Lean Management Drives Productivity Improvements at AAM

Aug. 1, 2011
An openness to new ideas helps automotive supplier win new business

In 2008, American Axle & Manufacturing’s Three Rivers (Mich.) Manufacturing Facility endured a 97-day strike. Ultimately, the UAW’s Local 2093 decided to separate itself from the national union’s pattern bargaining agreement and agreed on a new contract that substantially reduced the plant’s labor costs. That “landmark” agreement, says plant manager Greg Yezback, “allowed us to insource a tremendous amount of work over the last two years.” In fact, the plant, which makes automotive driveline products, has transferred in 24 salaried employees from other AAM facilities and hired 352 new hourly associates.

When Three Rivers and four other plants were purchased from General Motors in 1994, AAM CEO Richard Dauch immediately set the expectation that AAM would become a world-class manufacturing organization. In 1994, the Three Rivers plant had a customer reject rate of 570 parts per million (PPM). Dauch told the facility the bar was being set at 25 PPM.

“He took the approach of setting stretch goals and challenging the organization to meet goals that maybe we didn’t think we were capable of meeting at the time,” Yezback recalls. But by 2000, the rate had been slashed to 22. Today, it is zero.

The Three Rivers facility is a leader in implementing AAM’s continuous improvement system, called the Lean Manufacturing System. The system is focused on safety, quality, delivery and cost. Managers use value stream maps to optimize an entire value stream rather than simply individual processes. The plant employs lean steering committee meetings to review and update the value stream maps and ensure appropriate progress is being made on key initiatives. Standardized work is used extensively by production workers and management. The plant employs a host of other continuous improvement tools, including level schedules, pull systems, tugger routes, 5S and standardized work audit systems.

Plant officials admit continuous improvement has become more challenging as the facility has driven down defects. In 2007, plant officials began using a high-severity scorecard to focus attention on manufacturing defects assigned a severity number of eight or higher. For anything rated a 10, the plant put in a second level of containment to ensure that they didn’t reach customers.

All the more remarkable, plant quality has improved dramatically while the facility has taken on new business. In 1994, the plant only produced driveshafts. In 2002, the plant began building rear axles. “Through our agreement with the UAW, we were able to bring that axle out of Mexico and build it here at a profit,” Yezback notes. In 2004, the plant brought in a second axle. In July 2010, the plant began producing a front axle. Now, the plant produces all the products that go into a chassis. Moreover, it has added products for commercial vehicles to its existing truck and SUV business.

Plant management is quick to credit the work force with being receptive to new ideas and to doing what it takes to win new business. Employees average 40 hours of training a year and are increasingly cross-trained to provide flexibility in job assignments.

Despite the plant’s continuous improvement progress, Yezback rates it as a 3 or 4 on a scale of 10. “We are constantly learning,” he says. “It makes us focus.”

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