Nature shows and science confirms that strength comes from diversity. Whether the humblest pea plant or most complex animal, life forms thrive with crossbreeding: Wading in the shallow end of the gene pool is a dead end.
The same rule applies to corporate cultures. Just as the melting pot made America greater than the sum of its parts, organizations benefit from diverse inputs. To illustrate, look no further than Avon, NY, where Barilla America Inc. took technical expertise cultivated in Italy and grafted it onto lessons learned in its first-generation American plant in Ames, IA.
Judging by the company’s North American sales growth (see story on page 50), marketing and product development are areas of expertise. Less obvious is that engineering is a core competency. At its Parma, Italy headquarters, more than 60 professionals from a variety of disciplines provide engineering support to 28 bakeries and pasta plants worldwide. Worker safety also is part of Barilla’s DNA, and its importance is reflected in the design, construction and staff training at Avon. Engineering innovation and sanitary design are evident, and strides were taken in standardized automation. But the distinguishing feature at Avon is the focus on protecting human assets. Old World values that tie the business to the community and a manufacturer’s responsibilities for workplace health and safety were planted in Iowa a decade ago. They meshed with American management concepts and task orientation to create a distinct manufacturing environment.
Big, brawny lines characterize Barilla’s Midwest plant, a 420,000-sq.-ft. behemoth with a processing area stretching 900 ft. Avon is almost diminutive by contrast: The processing and packaging area is 700-ft. long, a flour mill was not included, and though the Pavan long-goods line outputs up to 4,000 kg (8,800 lbs.) of product an hour, it is considered a standard line, unlike Ames’s prototype line. The price tag for the 318,700-sq.-ft. production/warehouse facility also is a relatively modest $75 million, less than half Iowa’s cost in inflation-adjusted dollars. Annual capacity is 100,000 tons, 50,000 less than Ames but with room for expansion.
Avon puts Barilla within a day’s drive of half the people who eat its pasta, and more reliable equipment lets the team focus on issues more important and less stressful than line disruptions. “People struggle when machines don’t perform,” observes Carmine Simone, Avon’s plant manager. “This plant has proven technology.”
It also is built on proven safety programs, a competitive advantage in boosting productivity, reducing worker turnover and safeguarding the investment Barilla makes in training employees for optimum success. The hard-dollar return likely will include significant rebates of worker’s compensation premium, just as it has in Ames. The soft-dollar returns are even more important to the organization, however, because employees are central to the strategic priorities of workplace safety, product quality and environmental protection.
Build or expandBarilla already was the world’s largest pasta maker when it entered the US market in the 1990s. The company leveraged its Italian name to become a true national brand. Three years ago, Iowa’s capacity maxed out, making future growth contingent on expanding in Ames or building a second plant. Distribution cost, it turned out, trumps centralized production. Utilizing logistics software from Manugistics, managers in the Chicago and Parma, Italy headquarters determined a plant situated almost anywhere in the Northeast would save the company millions every year in distribution costs. The only caveat was rail service: The closest durum wheat field would be more than 1,000 miles away, and either grain or semolina would have to be delivered by rail car.
Deloitte Consulting was selected in September 2005 to oversee site selection. “Their fees are higher, but you go with the guys who are the experts,” explains Fabio Pettenati, the Bannockburn, IL-based vice president of manufacturing for Barilla America. “Their technical understanding and connections to local development agencies are unparalleled.”
Unlike Ray Kinsella’s field of dreams, the village of Avon was waiting for someone to come before it built an industrial park. But a rail spur bordered the envisioned park, and Deloitte’s Darrin Buelow knew the key local officials (see story on page 52). Despite the pastoral setting, Avon is near Rochester, NY, an area whose one million residents were hard hit by the imaging revolution: 50,000 jobs have been lost at Kodak since the ‘80s. Thousands of layoffs were duplicated at Xerox and Bosch & Lomb, two other community mainstays. The availability of skilled production workers would not be an issue.
While Buelow was narrowing the site list to two finalists, Minneapolis-based Faithful+Gould was coming on board as project manager. F+G filled the role of owner representative on site, overseeing design-engineering work, procurement and invoice management. “We used an owner representative in Ames, but not full-time on site,” explains Pettenati. The lower level of support proved insufficient, and broader responsibilities were assigned to F+G.
