HFO distributors won't need to carry inventory," reveals Mr Murray. "We want their operations to be showrooms, where potential customers can see machines in operation, not machines in crates."

And while it may be a fact that presently the machine tool industry generally is in a slowdown, Haas is using this time as an opportunity.

"We're not standing still," Mr Murray says. "We're taking every advantage of the present to excel and grow in the future."
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Comment:Inside the future of a machine tool builder.
Publication:Tooling & Production
Geographic Code:1USA
Date:Apr 1, 2000
Words:1311
Previous Article:Future of industry lies in skill and commitment.
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