Crisis and revolution22 May 2019
At Bauma, Manitowoc CEO Barry Pennypacker took a frank look at the crisis facing the company three years ago, and the revolutionary changes made since. Will North reports.
Talking to the press on the first day of Bauma, Pennypacker laid a stark picture of the challenges he and the company faced, as he took over as CEO of the then newly standalone business.
“At Bauma three years ago, I talked to hundreds of customers. At that time, I didn’t know the difference between an all terrain, a rough terrain, and a boom truck.
Now I must certainly do. But I really wanted to learn how best we can partner with our customers to be a world class crane company.
“Some of those discussions were very difficult. But those conversations told us what we need to do.”
Highlighting the company’s slogan for the show, ‘The revolution is real’, Pennypacker laid out the programme of change he and the Manitowoc team have implemented.
“First, we removed what we called a matrix management structure [where staff report to both functional and product managers]. It was difficult to work with. Customers would come with a problem or an opportunity, and it would get lost. Now, we know on a regional basis who’s in charge, and who you need to get in touch with to get a problem resolved.
“Secondly, we invested in new products, using what we call ‘Voice of the Customer’ to drive our innovation and development cycle.
“The biggest result of these two changes is that [we realised] we couldn’t avoid the reality that quality and reliability had taken a back seat. It no longer does.
We spent tens of millions of dollars on this globally in the first couple of years [as a standalone crane business] fixing quality and reliability problems. We no longer have to do that.
“Many people at this show three years ago were wondering if we would even make it. The downturn was so significant; we’d just spun off the food services business; and we were left with over $350m of debt. There was a lot of talk in the industry that we wouldn’t be back here. We’re here. And we’re here much stronger.”
In an interview with Cranes Today after the show, Manitowoc EVP, cranes, Aaron Ravenscroft described in greater detail the steps the company has taken to improve production, under the company’s Manitowoc Way strategy.
“The Manitowoc Way is an all encompassing program that seeks to increase velocity and innovation in all parts of our business, with the customer being our primary focus. One example of how we have done this is we have increased our lean production capabilities. At our global factories, this means faster material flow, reduced lead times and new systems for more accurate delivery forecasting. Other major focuses have been improving 5S methodology, safety, processes and Total Productive Maintenance (TPM).
By improving 5S (which stands for sort, set in order, shine, standardize and sustain), factory efficiency is improved. Through steps like these, we have been able to [shorten] our production cycle and bring new cranes to market with much more speed than before.”
As well as the changes made within its production facilities, Pennypacker pointed out the changes made to its global production structure, saying, “Cranes that were typically manufactured in areas that were higher cost have been moved to lower cost regions, so we can capitalise on emerging markets as time moves forward.”
While not naming rivals in these markets, there’s a strong implication that the company is paying attention to the challenge it faces in emerging markets from Chinese and other lower cost competitors. Ravenscroft fleshed out some of these global changes. “We moved crawler production to Shady Grove to optimise our manufacturing footprint, reduce costs, and expand margins.
This has increased operational efficiency and enabled the company to reallocate resources to invest in profitable growth.
“We have also relocated to a better facility in India (Chakan) for Potain cranes and begun manufacturing more models of cranes in Italy (Niella Tanaro).
The location of these factories brings our manufacturing closer to customers and enables us to deliver cranes with increased velocity.
“Manitowoc [as a standalone crane business] is focused on producing the best and most reliable cranes worldwide. We’re a more agile organization. By focusing solely on crane production we have been able to build better cranes, respond to our customers’ needs faster, and make decisions that are best for Manitowoc Cranes and our customers.
“Manitowoc has made significant investments in new equipment at all of our factories to augment their capacity and capabilities, and we are building cranes with higher quality that are more reliable. We doubled the standard warranty, and even added a new extended warranty program for our Grove GRT rough-terrain cranes.”
While becoming more efficient, agile, and dependable will help Manitowoc deliver better cranes faster, that is moot if the company’s products don’t match up with customers’ needs. That is where the company’s ‘Voice of the Customer’ programme comes in.
Ravenscroft says, “Many of our new cranes were heavily influenced by collaborations with our customers through a Voice of the Customer program. So not only are we responding to the market with better products, those products are also a response to customers’ needs.”
One example of this is the new long boom all terrain and rough terrain cranes the company launched at the show: the three-axle 60t, 48m boom, GMK3060L; five-axle, 250t, 78.5m GMK5250XL-1; upgraded six-axle, 300t, 80m, GMK6300L-1; and the 51t (55USt), 43m boom GRT655L rough terrain.
These new cranes are the fruit of changing demand, stronger materials, and improved production processes, says Ravenscroft. “As you look around, you can see that lifting projects are constantly getting bigger and taller. There’s always a need to get the most efficient crane as possible for every job site. So, customers have found that they prefer cranes with the longer booms because then they don’t have to spend as much time rigging a jib.
“For this to work though, we need innovation. Our Wilhelmshaven, Germany, plant has improved its welding process, which saves up to 200kg in boom weight and which in return can be used for longer boom length or more capacity. Also, the single engine design of many of our Grove all terrain cranes allows for more weight to be built into the boom. Another reason Grove all terrain cranes are able to optimize weight distribution more than our rivals is the inclusion of our unique Megatrak suspension.
This offers more weight and space savings than traditional axles, allowing us to create designs that offer longer booms than our competitors.”