McLaughlin Body Company
John Deere
February 21, 2005
Company History
McLaughlin Body Company
Corporate Office
East Moline Operations
1400 5th Street
(250,000 square feet / 23,225 square meters)
Rock Island Operations
350-44th Street
(450,000 sq. ft. / 32,516 sq. meters)
Most Valuable Resource

Dedicated employees at McLaughlin Body
Co.
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235 Hourly
83 Salaried
Renewed relationship with U.A.W 1414
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Newly signed 6 year contract
Lessons learned on both sides from a 4 week
work stoppage
Our Vision
Committed to being the premier supplier of
cabs and attachments by providing
products and services of the highest quality
and value to our customers.
Our Mission / Value Statement
Our Mission
Our mission is to be the Quality, Service, Technology and Value
leader in our industry. The focus on leading in all these areas will
allow McLaughlin to exceed our customer’s expectations and
mutually prosper.
Our Values
The integration of our people and
processes to provide products of high value
and high quality.
The continual support of our community by
providing valued jobs and participating in
charitable activities.
Continuous improvement through employee
development, training and education.
Competencies

McLaughlin Body Company is a supplier of cabs,
bodies and attachments to the ag, construction,
industrial, military, mining, municipal and truck
markets
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Expertise in
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Design and development
Program management
Prototyping
ROPS certification
Fabrication
Weld
Paint
Assembly
Delivery JIT to line set
Fabrication Capabilities
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Various lasers including a
Mazak FMS (Flexible
Manufacturing System)
featuring (2) 4000 watt lasers
2500 watt Mazak multi-axis
laser with sheet loader
Straight side and double action
draw presses to 1000 tons –
bed sizes up to 144” X 90” and
56” shut height
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5” OD capacity CNC controlled roll
bender for complex sweeps
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CNC controlled press brakes
nearly eliminate setup
Robotic Welding
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13 Existing robotic weld
stations
 ABB
 Panasonic
 Fanuc
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9 integrated weld positioners
3 flexible cells
Continued dedication to
expansion of automation
Paint Capabilities
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Current dual paint systems handle parts of any size
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Current E-coat Cab line
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8 stage zinc phosphate pretreatment with non-chrome seal
8th generation low cure cathodic epoxy e-coat material
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Acrylic top coat
6’ X 8’ X 6’ part size
2000# capacity
Large line
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Minimal shrink / edge pull
Reduced VOCs and improved performance
5 stage iron phosphate pretreatment
Polyester top coat over thermally cured spray primer
10’ X 10’ X 50’ part size
10,000# capacity
All new cab line will be operational in April of 2005
MBC Customers
Quality
Customer Quality Metrics
Quality
Delivery

Customer A
5.1σ
6.0σ
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Customer B
6.0σ
6.0σ
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Customer C
4.8σ
6.0σ
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Customer D
6.0σ
6.0σ
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Customer E
98%
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All Others
99%
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(MBC, VOC Report Ratings)
Supplier of the Year Award
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Deere & Company, North
American Ag Division, 2004
Supplier of the Year Award
Customer Communications Tools
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Customer Quality Status Reports (VOC)
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NetMeeting or WebEx Capabilities
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Internal quality rating system
Quality Engineers communicate with customers and report to
the McLaughlin organization on a weekly basis.
Provides the opportunity for the design, process,
manufacturing and quality engineers plus supply management
to work as a team on cost reduction, corrective and preventive
activities from multiple remote locations.
Caterpillar Connect / Deere Supplier Collaboration
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Customer specific web based access to specs, drawings,
quality performance reports and other communication
information.
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Electronic posting of PPAP documentation
Materials Testing
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Two local certified laboratories for chemical and physical testing of
metals.
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Chemical supplier performs periodic system audits of cleaning and
phosphating processes
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Paint supplier performs monthly analysis of E-coat bath.