For a lean organization with most of its technical staff in Europe, outsourcing project management made sense. The practice also is becoming more common in the largest food companies, according to F+G’s Paul Lakin, who estimates 10-20% of food and beverage greenfield projects are managed by specialists.
Some preliminary soil sampling preceded the February 2006 site selection, “but it really was a farm field at that point,” recalls Lakin. “It was fun, but the liaison work with the Livingston County Development Agency increased the complexity tremendously.”
Outsourcing ownership of the Barilla purse strings paid dividends to the client in the end. Even with unforeseen change orders, the final cost was $1 million below the guaranteed maximum price. The savings were shared with Whiting Turner Contracting Co., general contractors on the project.
Sixteen contractors responded to the request for proposals, which was prepared by TranSystems. Preparing preliminary design drawings was supposed to preclude TranSystems from serving as design engineers, but professional relationships between Whiting and TranSystems, along with the oversight of the owner’s representative, persuaded Barilla management to greenlight TranSystem’s involvement.
Safety and hygiene considerations drove many aspects of the project; one contractor was ruled out because of his insistence on a walkable ceiling, above which steam pipes and other utilities would be installed. The concern was that such an area would be difficult to keep clean and could harbor insects. Instead, piping runs along the ceiling of a service corridor running parallel to the processing room and connecting to the warehouse. To reinforce safety rules, a doorway was built adjacent to each lift-truck opening so people would not be forced to share an opening with truck traffic.
Creating a processing area that could be maintained clean and dust free led to horizontal placement of wall panels so supporting girts would run vertically, eliminating flat edges where dust could accumulate. Curbs were sloped for the same reason. Concrete wedges were fitted and caulked into openings at the top of inverted support tees 40 ft. above the process floor to eliminate a harborage. Instead of painting the ceiling, the underside of roof panels were filled and polished by hand to seal them.
Grunt-reduction stepsWorker movement and ergonomics were major considerations in floor layout and equipment placement. “We improved the flow of the process in a nice, streamlined effect,” says John Davlin, manager-engineering. The QA lab is more convenient to the control room than in the Ames plant, and the die room was improved to reduce the number of steps workers take while washing and storing dies. Three times as many overhead air handlers in the processing area will make climate control much more even than in Iowa, improving comfort levels.
“We set up work stations so that there is less lifting and stretching,” explains Mike Biegger, director of operations for both Ames and Avon, “and so lifting occurs between the waist and shoulders.” Most lifting occurs in the packaging area, and a number of stress-reducing aids were put in place. An adjustable load-sensitive box holder rises as the level of the flats decreases, bringing the next blanks closer to the operator’s comfort zone. Similarly, a machine automatically lifts rolls of foodservice bags into position, eliminating the need for two workers to manually install the 70-lb. rolls. “Productivity was the secondary consideration,” says Biegger. “The safety of the people is the main ROI.”
More changes will be made as the safety committee recommends improvements, though a dollar spent on upfront design is worth $10 in retrofit costs, he adds. “If we need to spend money or time, I have the support of management to do it,” says Biegger. “We’re always trying to reinvent ourselves.”
The last decade has seen significant advances in open architecture of automation controls. Davlin, an electronics engineer, recognized the savings in both start-up time and on-going maintenance that could be realized by standardizing as much of the automation infrastructure as possible. “We must have five different types of PLCs in Ames,” he says by example. “The maintenance and training costs are huge.” Rockwell was the new plant’s hardware choice, and an upgrade from SLC to Contrologix PLCs was done with an eye toward centralized data management. “If you want to be in complete compliance with the Bioterrorism Act and other mandates, handwritten reports would have to disappear,” Davlin says.
Electronic records provide details on every aspect of a facility’s operation, but operators generate written reports on certain critical functions. Poring over electronic reports is like “reading the phone book,” Simone believes. He cites the Japanese contention that people need to write down critical information to reinforce it.
Wonderware is the HMI standard because “it’s a nice, neutral interface between all the different PLC platforms,” Davlin says. But the reality on the floor underscores the current limits in standardization. PanelView HMIs from Allen-Bradley and industrial PCs from Hewlett Packard populate the plant floor, alongside Wonderware HMIs. Agnostic controls currently are as good as standardization gets.
Air handlers are networked to the ControlLogix platform, and the system monitors equipment in the machine room, though specialized controls actually operate boilers and chillers. The biggest benefit from standardization came in packaging, where fillers, case packers, palletizers and stretch wrappers from Italy, Japan and the US had to be integrated. The complexity is greatest on the short-goods line, where 20 silos manage finished goods of various shapes. When the filling machines are ready, a simple interface signals the silo cluster to begin feeding product.
