Get lost. That's essentially what Buick Motor Div. told Michael A. Plumley in 1983. Citing poor-quality parts, the General Motors Corp. unit dropped Plumley Cos., which since 1967 had been a supplier of hoses and other rubber gear. But instead of quitting, Plumley fought back. It stepped up worker training and started a quality drive that has taken it to the front ranks of America's auto-parts industry. Today, the $80 million company holds quality awards from GM, Chrysler, and Nissan, and is one of 16 suppliers in the world to have earned Ford's Total Quality Excellence (TQE) award.
Pushed by their customers, a handful of small U.S. parts makers have remade themselves into industry pacesetters. They have retrained their employees, upgraded equipment, and worked to make their own suppliers comply with ever more demanding standards. They didn't have the resources of such corporate giants as Xerox Corp. or Motorola Inc., so they compensated. "It's a little bit of smarts, a lot of hard work, and constancy of purpose," says Plumley, chairman and CEO of Plumley Cos.
To identify these top-drawer outfits, BUSINESS WEEK asked consultant ELM International Inc. in East Lansing, Mich., to search its data base for auto suppliers that had won quality awards from at least two of Detroit's Big Three and also from one Japanese transplant. More than half of these 48 suppliers were the U.S. units of such Japanese heavyweights as Nippondenso Co., the world's largest independent auto-parts maker. Most of the rest were major players or their divisions: Goodyear, Michelin, the Spicer Universal Joint Div. of Dana Corp. But a handful of them were small companies.
At first glance, three of the group have little in common. At the Springfield (Tenn.) plant of Perstorp Components Inc., chemicals and recycled plastics are mixed in large vats, poured out like cookie dough, then cut and baked into noise-deadening floor insulation for Ford Rangers and Jeep Grand Cherokees. Manchester Stamping Corp. in Manchester, Mich., cranks out brackets, door latches, and other steel parts--most no larger than your hand--from a row of metal presses. At Plumley's Paris (Tenn.) factories, some workers carefully glue oil-retaining rubber seals to engine parts, while others make, bend, and trim rubber engine hoses into pretzel-like shapes.
BACK TO SCHOOL. All three share one distinction, however: an unwavering focus on excellence. "Customer satisfaction is as good a definition of quality as there is," says Art Mulwitz, Perstorp's vice-president for operations. "The key to pleasing your customers is not shipping mistakes." Sounds simple, but some of these manufacturers weren't even sure how many mistakes were getting out the door when they began to look inward.
In the early 1980s, Ford Motor Co. insisted that parts makers jump into classes on statistical process-control to learn how to limit variations in production. Number-crunching wasn't all they learned. Plumley, for example, found that an inspector responsible for measuring hoses couldn't read a ruler. In mid-1984, the company began remedial classes for workers. Since then, more than 65 have earned a high-school general equivalency degree.
Now, new hires get 14 hours of training: 10 in statistics, 4 in problem-solving techniques. Manchester Stamping pays tuition and book fees for employees who manage at least a "C" average at any school--technical, junior college, or the University of Michigan. At any given time, 10 of the company's 80 employees are enrolled somewhere. "I'd like to see 50% of our people doing it," says President and CEO Wayne T. Hamilton.
As Plumley's employees got better at monitoring quality, they grew dissatisfied with their machinery, which couldn't produce parts at tight enough tolerances. So the company spent $28 million to upgrade. The other two companies have followed suit. For instance, Perstorp's investments included a $20,000 shop-floor computer that automatically plots quality charts showing how many pieces of insulation are outside the acceptable thickness limits of 2.912 mm to 2.988 mm. Relieving workers of drawing such graphs saved the company more than $40,000 in the first year, says Mulwitz. Meanwhile, Manchester replaced virtually all of its presses--a four-year, $4 million expenditure.
Just as the auto makers had, parts makers came down hard on their suppliers. Manchester had more than 30 steel suppliers in 1985; today, it has five. And now that it's writing bigger orders, it can demand faster service on, say, a new alloy for a special part. Plumley tracks its suppliers' performance and invites the best to an annual ceremony and golf match.
QUICK FIX. Monitoring suppliers is particularly crucial at Perstorp, where half of the raw material used is plastic recycled from garbage. Recently, Mulwitz phoned a longtime supplier that had shipped a batch tainted with a verboten chemical compound. They quickly worked out a way to monitor deliveries until the problem could be solved.
All three have also come up with specific targets for improving efficiency and cutting waste. Once, a maintenance worker told Perstorp's Mulwitz that he considered 80% to 85% uptime acceptable for the plant's machinery. "What uptime do you expect from your Chevy Blazer?" Mulwitz replied. Uptime now averages 94% to 97%.
All this pays tangible dividends. At Perstorp, waste is down to 0.7% of sales from 2.5% a few years ago, and the company has become a model of quality control for its parent, Perstorp AB, a Swedish chemical concern. Plumley's TQE status allows it to look at--and prepare bids on--future Ford projects ahead of its competitors. Manchester's Hamilton says its award from Honda Motor Corp.'s Marysville (Ohio) plant has opened the door for work with other Japanese carmakers.
Still, the task never ends. In mid-November, Plumley learned that it won't get its sixth straight Quality Master Award this year from Nissan. Likewise, Manchester may not get a repeat nod from Honda. It shipped a single bad part this year out of some 2 million, the result of a plating mistake that a subcontractor made after Manchester had stamped the part. "We didn't do it, but we're still responsible for it," says Hamilton. He laughingly recalls being proud in 1989, when 99.9996% of the parts Manchester shipped were defect-free. Now that perfection is within reach, such performance just isn't good enough.