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In-house testing:
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Dry film paint thickness
Zinc phosphate pre-treatment coating weights
Specular gloss of topcoat paints
Cross hatch paint adhesion,
ASTM B117 salt fog accelerated corrosion resistance
GM9540P cyclic accelerated corrosion resistance
Ultra phonic leak testing
Ultra sonic weld evaluation
Surface hardness of metals (Rb)
CQTS Completed Checklist
CQTS Component Pareto Analysis
Corrective & preventive action
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New reports automatically sent via internal e-mail to
specific employees
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Focus on Direct & Root Causal factors, Mistake
Proofing and other Prevention Activities
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Complete sort capability by date range, originator or
report status
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Completed reports are electronically transmitted to the
customer
Cost Containments
Pricing Methodology
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A specific formula is applied that both MBC and
our customer know and understand
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Separate markups for purchased content vs.
manufactured content
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Departmental overhead rates are applied for
press room, weld, trim, and paint
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Changes are processed at variable cost only
Cost Benchmarking Initiatives
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John Deere Steel
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Cat Logistics
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MRO Supplies
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Cost Containment Analysis
McLaughlin Enterprise
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McLaughlin Body Company
Cab Manufacturer
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Bee Line Company
Laser Alignment
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McLaughlin Motors
Auto Dealership
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SE National Bank
Banking
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MBC Financial
Leasing
MBC Working to reduce costs?
 Major investments in equipment
 Info Systems Initiatives
 Continuous improvement initiatives
 Monthly cost reduction meetings
 Consolidation efforts
Operations Consolidation
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Rock Island facility has been selected as the
primary manufacturing facility
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Operations centered around world-class paint
system
Integration of all weld, paint and assembly
operations
Streamlined material flow between processes
Integrated fabrication of components
Operational in 4-6 months
New system capabilities
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System will be isolated in separate,
pressurized building
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Provide superior pretreatment
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15 Stage immersion pretreatment with Zinc Phosphate
Alkaline / Acid / Alkaline w/reverse polarity cleaning
stages for best in class laser oxide and weld smut
removal
Include powder coat in addition to e-coat and wet
spray top coat capabilities
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8th Generation improved performance e-coat
Low-E powder for reduced VOC emissions and reduce
energy consumption
Consolidation Goals
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Increased competitiveness
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Reduce waste associated with non-value
added activities
Reduce overhead by establishing multifunctional focus teams
Accelerate throughput and reduced
inventories
Improve quality through streamlined
processes and direct communication
between functional groups
Consolidation Goals
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Improved communication
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Integration of product support personnel
Electronic data collection and online access
to process instructions and drawings
Open layout without “departmental” barriers
Committed team focused with clear mission
for the future
Consolidation Goals
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Establish positive image within QCIC
complex
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Segregation and distinction of MBC
Exterior revitalization
New visitor center and product showroom
Clean and comfortable work areas for all
employees
Renewed emphasis on housekeeping
What are the results?
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Material burden reduced 20%
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Paint costs reduced 5%
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Laser costs reduced 17%
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Improved quality and capabilities
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Freight costs reduced 19%
Representative Price History – 1
45%
35%
25%
PRICE WITH INFLATION
15%
ACTUAL PRICE
ACTUAL LESS IMPROVEMENTS
5%
Base Price
5%
15%
Representative Price History – 2
12.5%
7.5%
2.5%
Base Price
2.5%
Inflation Price
7.5%
Actual Price
12.5%
17.5%
22.55%
Inventory Controls
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Forecasting
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Delivery PPM scores
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Customer forecast and order requirements
In the past 12 months, of the 8092 trimmed and sequenced
cabs produced, 100% were delivered on time
Sequencing of delivered cabs to machine line set
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Releases for fully trimmed cabs with a wide variety of options
are received into the planning system via EDI
Electronic configuration of models and options (EDI data / web
portal)
Unique BOMs generated for each cab serial number
Build card system for assembly instructions
Order Process – Trimmed Cab
Order
Received
EDI
• Sequence #
• Options
Required
• 30 Day Ship
Notice
• 7 Day Firm
Notice
MBC Create
Work Order
with
Sequence #
• Details
Optional
Equipment
• Software
Program
Review
Available
Options for
Acceptance
Build Ticket
• Creates SubAss’y Reports