Energy conservation was a priority, and extensive use of variable frequency drives, high-efficiency fluorescent lighting, presence sensors in the warehouse and side windows for natural lighting are expected to help lower energy consumption and improve working conditions. The engineering staff took advantage of the plant’s snowbelt location to use outside air during the winter months in an air-to-air heat exchanger used to cool finished pasta. The innovation, along with other efficiencies, helped win a $160,000 grant from New York’s energy-conservation authority.
Jacobson Warehouse Co., Barilla’s logistics partner, operates the complex’s 205,000-sq.-ft. warehouse. A repacking area was created to allow Barilla to create specialty packs for club stores and, in another part of the warehouse, build rainbow pallets on demand. Meeting customers’ requests for customization without having to send finished goods to a copacker and then bring pallets back to the warehouse will save time, expense and energy costs, though the wasted time and resources on removing boxed product from cardboard cases for club packs is frustrating. Managers hope to engineer a system that would divert boxes before they’re case packed.
Most of the rolling inventory is in the warehouse, where the battery-changing room is located. Two workers use a chain to swing DC batteries in and out of position in Ames; in Avon, a mechanical system enables a single worker to make a safer, more efficient change.
Safety bonus planWorker safety was a consideration before the permanent staff arrived. Construction workers had to complete 10 hours of OSHA orientation before being permitted on the work site. With as many as 200 workers a day, the training was extensive and worthwhile: No lost days were reported during the construction period. The safety mandate extended to preparations inside the plant, which meant retaining an Italian interpreter. Besides technicians from Pavan and Fava, the maker of the short-cuts line, Barilla maintenance technicians from Italy joined their American colleagues in setting up the production lines.
Individual incentives and production bonuses are the norm at Barilla, and they are generous. With the plant’s 69 workers coming on board as early as January 2007 and production not scheduled to begin until summer, there was no production goal to work against for half the year. Management decided to offer cash rewards to fortify the safety culture they wanted to create. Ten criteria were set, beginning with establishment of safety and emergency-response teams. If all goals were met when production began, workers would receive a 5% bonus for each hour worked.
Safety training and certification in Haz-Com, forklift operation and CPR were stipulated. A safety work order system was developed. Near-miss reporting and safety investigation protocols were set. A safety behaviors observation process was developed, requiring all employees to spend time each month observing their peers and reporting on whether procedures on a checklist were done properly or not.
“You’re expected to be safe,” explains Tracy Charlebois, human resources manager. “It’s part of the new-employee interview process, and the individual observations help keep it behavior based. The focus is on interaction and modifying people’s behavior.”
The hiring process was rigorous, beginning with a questionnaire designed to identify self-motivated personalities and conflict-resolution tendencies. About 175 applicants were invited to interview before a panel including Charlebois, Biegger, Simone, Administrator Stacey Cale and a specialist for each job. Each evaluator scored the applicant; then a consensus was reached. “It was exhausting but such a critical step,” says Biegger. Adds Simone: “The interviews helped us see if the candidate was engaged with his mind or just his hands.”
Once on board, workers are encouraged to upgrade their skills through a four-tier system. Employees are financially rewarded, and the plant gains production flexibility. “This is a high-performance organization,” says Biegger. “Our employees are motivated, and they want to grow.”
Pushing the PM envelopeWhen Barilla’s Ames and Foggia, Italy plants came on line, they were the first 24/7 production centers in the company’s network. Avon was able to borrow from those plants’ scheduling approaches and look for opportunities to improve on them.
Lines shut down after three weeks of production for 22 hours of intensive and coordinated maintenance and sanitization. Fifteen or more people swarm the line, a third of them outsourced sanitation specialists. Operators clean the mixers themselves, and they’re responsible for general cleaning and sanitizing on a daily basis.
“It’s a hugely developed PM program,” observes Davlin, “and they stick to it religiously.”
Simone hopes to take maintenance to a higher level with more predictive work. After graduating with the Italian equivalent of mechanical engineering degree, he spent three years in maintenance engineering at Fiat and Parmalat before joining Barilla. Predictive maintenance is a mature practice in automotive, as are Kaizen and other principles of lean manufacturing, and Simone brought those orientations with him to Barilla’s Foggia facility. Until then, operators performed routine maintenance, but he argued that would not work with 24/7 production. Scheduled maintenance eventually was augmented with oil analysis, vibration analysis and infrared imaging to troubleshoot. “At first it’s difficult,” he allows, but when production disruptions are minimized, staff buy-in follows. “At some point, the system will self sustain, which is pretty neat,” Simone says.
