TUG Technologies

A moving experience┬áThe aviation industry has been hit harder than most over the last year, but ground support equipment maker TUG Technologies has been weathering the storm. CEO Stefaan Ver Eecke tells Gay Sutton how the implementation of lean manufacturing has made all the difference. Chances are that if youÔÇÖre flying anywhere in the world on business or for pleasure, your baggage and quite probably your plane will be maneuvered around the airport by ground support equipment (GSE) manufactured by TUG Technologies.  Headquartered in Marietta, Georgia, just north of Atlanta, the company has built a strong reputation and a worldwide customer base. But as the airlines have contracted, hit first by the rapid increase in fuel costs early this year and second by the economic downturn, suppliers to the aviation industry have been hard hit, TUG less than most.Over the last two years, led by a whole new management team and new owners, TUG has begun an operational transformation that has helped it weather this difficult period and increased its fitness to thrive in the new-look world. ÔÇ£The basis of our turnaround is lean manufacturing, modeled on the Toyota Production System,ÔÇØ says TUG Technologies president and chief executive officer Stefaan Ver Eecke. While TUG had some excellent manufacturing processes, it had not previously implemented a structured lean approach. No newcomer to lean manufacturing, TUGÔÇÖs management team took a two-pronged approach to the challenge. They called on the services of the government-sponsored Manufacturing Extension Program (MEP), an initiative that is one-third funded by the federal government, one-third by the state government, and one-third by the participating company and is aimed at supporting US manufacturing. ÔÇ£Through this program we teamed up with the engineering school Georgia Tech. They helped us implement training to educate our workforce on the principles of lean manufacturing.ÔÇØNext they called in the services of Japanese consultancy Shingijutsu, with whom the TUG management team had previously worked when introducing similar improvements at Bobcat. Founded by former senior Toyota employees, Shingijutsu sent a sensei (master teacher) to TUG on a quarterly basis to guide progress and help the newly formed kaizen (continuous improvement) teams tackle particular problems or identify and harness lean opportunities. Until this point, manufacturing at TUG had been organized around a series of stalls, each manned by a team of four or five people responsible for building a single complete unit. TUGÔÇÖs first lean change was to remove the stall system and introduce a manufacturing flow line. Under this arrangement, products move in an orchestrated fashion from one station to the next along a single production line, progressing to a regular takt time or beat. Since the introduction of flow production, the kaizen teams have continued to make incremental improvements to the production line, balancing the flow and removing waste in all its formsÔÇösuch as the time staff members used to spend walking around looking for the tools and equipment they needed.Two years into the three-year program, the company is now consistently able to meet ship dates, and because manufacturing is now a controlled environment organized around flow lines, quality has improved markedly and warranty costs have fallen by over 40 percent.Changes have been made throughout the companyÔÇöfrom supply chain through to managementÔÇöto support the lean program. ÔÇ£We certify workers from a quality and efficiency perspective based on their performance at a particular station on the flow line. Then we challenge them on skill-based pay,ÔÇØ Ver Eecke says. ÔÇ£As they learn to operate efficiently on more and more stations, their pay increases. This has the added benefit of providing greater manufacturing flexibility.ÔÇØThe workforce is recognized for its improvements and achievements, and this has been quantified by the launch of what the company calls gain sharing. ÔÇ£All employees, whether myself as CEO or an hourly employee on the floor, are treated equally in terms of rewards. As our financials improve in a quarter compared with the previous year, a percentage of that gain is shared equally among the employees. ItÔÇÖs certainly a big motivator for people to look at how to reduce waste.ÔÇØThe downward plunge in aviation spending over the last year, however, has had a significant effect on TUG, which has seen its sales of GSE equipment in North America fall by 65 percent. Ver Eecke says most of this has been compensated for by increases in government contracts, international sales and service work, but the cost savings and efficiency increases delivered by the turnaround program have been crucial. ÔÇ£If we hadnÔÇÖt embraced lean, I donÔÇÖt know where we would be. ItÔÇÖs certainly helped us to manage through what I would consider tough economic times,ÔÇØ he says. ÔÇ£The airlines are still being very prudent and economical in their purchases. But on the positive side, where theyÔÇÖre not looking to buy new equipment, theyÔÇÖre looking to refurbish or fix up their older equipment.ÔÇØHere too, TUG provides a refurbishment and retrofit service that enables the airlines to continue updating their equipment with the latest technology without the cost of buying new. Around five percent of TUGÔÇÖs total revenue is invested back into research and development, and the current focus is on reducing fuel consumption and the environmental impact of its productsÔÇöanother major concern for the airlines. ÔÇ£Our gasoline products are an excellent example. Where we would once have used a Ford 4.9-liter gasoline engine in a baggage tractor or belt loader, a year and half ago that was a 4.2-liter engine, and today weÔÇÖre able to do it with a Ford 2.3-liter engine.ÔÇØ Looking to the future, Ver Eecke sees opportunities for growth. ÔÇ£We work very diligently on our product development to continue providing value-added products for our customers. And weÔÇÖre certainly open to suggestions if the right opportunity comes alongÔÇöeven if itÔÇÖs outside the area of ground support equipment,ÔÇØ he says. ÔÇ£WeÔÇÖre looking at the opportunity to build other products, perhaps as a joint venture or a contract manufacturing agreement. Are there any finalized deals? No. Are there things that weÔÇÖre discussing and looking at? Yes,ÔÇØ he concludes. ┬á