Circuits Assembly - July 2008 - (Page 19)

Kester’s ‘Delicate Balance’ TW’s July 2006 acquisition of Kester (kester.com) has garnered perhaps less attention than other moves the conglomerate has made of late, but it was no less significant. In May, Bill Spring, Kester’s paste general manager, and Jeff King, general manager of metals and chemicals, described the cultural and strategic shifts taking place at one of the world’s largest solder companies to CirCuits Assembly’s Mike Buetow. Excerpts (for the full interview, visit circuitsassembly.com/cms/content/view/6751). CA: What can you tell us about Kester today? BS: We’re taking an absolutely different approach [than in the past]. As you are probably aware, the ITW philosophy is all about 80/20. In a nutshell, it’s about focus and simplification. We aren’t trying to be everything to everybody. We’re trying to be focused and absolutely excellent at doing fewer things, but doing them very, very well. It’s grossly simple on the surface, but takes some energy to get people to think differently. It’s more of a cultural shift. Naturally, there’s some fallout and upheaval, but in the end, the company is stronger and more efficient than ever. CA: What has the customer reaction been to 80/20? BS: In the end – and it’s all about customers – they understand where we’re headed. They might not always like the changes as they happen, but they understand and appreciate what we’re doing and ultimately, they know it will be beneficial for them. CA: We talk a lot about change and yet when it happens, the inclination is to resist. What are the biggest challenges you’ve encountered? BS: The ITW formula works. It’s a question of getting everyone on board and getting everything in place. It doesn’t take place overnight. We’re patient with that – to a degree – but expectations are high. The result will come; we know that will happen. We’ve had a very good [2008], probably better than we thought it would be, given the economy. In that regard, our expectations for the balance of 2008 are conservative. That said, the strategy of simplification absolutely works. We have spent time taking our internal people to other divisions to get them to understand how immensely powerful this strategy is. That way, they get a better sense of it than they would by just hearing it from management. Where we have to get better is in our ability to continue to perfect our quality – in solder, this is grossly important – and customer service. Everyone expects that. CA: Having ITW as a parent must ease the uncertainty that hangs over companies owned by investment groups. BS: People get nervous on any acquisition. There’s a relief at first that someone is going to invest in the company. With holding companies, typically, there’s a sense the business will be reshaped so someone will buy it. Since ITW took over, we’ve conducted some restructuring, but circuitsassembly.com Talking Heads I there was some that needed to be done. Last fall, we broke Kester into different units as part of our focus strategy, so we don’t get bogged down as we might in a bigger organization, and now can think “smaller” and react faster. It’s a delicate balance to make that happen. We want to make it easier for our customers to do business with us. With smaller business units, we can be more flexible. JK: I’d like to offer some background. When Northrop Grumman owned Kester, the group we were in had about $1 billion in annual sales. Northrop sold all those companies, and that’s when we were purchased by American Capital. ITW has a history of buying and holding companies and being a good owner. They have a history of buying companies that have great brand names and where they see great upside. What Kester provided was a strong basic platform for the company to grow. BS: We will get tremendous support from ITW’s corporate management. They will invest in this business. They want us to have absolutely the best equipment. We want to make sure we have capacity, so they will help us invest in capacity, and not rely on inventory as a crutch. CA: Most manufacturers define full capacity as 80% of available resources. Where do you stand on that? BS: That’s the number we use: 80%. When we have an average of 80% of our demand going on with our capacity, we look at it at as time to invest in more capacity. You need time to expand, lead times for equipment, and by the time you start that, you are being pushed on capacity utilization. JK: In the past 9 months, we have virtually squeezed late orders out of our systems. We’re in a position now where we have a lot of capacity to bring to bear – up to 120-130% of what’s needed in any given week. CA: What can you tell us about the changes made to your plants? Kester GMs Jeff King (top) and BS: It starts with focus. By that, I Bill Spring (bottom) mean a simplified product offering. We do fewer things, and do them really well. We can concentrate dedicated equipment. That was never done in the past. We pick up tremendous efficiency because of the way we dedicate people and equipment. There are always tons of things in manufacturing that can be improved. You take the easy ones first. It’s a continual process, and you do that repeatedly. You start with the right product offering that meets key customers’ needs (that doesn’t mean there might not be some small ones too). The narrowing of the product lines greatly helps simplify manufacturing. We Circuits Assembly JULY 2008 19 http://kester.com http://circuitsassembly.com/cms/content/view/6751 http://circuitsassembly.com

Table of Contents Feed for the Digital Edition of Circuits Assembly - July 2008

Circuits Assembly - July 2008 Contents Caveat Lector Industry News Market Watch Talking Heads Focus on Business Global Sourcing On the Forefront Screen Printing Tech Tips Will Electronics Follow the Sun? ‘Warm’ Manufacturing Heats Up Reputation Trumps Recession, China ‘Web Circuits’ A Novel Non-VOC Conformal Coating Krypton: Benchmarking Customer Satisfaction 2008-09 CIRCUITS ASSEMBLY Buyers Guide Wave Soldering Pb-Free Lessons Learned Process Doctor Materials World SMTA Int'l Product Preview Ad Index Assembly Insider Technical Abstracts

Circuits Assembly - July 2008

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