Continuous improvement – in processes as well as product – is what it takes to be a globally competitive manufacturer in today’s economy. That is the premise upon which Hutch Johnson, president of Vancouver-based electric heater manufacturer Cadet Manufacturing, bases his company’s operations.
“In this economy,” said Johnson, “you need a company that is designed for efficiency and productivity.”
Johnson said Cadet’s revenue is up six percent over last year’s revenue, and that a resurgence in the apartment/multi-family residence market will drive additional growth.
Process improvement
Cadet, Johnson explained, applies “lean enterprise” to eliminate waste at all levels. Cross-departmental teams analyze whether tools are within easy reach and how many extra steps are taken each day. The goal, he said, is for every person to be productive and efficient every hour of every day.
According to Darla Rosser, Cadet’s director of corporate and customer service, lean enterprise practices have enabled Cadet to reduce its paper use by 58 percent, and its landfill waste by 74 percent. She also reported that in February of this year the Port of Vancouver named Cadet that “Best Environmental Steward of the Year” as well as a “Manufacturing Excellence Award” for their lean manufacturing and sustainability efforts.
At ControlTek, a Vancouver-based electronic manufacturing services firm, a similar focus on continuous improvement has driven a 30-percent growth in revenue in 2010 and another 10 percent in 2011. Andy LaFrazia, ControlTek president, said they had hired 35 people and added 19 customers since 2010.
“We’re developing improved offerings, and doing things better,” said LaFrazia.
For example, he said, they are investing in new tooling and equipment to offer a higher level of technical capability than competitors. They have also added new certifications, such as ISO 1345 and AS9100. Although certifications are expensive – as much as $10,000 in direct costs per certification – LaFrazia said they paid for themselves in attracting customers and instituting good business practices.
Cadet has recently instituted a new order fulfillment process through HomeDepot.com, where customers can order Cadet’s product online and have it shipped directly to their home without involving a distribution center or having to go to Home Depot to pick it up.
“It’s a very efficient way to buy,” said Johnson, because it eliminates intermediate freight costs and the associated carbon emissions. According to Johnson, retail Internet sales are going to drive double-digit sales growth in the future and successful manufacturers need to adjust to this trend.
Product improvement
According to Johnson, product innovation is just as important as process improvement.
“New products will take us into new markets,” said Johnson.
For example, Cadet is working on developing an energy-saving electric heater that is designed for today’s more energy-efficient, tighter homes. Johnson said this is the first new product Cadet has produced since the late 1990s.
ControlTek, too, is focused on new products – in this case, helping them come to market through their manufacturing services. Not only is ControlTek building the control boards for Cadet’s new heater, but they also work with many other small local businesses to help bring visions to life.
For example, ControlTek is providing printed circuit board fabrication, quality assurance and electronic assembly for Focus Designs, a Vancouver-based company that has invented a self-balancing unicycle. ControlTek also builds the refrigerator-sized units for GSL Solutions, a Vancouver-based RFID company that sells storage and tracking systems to pharmacies.
These symbiotic relationships between manufacturers and product visionaries lead to more growth. LaFrazia said that GSL Solutions hired ten people so far this year, and ControlTek had to lease 4,000 square feet of additional space in July, and was looking at leasing another 3,500 square feet soon, bringing their total square footage to more than 47,000 square feet.
Workforce improvement
Both Johnson and LaFrazia agreed that investing in their workforce was very important to their companies’ success and growth.
“Culture is very important to us,” said LaFrazia. “We help them grow and get better at what they do.”
Johnson said his firm tries to be sensitive to employees’ needs. With employees from five separate generations working at the company, this can be challenging.
“Younger employees tend to want flexible hours and be more involved with decision making,” said Johnson.
Besides implementing flex hours, a four-day work week, and work-from-home options, Cadet also offers a wellness program to educate employees about being healthier.
“If people feel better, they do a better job,” said Johnson.
Good for the economy
Ridgefield City Manager Justin Clary said that Ridgefield views manufacturing as a “value-added component to the whole economy of southwest Washington.” He said that the proximity of the Portland airport, the I-5 corridor, 30-minute access to four deep-water ports (Portland, Vancouver, Kalama, and Longview) and a “significant amount” of shovel-ready land zoned for manufacturing uses, make Ridgefield attractive to manufacturers looking to locate in Clark County.
Each manufacturer that locates here will fuel the local economy, said LaFrazia. For example, with 130 employees, ControlTek has an annual salary base of five to seven million dollars. These salaries, mostly earned by local residents, then pump back into the economy through sales tax, property tax and more. In addition, LaFrazia said ControlTek spends $10 million annually on component parts – many of which come from local suppliers.
“Using a local workforce and local suppliers, along with customers who are selling our product locally and who are hiring local people to sell,” Johnson explained, “from the ground to the sales cycle, it’s a local-based supply chain.”
