NO ONE wants business to tank. But if it does, what should you do about it?
In the case of Kentucky Trailer, you build for the future.
The company, founded as a covered wagon manufacturer in 1879, knows a thing or two about making it through downturns and depressions. There have been plenty of them in the 131 years that Kentucky has been in business. Last year was simply the latest — albeit one of the worst.
Recognizing that bad times come and bad times go, the company did what may seem counterintuitive when business is bad. It moved into a new plant.
The decision really had nothing to do with a downturn in business or even an upturn in business. It had everything to do, though, with having a “right-sized,” more efficient manufacturing operation — one that would better position Kentucky Trailer for what tomorrow's manufacturing will look like.
As it turned out, the timing was ideal, says Gary Smith, president.
“The severity of the downturn made it possible for us to be able to move in a way that we couldn't when business was booming,” he says. “We had the ability to shut down production in order to get things set up the way we wanted them. We were completely dark for four weeks, and for seven weeks total we were at less than our capacity.”
But with the move — and apparently the latest recession — behind them, the decision has begun to pay dividends. Example: 67% reduction in electricity costs, and a whopping 80% reduction in heating expense, both of which can come in handy at a time when every penny counts.
The idea of moving into a new plant was something Kentucky was considering long before the downturn. Things got serious when Smith became the company's president in 2007.
“From Day One, I wanted to modernize our facilities,” he says.
That's because Kentucky Trailer at that time was building trailers at the same place where it used to build wagons. Like many manufacturers with long histories, the plant had been expanded numerous times. The result was a campus of multiple buildings, one that limited Kentucky's ability to manufacture efficiently.
When new, the Kentucky Trailer plant was on the outskirts of Louisville. The University of Louisville, founded in 1798, was in the general vicinity of the wagon manufacturer.
Today, the site is in the heart of Louisville, and the University of Louisville has surrounded it. In management's way of thinking, eventually the university would need the property, and Kentucky Trailer would need to find a new place to manufacture.
At the company's strategic planning meetings in December 2007, negotiations began with the university to acquire the property. Parallel with that, Kentucky began the search for a new location. Initially the company considered leaving the state, seriously considering moving to a site in southern Indiana. That caught the attention of government officials back home.
“When the City of Louisville and the State of Kentucky learned that we were considering a move, they asked us what it would take to keep us here in the Louisville area,” Smith says.
New home
After an extensive search, Kentucky found a building that had been built on spec as a warehouse and had never been occupied. The building provided Kentucky with high ceilings, good ventilation, good lighting, and (perhaps most important) the ability to fit its entire production under one roof.
Kentucky closed on the sale in November 2008 and took six months to move trailer assembly into the new location. The company began assembling trailers in June 2009, with fabrication and painting remaining at the old location. Since then, Kentucky has moved fabrication to the new plant and plans to have paint — the last operation remaining at the old facility — up and running by the end of the year. At that point, Kentucky Trailer will turn the property over to the University of Louisville.
Next Page: New processes
The new plant is paying dividends in terms of manufacturing efficiency and drastically lower utility bills.
“Our cycle times are so much shorter here, says Dan Murphy, senior vice-president of operations. “Getting everything under one roof has been a tremendous benefit. At our old location, we had three separate buildings just for our offices and three more for production. The difference in our efficiency has been significant. We have been able to slash the size of our building, yet our production capacity is still the same. And if we need to increase our production capacity, we could do it easily with the addition of a second shift.”
New processes
Kentucky made a number of changes to the way that the company produces its trailers, but it did so with caution.
“We talked to a lot of people who have gone through a move like this,” Murphy says. “They all advised us not to move into a new plant and radically revise our manufacturing processes at the same time. We took that advice to heart.”
Knowing how they planned to produce things differently at the new plant, Kentucky implemented those changes at the old facility first. Management got plenty of input from production personnel and tested them prior to moving into the new plant.
One example is the way Kentucky produces its sidewalls. The old location had three separate areas. These are combined into a single area at the new plant.
“There were several ideas that we mimicked at the old plant first,” Murphy says. “Our goal in doing that was simple. We wanted to know if the new approach will work and to make sure that everyone knew what to do when we got moved into the new plant.”
