When Kevin Miles was getting ready to quit his job as a production worker for a company that makes plastic labels, co-workers questioned his sanity.
Wasn't he making $12.86 an hour, vs. the $8 an hour starting wage that prospective employer Tower Automotive Inc. was offering? And why, they asked, would Miles want to leave a union shop for Tower's Bardstown, Ky., plant, a nonunion metal stamping operation?
'Most people I worked with thought I was nuts,' he said.
But Miles, a soft-spoken 27-year-old, quit anyway. He liked Tower's offer of first-shift work, and the company seemed like a place where he could use more of his training as a state-certified machinist. At his old job, Miles said, he was 'a number, and that was it.'
Despite a few sleepless nights at the outset, Miles is happy with the decision he made 18 months ago to join Tower. As one of six people assigned to Press No. 1, a 1,600-ton Verson stamping press, Miles runs batches of eight to 12 different original-equipment auto parts per day. Under Tower's operating system, he and other members of the group are responsible for much of the production scheduling and even the overtime they work.
'I'm like everybody else here,' Miles said. 'I'm a vital part of the work force.'
Miles and his co-workers in Bardstown are at the heart of Tower's strategy to build a global parts-making enterprise based on lean manufacturing principles. The company, which makes a variety of structural stampings and suspension parts, bases its standards on the Toyota production system. Tower has pushed lean manufacturing furthest along at Bardstown, a plant that opened in January 1995 and supplies Toyota Motor Corp.'s Georgetown, Ky., assembly operation.
It's one thing to put an advanced operating system in a new plant with an all-new work force. It's quite another to remake existing companies. But that's what Tower, which has made five acquisitions since 1994, is trying to do.
The company has adopted a highly decentralized management organization with a staff of only 11 people at its Grand Rapids, Mich., headquarters. And they are there to help people in the plants, not give orders, said President Dugald Campbell.
'It's not two or three people decreeing that we're going to have an empowered environment and then wondering why it doesn't come together,' he said. 'It's hard work and common sense and there's nothing magical about it.'
Biggest move yet
In April, Tower completed its biggest move yet, acquiring A.O. Smith Corp.'s Automotive Products division for $625 million. The acquisition marries Tower's product line of automotive body structures with A.O. Smith's automotive frame and suspension business, which is heavily weighted in light trucks.
Tower, a company that refers to employees as colleagues and shuns business titles, is bringing its shop-floor empowerment philosophy to tradition-bound A.O. Smith, which got into the automotive frame business in 1899.
Campbell describes A.O. Smith's capabilities in product development and manufacturing technology as 'very strong.' He hopes to unleash more of Smith's potential by introducing Tower's system into what he describes as a conservative business culture.
For Duane McConville, Tower's acquisition of the A.O. Smith automotive business was 'unnerving to say the least.' He is president of Smith Steel Workers, an AFL-CIO affiliate that represents 2,000 hourly workers at the company's Milwaukee Works. McConville also is spokesman for six other unions representing 400 more people.
But in the few short weeks since the acquisition, union officials and hourly workers have been encouraged by Tower's 'open and straightforward' style, McConville said. All existing wage and benefit agreements have been honored, an apprenticeship training program is being revived, and union members now help screen applicants for factory jobs.
True, some workers are suspicious that lean manufacturing is a ruse for cutting jobs. 'We've seen it used against us all too often, and we're paranoid about that,' McConville said.
'But this is someone new, a new day, a new beginning.'
Tower's operating system incorporates the Toyota building blocks of continuous improvement, a work force trained to do a number of different jobs, leveled production runs, just-in-time manufacturing and kanban work-in-process inventory control.
The Tower system is also designed to keep morale high by explicitly promoting what it calls the 'trust and respect of colleagues' in its training and shop-floor operations. And it may be one of the few systems that reserves a box in its operating system flow chart for 'positive colleague relations - fun.'
Campbell, whose business card omits his business title, describes Tower as a 'learning organization' that allows its employees to approach the business from a new perspective.