Vibration analysis was done on the massive extruders at the head of the lines, but the screws turn too slowly to produce signals that are reliable predictors of failure. However, he intends to install vibration sensors in the pasta dryers to monitor vibration of the fans, which turn at 1,800 rpm or higher. He also is budgeting a sophisticated infrared camera. Besides troubleshooting electrical hot spots, the camera will be useful in detecting warps in machine panels, seal degradation and other thermal deviations.
The culture being built in Avon has an Italian accent, but the combination of Italian and American perspectives enriches the organization. “If you respect others, these systems work anywhere in the world,” Simone reflects. But the openness of American culture short circuits potential friction. “If there is a problem, you sit around the table, look people in the eye and get an honest and open response,” he says. “People here are very honest, caring and open.”
It is early in the Avon plant’s life, but the groundwork for success has been laid. The safety training has paid off with zero workdays lost to date. And throughput in the first six months was well over production goals, generating year-end bonuses for the entire staff.
It’s a promising start for Avon. More will be expected, of course, and not simply in terms of increased output. How the facility interacts with the community and how it safeguards the well-being of its employees also are priorities. Food manufacturers “cannot solely be production engines but must also convey values and models of behavior,” a recent Barilla SpA annual report notes. The engine under Avon’s hood might belong to a Maserati, but the rest of the car is a Volvo.
For more information:
Darrin Buelow, Deloitte Consulting, 312-486-2096, firstname.lastname@example.org
Paul Lakin, Faithful+Gould, 612-338-3120, email@example.com
Luca Zocca, Pavan Group, 011 39 049-9423111, firstname.lastname@example.org
In second place and gainingAccording to supermarket scan data from ACNielsen, Barilla America has elbowed its way past New World Pasta to stake its claim as America’s second largest pasta manufacturer, trailing only American Italian Pasta Co. The advantage is razor thin, but that doesn’t dim the achievement for a company that didn’t begin North American production until 1998. Between them, the top three pasta makers command 80% of the US retail market.
For the 52 weeks ending January 25, retail sales of Barilla accounted for 25.6% in the food-store channel, Nielsen numbers show, a few truckloads better than New World with 25%. AIPC, which dominates the private-label segment, had about 30% share. Branded product accounts for all of Barilla’s sales.
Barilla entered the US market in 1996, importing product from Italy and packaging it in Syracuse, NY. A strong Italian American presence in the Northeast in general and upstate New York in particular makes the region a primary market for pasta: According to Nielsen Panel data, Northeastern households purchase 17 lbs. of pasta a year, 55% more than the national average.
Guessing right on category trends has boosted Barilla’s double-digit annual growth over the last decade. Instead of trying to respond to the low-carb diet craze of 2003-2004, Barilla’s R&D staff focused on nutritional enhancements such as whole-grain pastas and Plus, a line fortified with flaxseed, fiber and enough extra protein to meet USDA school-lunch guidelines for meat substitution.
Matchmaker, matchmaker ....Site selection blends art and science, muses Deloitte Consulting’s Darrin Buelow, and both were present in almost equal measures on the Barilla America project.
Computer databases and sophisticated models are valuable tools, and they accelerated analysis of thousands of possible parcels strewn across seven states from New York to Virginia. But raw-material delivery was a sticking point: “Rail-served sites east of the Mississippi have been pretty much picked over in the last 150 years,” the Chicago-based project manager allows. Time for Plan B: “We relaxed our strike zone to include Avon.”
The Finger Lakes community was a previous finalist on one of the 80 site projects Deloitte does each year, and the local authorities, utilities availability and other quantifiables already were known. Workforce statistics are readily available, and they were augmented by interviews with local manufacturers as part of due diligence.
When negotiations begin with development authorities, “it’s not uncommon to see a job-multiplier factor into the 2s” with a food plant, Buelow says: For every person hired by the plant, two to three additional jobs will be created in the community. Bare-knuckle negotiations are not advised, however. “Be very careful not to put a community in a position where bad blood is created,” he cautions. Once built, a plant is there to stay, and who wants to fight with the neighbors from Day One?