• Reviews
Inventory
Requirements
Software and
Test
Download
• Software
Downloaded
• Test
Requirements
• Sub-Assembly
Test
Documented
Daily
Shipments to
Customer
• Daily
Shipments by
Customer Ass’y
Sequence
• Invoiced
Supplier Communication
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Supplier Forecasting Requirements
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Expedited Freight From MBC suppliers
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Quarterly forecasting meeting with suppliers to review our
estimated requirements for the next six months
Unscheduled customer volume increases
Customer controller supplier late shipments
Customer expedites cab shipments
Supplier Quality Rating
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Reviewed with supplier on quarterly basis
Development
Engineering Support
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Current group consists of 5 Manufacturing
Engineers, 4 Industrial Engineers, 4 Quality
Engineers, 3 Design Engineers, 2 Tooling
Engineers and 1 Weld Engineer
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This group can manage any product introduction
from a complete design from the ground up to a
straight forward transfer
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Average Quotation Lead Time
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1 week turn on Engineering Changes
3 to 4 weeks Cab
Product Development Process
• Provide acceptable quotation
• Establish target price
Contract
Feasibility
Review
• X-functional
• Capacities
• Capabilities
• Competencies
• Strategy
Design
and
Develop
• Assign Team
• Develop
Project Plan
• INPUT review
• Product design
• Supplier
selection
• Design reviews
• DFMA/ FMEA
reviews
• Tooling Design
• Process Plan
Prototype
Validate
Pilot
• Proto build
• Confidentiality
• Mfg validation
• Tooling build
• Tooling
validation
Release
Launch
• OUTPUT
review
• Key features ID
• IMS
development
• Preliminary
process docs
(routings /
process
instructions)
• Control plans
• Facility prep
• Training
• Product
approval
• FAI / Capability
Studies
Engineering Support
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Project Management
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Projects are tracked through production
start up with detailed Gantt chart
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Responsibilities defined and communicated
Key milestone reviews scheduled
Critical path tracked and managed
Summaries and updates are circulated to
entire internal and external project team
on predetermined intervals
Engineering Support
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Project Management
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Tooling and product cost budgets are carefully
tracked using development tracking summary
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Products broken down by functional group such as
frame, glass, door, etc
Costs tracked and monitored against initial frozen
budgets
Immediate visibility to budget creep
Miscellaneous items such as hardware budgeted
initially as a “kit” and tracked as defined
Design Capabilities
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(7) Seats of Pro-Engineer (Maintain
use of previous versions to support
customer needs)
Pro-Process for Assemblies (used
by IE)
Pro-Intralink (Data Management
software)
Pro-Mechanica 2001 (for FEA
analysis)
Ability to import IGES, STEP, DXF
models
Flexible and will adapt to customer
needs
Design Capabilities - Tooling
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Tooling design in can be done in Pro/E
concurrent with product development
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Speed launch time, simplify changes
Create permanent revision controlled
record of tools
Design Capabilities - FEA
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Linear FEA capabilities using Pro/Mechanica
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Analysis for potential hot spots
Frame / joint optimization
Product Expertise
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ROPS expertise with active members on
both construction and Ag ROPS
subcommittees.
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Bill Johnson – Advance Engineering Manager,
Current vice chair of SAE Operator Protection
Technical Committee - OPTC
Active member of OPTC SC4 - Protective
Structures
Active member of ASAE PM-23-2-2 Agricultural
ROPS subcommittee
Change Process
Request for
Change
Identify Impact
• Customer request
• Internal Change
• Unit cost impact
• Tooling
• Obsolescence
Standard time = 1 Week
(~300 Changes in 2004)
• Customer approval
Authorization
Implement
• Internal approval
• New parts
• ISIRs
• Process Instructions
• Training
Implementation Specific
lead time requirement
Management
2004 Five Year Strategic Plan
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Retain current customer base through superior customers
service
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Diversify business by obtaining new business in new
markets and additional business from key customers
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Improve customer communications with quarterly reviews
Position ourselves as a Key Supplier all Deere Division
Supplier of the Year for Deere Ag Division 2004
Utilize adjacency strategies to grow key segments with valued
customers
Achieve high value status (low cost, high quality,
exceptional services)
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Evaluate current supply base and look at offshore sources.
Evaluate current supplier deliver process for inventory reduction
Leverage supplier expertise and develop strategy for significant
reductions
2004 Five Year Strategic Plan
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Operations consolidation
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Successfully address key management succession issues
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Utilize lean tools and methods to sustain continuous
improvements
Pursue technology advancements to improve quality
Identify key people and skills and develop appropriate plan
Achieve ongoing company wide commitment to strategic
direction
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Schedule timely review, update and measurement against
strategic plan
Thank You
From McLaughlin Body Company