'It's a foreign concept for people, not to hide behind titles anymore and rather be defined as a leader or mentor,' Campbell said. 'The days of command and control are over.'
By any measure, traditional or empowered, Tower is a leading consolidator in a highly fragmented automotive stampings industry.
The company, with sales of $400 million last year, tripled in size with the addition of A.O. Smith Automotive's $863 million in sales. Had the two companies combined operations last year, they would have reported $47.4 million in net income on sales of $1.32 billion. With the acquisition, Tower would have ranked No. 31 on the Automotive News list of top OEM suppliers to North America. Without it, Tower ranked No. 89.
Last year, Tower's sales rose 80 percent, largely because of the acquisition of two companies: Trylon Corp. and MascoTech Stamping Technologies Inc. But the $177.1 million in new revenue also included $42.8 million in new business not attributable to acquisitions. Tower expanded with new business on key programs such as the Ford Escort, Econoline and Expedition, the Dodge Ram Club Cab pickup, and the Toyota Camry.
The company is a unit of Hidden Creek Industries, a Minneapolis holding company that developed the former Automotive Industries Inc. into a major player in the interior trim market, and then sold the company to Lear Corp. in August 1995. Hidden Creek also owns Dura Automotive Systems Inc., a maker of parking brake and shifter systems, and Heavy Duty Holdings, which focuses on heavy truck and off-road equipment components.
In 1993, Hidden Creek acquired what was then known as the R.J. Tower Corp., a metal stamper based in Greenville, Mich. It had two plants and 1992 sales of $80.8 million. In quick order, Hidden Creek made several more acquisitions, each time adding to Tower's list of stampings and assemblies: body pillars, roof rails, hinges, radiator brackets and body cross members.
Campbell said Tower's acquisition of A.O. Smith Automotive 'unbelievably dovetails' two distinct product lines. To Tower's upper body and structural offerings, A.O. Smith adds more lower body components such as light truck frames, engine cradles, suspension components and heavy- truck frame rails. With the A.O. Smith unit, Tower said it will be the largest supplier of structural components to Chrysler Corp. and the largest supplier of metal components to Ford Motor Co.
Tower said the acquisition will also allow it to deliver more assemblies and completed modules in more markets around the world. A.O. Smith has a sales office in Japan, a joint venture to supply Volkswagen in China, and a Brazilian subsidiary that makes parts for Chrysler and Ford in South America. Tower has just begun its own expansion outside North America.
In April, the company announced an agreement to acquire Societa Industria Meccanica Stampaggio S.p.A., known as SIMES, a metal stamper based in Turin, Italy. SIMES had $70 million in sales last year but, more importantly for Tower, adds Fiat Auto S.p.A. as a major customer.
In new markets, and at home, Tower views its lean production system and teamwork philosophy as a key advantage over the competition. In Bardstown, first year turnover has averaged 2 percent since the plant opened, said Debbie Morris, a human resources manager. That compares with an industrywide turnover rate in the first year of 10 to 13 percent, the company said.
Production workers now start at $8.75 an hour and can work their way up to a top wage of $11.70 an hour after two years and completion of 16 training courses.
Bobby Barnes, 38, left a job of 20 years in a magnet factory to go to work for Tower in January 1996. He quit a company that paid $11 an hour to start all over at $8 an hour - what was then the starting wage at Tower. A friend had first told him about the company, how 'you're treated with respect and dignity, how your opinion matters,' Barnes said.
Now he is part of a self-directed production team that makes side pillars for the Ford Taurus and Toyota Camry.
Barnes said he left behind 'unions, foremen, time clocks, everything' at his former job and is much happier at Tower. He sees opportunity and a future in Bardstown.
Said Barnes: 'This is completely different than what I was used to. Before, someone else made the decisions. Now I make them. How many places can you go where it's like that?'
Automotive News Staff Reporter John Couretas is based in Detroit.