The Area Development Frontline series offers insight into the innovative strategy being taken by businesses that are succeeding, intelligence on locations that are deploying winning policy to attract investment and talent, and reports on the industry trends that are affecting and shaping the global business climate now and into the future.
In a move to compete on a global scale from U.S. soil, GE is investing $432 million to build four refrigeration, design, and manufacturing centers of excellence and create 500 green jobs by 2014.
"With Lean manufacturing and advanced design, we believe that American workers can compete with any in the world," says Charlene Begley, president and CEO of GE Home & Business Solutions. "In addition, our employees and union leaders have agreed to innovative wage agreements that further increase the competitiveness of these plants."
GE is positioning the investment - which includes new centers of excellence in Louisville, Kentucky; Bloomington, Indiana; Decatur, Alabama; and Selmer, Tennessee - as part of a growing American manufacturing renewal. But is the centers of excellence model realistic for smaller manufacturers? Some are already exploring the synergies of this model, and analysts say it's the path to the future as sustainability becomes more than just a buzzword.
Co-locating Design and Manufacturing
Centers of excellence, a new product development model for GE, co-locate design teams and manufacturing operations to increase collaboration and problem-solving and hasten development time. The company anticipates more flexible factory layouts, waste elimination, improved product quality and service, double-digit productivity increases, and other manufacturing efficiencies that drive down costs.
GE is not the only manufacturer tapping the centers of excellence approach. Watlow Electric Manufacturing, a St. Louis-based custom designer and manufacturer of industrial heaters, sensors, and controller software, operates on the same model. Watlow has cut waste and costs across its operation, including a 70 percent reduction in product cycle time, a 20 percent increase in productivity, and overall improved quality. Product defects have decreased to 4,000 parts per million.
"The centers of excellence model works for us," says Tom Lyons, continuous improvement manager at Watlow. "We're pulling together a flexible group of willing thinkers in a variety of disciplines to work as a cross-functional group to develop a product that's easily manufactured at a low cost and appeals to our customers. The future is smaller packages that consume less energy. We are always exploring how to pack more features into smaller packages."
A Sustainability Culture
Malcolm Fox, director of sustainability at NSF International, a nonprofit health and safety organization and LEED certifier, says the centers of excellence model is gaining ground as more manufacturers go green. That is because of the fundamental connection between green design and manufacturing, he says.
Fox expects to see the centers of excellence model pervade U.S. manufacturing as companies find ways to create value from sustainability. GE is on the cutting-edge of driving a sustainable business, not just greening products or the supply chain. True sustainability, Fox says, demands a center of excellence that clearly ties together design, manufacturing, and delivering products to market.
"I imagine the trend of sustainability, the business of sustainability, will absolutely drive a close connection between product design teams and manufacturing operations," Fox says. "But it's going to be progressive. Green designers have much more influence over manufacturing development and production processes today than they did 10 years ago, but this is still not mainstream. This is a developing trend that will be interesting to watch."