After searching extensively for a new home, Kentucky found its present location on the west side of Louisville — a building designed as a warehouse, not a trailer manufacturing plant.
“It was a 480-ft by 500-ft box,” Murphy recalls. “It had never been occupied, and by the time we bought it, it had four light bulbs that burned.”
Thinking inside the box
Converting the building into a trailer manufacturing plant involved a lot of work, including designing the layout around support columns mounted on 50 and 60-ft centers, an upgrade to the electrical system, and creating a support system for bridge cranes in a building that was not designed to accommodate them. Office space had to be created inside the building, and applicable local ordinances had to be met.
Smith says it helped to have one person dedicated to getting the new plant ready and to prepare the company to make the move.
“Dan's sole job for the better part of a year was the new plant,” Smith says.
“We got our associates input in the project right away,” Murphy says. “We could not have done it without their involvement.”
The new plant has a minimum ceiling height of 29 feet — a far cry from the old plant.
“There were times in the old plant that snow loads would cause the roof to sag,” Murphy says. “The sag was just enough that the roof of a trailer could drag against a rafter on the way out of the building.”
Next Page: Plenty of headroom
Plenty of headroom
That's not the case at Kentucky Trailer anymore. The 29-ft ceiling allows the company to leapfrog trailers when necessary.
“We are a custom manufacturer,” Murphy says, “so we need to be able to send a variety of trailers down the assembly line. We've designed the plant for mixed production.”
One way Kentucky achieves that objective is to have one assembly line and space offline to add special features.
The plant, with its single assembly line, includes one large custom zone, along with the ability to vary subassembly sequences.
“The customization zone allows us to pull trailers out of the line, do whatever special work is required, and then put them back on the assembly line,” Murphy says.
Decentralized fabrication
Kentucky Trailer has adopted a new approach to fabrication since moving to the new plant. Instead of the centralized fabrication department that the company operated at its old location, it has spread machine tools throughout the production area. The result is a substantial reduction in material handling.
“Our fabrication equipment is where we need it,” Murphy says. “And our access to inventory is much better. We had 34 acres at our old location, and we had to move things around a lot. Everything here is more convenient. We used to operate 26 forklifts. Now we have four.”
The more compact plant is easier to manage.
“We don't have to satisfy a lot of subassembly areas,” Murphy says. “We used to produce subassemblies in several locations and then coordinate the flow so that everything comes together properly. There was a lot of work in process. We've been able to reduce that a lot in the new plant. With everything under one roof, our visibility has improved. We have a clearer picture of what's going on.”
Cutting utility costs
The smaller overall size of the building, combined with modern construction techniques and equipment, add up to substantial reductions in energy costs.
“We used to have a 35 million Btu heating system,” Murphy says. “The system we have now is rated at 7 ½ million — and we are a lot more comfortable here in the wintertime.”
The heating system is part of Kentucky's efforts to cut utility costs. Others include:
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Automatic light switches
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Zoned ventilation in the plant. Fans come on only when needed.
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More uniform lighting.
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Increased use of natural lighting. Three sides of the building have large windows.
Renewed commitment
The new plant represents a new commitment to the 131-year-old company.
Established as a Kentucky Wagon Company in 1879, the 21st century trailer manufacturer has built wagons, horse-drawn carriages, and (as Dixie Motor Car Company) a line of automobiles branded the Dixie Flyer.
In 1936, the Company was acquired by R C Tway Sr and renamed the Kentucky Manufacturing Co. Since then, the Tway family has operated the company through four generations.
Between 1997 and 2007, non-family members ran the company. Three years ago, the family considered selling the company but chose to keep it in the family. Gary Smith, whose wife is R C Tway's great-granddaughter, was named president.
“We had other options that would have been less costly,” Smith says. “But this company has been family owned for 74 years. We want to run it for 74 more.”
It was that lengthy history that had management wondering how its employees would react to the new plant.
“We have a lot of people who have been with us for quite a while,” says Charles Ducas, vice-president of marketing. “They are craftsmen, and they appreciate the tradition that this company has. We were wondering how well they would transition to the new plant. After seeing the break room and other amenities we have here, it may have taken them 15 minutes.”