Lethbridge reinvents itself mid-expansion to ensure its future.
Denise Kapel, Senior Editor
(Click here to see the story as it appears in the August issue of Modern Casting.)
In Lethbridge, Alberta, Canada, the unemployment rate hovers at or below 4%. With oil production dominating the provincial industry, skilled workers are difficult to attract and retain in metalcasting.
“Any young guy who is willing to go to northern Alberta and live in a camp can probably make $100,000 a year,” according to John Davies, president of Lethbridge Iron Works. “So, our wage base is high, and we have a very low unemployment rate here. Our energy costs also are high. Electricity deregulation happened in 2000 and has been hurting us ever since.”
Lethbridge is a 116-year-old company that has survived many changes. But in recent years, economic pressures took a toll. The local economy has not experienced a significant setback, which ordinarily would be considered a good thing, but in Davies’ view, that is another reason it was difficult to reinvest in the company and meet demand.
“We found it very hard in the last two busy periods, in 2007 and 2011,” he said. “We had to ramp up our hiring practice from lots of screening to hiring anyone with a heartbeat. We had to take what we could get, and we suffered financially at that time.” As economic cycles in the industry became more severe, Davies and the executive team realized they needed to take steps to improve the situation.
The solution was to change their management style even as the facility itself underwent a major expansion. The company will run two separate casting operations onsite in Lethbridge, when the project is complete.
Combining equipment improvements with better communication and training already has proved synergistic for the company, resulting in an upward trend that is expected to continue through the second phase of its revitalization.
Meeting the Hiring Challenge
Lethbridge Iron Works pours ductile and gray iron castings from 1 to 500 lbs. in runs ranging between 50 and 500,000 pieces for customers in the oil and gas, agricultural, automotive, rail and tool industries. Castings range from simple parts to one recent award-winning component that required 40 cores per mold.
When demand spikes, the employees’ ability to rise to the occasion and produce quality parts quickly is critical to profitability. In the past decade, staffing deficiencies sometimes became painfully evident.
“We did what we had to do to meet our customers’ needs, but it didn’t meet our bottom line very well to have people who were not well trained, not showing up and without much interest, but still well paid,” Davies said. “Between hiring difficulties and high wages, we need to attract and retain good workers. That’s not easy.”
Davies determined Lethbridge’s hiring challenges to be high turnover, low productivity, high absenteeism, low morale and a high level of workers compensation claims. He and the rest of the team set about determining what needed to be done to address those issues.
Prior to 2007, hiring had involved several prescreening steps:
- Initial interview and background check.
- High school diploma or equivalency requirement.
- Wonderlic cognitive abilities test.
- Medical screening (including medical and workers compensation history).
- RSI screen as part of the medical screening.
- Workplace Hazardous Materials Information System exam on computer—70% pass required.
The management team determined employee engagement was the key to productivity and profitability, and they mapped out a path to get there. First, they evaluated “the problem” and sought expert consulting from outside the company, then worked on buy-in from the top down. The company’s leadership went through training to work together and make the most of their strengths and weaknesses, and then they formed common goals. Going forward, the team revamped the old hiring model to meet the operation’s current and anticipated future needs.
The interview process is more thorough and involves area supervisors. Medical screening is still in place, as is safety training. New hires are trained in a new program that includes demonstrating what they have learned. The company also has implemented exit interviews.
“Part of this whole process was that we brought in a corporate coach a little over two years ago, to try to get employees more engaged and [ensure they] understand the significance of what they’re doing,” Davies said. “We’re family owned, and running the business like one big family worked with about 60 employees, many of whom are long-term, but we run about 130 now and, when the economy was roaring, about 190 employees.”
As the company expanded and added capacity, communication with employees became more important than ever. Automation increased significantly in the first phase of the company’s major expansion, which requires training on new practices for long-term employees as well as new and recent hires.
“If you brought my grandfather back and took him through the plant, he’d be pretty confused until he got to the grinding room,” Davies said, “because it’s the same as it used to be, while everything else is more automated now. That’s not something people want to do, standing at a grindstone all day.” The grinding room has six robotic systems, now, which don’t eliminate the worker from the line but make the work less physically demanding. “A couple years ago more than 50% was being ground on [the new systems], and it’s 70% to 80% now, by weight,” he said.
On the SPO molding line, small cores are set by hand and larger ones are set by hoist. “We want to do it as precisely as we can, and [using a jig] makes it easier for them to place the cores,” Davies said. “We’ll have one to four people on this deck, so we’ve also installed a light guard so they can step in between molds safely and without having to stop the machine.”
Lethbridge’s workers use iPads on the shop floor to interface with the management system, which also collects data for auditing.
“There are no guarantees when you start a guy that he’ll be here forever,” Davies said. “So your way of doing things, your need for structure definitely does change, the larger you get. We always knew as owner-operators whether we were doing well or not, but now we share more of that information with employees.”
In the past, employees didn’t receive much, if any, feedback on their performance or the company’s overall. Davies and his team created a room—the “Iron Bunker”—dedicated to sharing information, so everyone can understand the impact of what they do, from daily work planning to profit comparisons as well as metrics on safety, quality and productivity.
“The bottom line is profitability but also quality results,” Davies said. “We’re holding employees more accountable on both sides—management and operations—trying to instill in people personal accountability and recognition for doing a job well.”
Shop-floor workers might never see how a part is designed or where it ultimately goes. So, Lethbridge’s management has started working on giving employees that big picture view.
“We make parts for air seeders, so we had one of the local distributors of the equipment—the finished product—bring it to our parking lot for a few days,” Davies said. “The employees were able to see exactly where the metal part goes, what it does and why it has the attributes it has. We also try to get brochures and posters from our customers that employees can see.”
Goals are set daily and discussed the next day in the Iron Bunker. New hires receive a specific course of graduated work training and experience before they are turned loose on the shop floor, including 30, 60 and 90-day reviews to keep them on track. On-the-job training includes three phases: a review of standard operating procedures, training on tasks and procedure, and trainer signoff that the person is competent and can complete the task independently. Lead Hands receive online human resources and safety training. In addition, engagement surveys keep management informed of how the program is going.
Accountability and Rewards
Employees have begun writing their own job descriptions, with specific details, and they receive training, exams and regular reviews to keep up their in-house certification. The goal for the company’s owners is to ensure the right staff is in the best place to apply their skills and talents effectively.
“We have seen our profitability go up, so we’ve tried to concentrate on a lot of different areas at the same time, with changes in personnel and managers,” said Davies. “Employees are the key to business success these days. It starts at the top and must filter down to the shop floor. This requires commitment at all levels. The number one reason people leave their jobs is their boss, not their pay or conditions.”
The benefits are many. Productivity and profitability had declined through the early 2000s despite periods when product demand spiked. The improvements have become increasingly clear, benefiting the company in numerous ways, such as its ability to reinvest. Phase two of Lethbridge’s expansion is underway today, and in the end the metalcaster will run two distinct, automated operations with current technology in every area of production.
“We’ve gotten very low on internal reject rates,” Davies said. “Things like being able to make on-time deliveries have improved through the process. And we track our productivity rates and have seen improvement in that, so we are setting new goals and new targets. “
With a molding system reengineering and installation complete, phase two is underway with a completed addition and relocated coring. Lethbridge is installing a second sand system and new melting equipment dedicated to a second operation. A new attitude and engaged approach to the work, companywide, will help ensure Lethbridge Iron Works keeps pouring iron far into the future.