SABANCI UK LTD
Five years ago Sabanci’s Teesside chemicals plants were underperforming.
Now, after some capital expenditure and improvements in procedures,
systems and working practices, these world class plants export to China.
OBJECTIVES
In 1999 output at what is now the Sabanci site was falling due to
a lack of asset care. Without change its Teesside manufacturing
facilities would become uneconomic. The then owners’ cost
cutting strategy had failed, so a new approach was needed.
SOLUTION
The Wilton site
Wilton’s two plants (T7 and T8) process paraxylene to make
purified terephthalic acid (PTA) for polyester films, PET bottles,
and fibres. ICI owned them until 1998, then sold them to DuPont
of the USA. Two years later, DuPont put them into a joint
venture with Sabanci of Turkey, which now owns them outright.
Though capable of 550,000 tonnes a year, by 1993 they
produced under 480,000. In a buoyant market ICI could combat
breakdowns with increased spending on parts and overtime.
Best practice in:
High performance workplace
Sector:
Chemicals
Size of firm:
The Wilton operation employs
around 380 employees.
Location:
Wilton, UK
Website:
www.dupontsa.com
www.beyondworldclass.com
Then a change in the market forced prices down and increased
costs. In 1995, just before the disposal to DuPont, ICI cut back,
even though reducing maintenance made the plant more
unreliable and consequently cut its capacity. When continuing
breakdowns drove output below 400,000 tonnes in 1998, both
plants faced possible closure.
Solution
By 1999 these crises had forced operations and plant engineering
managers to collaborate more closely. In a process now called
Flowdown, the two sets of managers translated business goals
into measures and identified projects that would help the
business achieve them.
The measure that mattered, they concluded, was cost per tonne,
not fixed costs, and the way to cut it was to increase uptime, the
multiple of an asset’s maximum available running time, running
rate and quality rate.
Chris Lakin, now Sabanci’s manufacturing improvement
manager, studied four years’ plant data and found that
improving uptime by 15 per cent was worth 10 times as much
as a half-million-pound cost cut. Higher uptime would increase
capacity, lower variable and fixed costs, reduce inventories and
working capital and reduce waste.
Photo by Samuel Ashfield
“You can’t sit back because, as you’re moving up that
tree, there will be other people moving up too.”
CRAIG DOHRING – OPERATIONS MANAGER
The customer would benefit: “If you keep the plant steady,”
says Lakin, “the product is consistent.” Customers don’t have to
tweak their processes to deal with raw material variations.
Root causes
Lakin had identified two deep causes for plant failures, one
‘hard’, one ‘soft’. The ‘hard’ causes of downtime – for example,
a worn out heat exchanger or cracked drier shell – could be put
right with investment in plant refurbishment. The spending
would yield a one-year payback and, ultimately, a return of
between £10m and £20m. DuPont agreed to provide £3m a year
between 1999 and 2001.
To benefit from this investment, Wilton would have to overcome
‘soft’ causes of downtime. These accounted for about half the
stoppages and arose because the workforce failed either to
understand or follow start-up and maintenance procedures or
because the right routines were not in place.
Poor start-ups accounted for huge amounts of lost output and
damaged equipment. Qualified fitters fixed pumps and other
assets by judgement instead of by following ‘quality build
plans’. And patrols – operators given a route round the plants to
inspect assets, take readings and fix problems – periodically
used poor weather as an excuse for failing to fill out their plantitem reading sheets.
Management knew the ‘hard’ investment would only pay off if
operators and technicians worked in teams committed to
continuous improvement and defect elimination. Achieving this
would mean a period of intense education and training and, at
this stage, management had yet to convince the workforce to
accept a changed approach.
Pressures for change
As management prepared its education programme, there
was some resistance to change. But although process and
engineering staff, unused to cooperating, blamed each other for
plant faults, a number of influences were working to change
behaviours.
First, in 1991 ICI had introduced annualised hours – abolishing
overtime – and flexible working in return for a 14 per cent pay
rise and a reduced working week. At first this was resisted
because some earned more in overtime than they gained under
the new agreement but, five years on, the change already noted
in market conditions allowed ICI to enforce it. The plant
recovered from this low point in industrial relations and flexible
working became a Wilton way of life.
The second influence was DuPont’s purchase of the PTA plants
in 1998-9. DuPont’s non-negotiable enforcement of safety rules
overcame resistance to better operating procedures, and Lakin
could instil the need for continuous improvement – based on
root-cause analysis of downtime – to find and eliminate at
source the defects that caused them.
The third influence was a meeting in 2000, when management
brought together two staff from each of the six shifts to talk
about how they did their jobs. The meeting revealed that every
shift had a different way of starting, running and stopping the
plant – even though, in theory, they worked to the same set of
clear procedural instructions.
Through this and other exercises, management showed that
poorly designed reading sheets, poor start-ups and other
behaviours lost £1.5m in six months on plant T8. There was
uproar, recalls T7 operations manager Craig Dohring, but the
case the meeting made for retraining and other changes was
unanswerable.
Opening communication
The workforce was receptive to the workshops and training that
followed, particularly when operators, not management, ran the
workshops that spread the compliance message. When Wilton
management presented the same business case to the unions
and operations teams as Lakin had to the DuPont board,
resistance to complying with consistent, stringently enforced
operating instructions in the cause of ever-higher uptime
dwindled and disappeared.
Transformation
Now, with multi-skilling and a continuous improvement
programme in place, and no overtime payments, it takes six
hours to change a high speed pump instead of three days.
Operators and engineers have now taken on many of the tasks
formerly given to outside contractors for large callout fees.
Continuous improvement (CI) is now built into the way the plant
floor operates, says Wilton site manager Gary Conroy. At the end
of each shift, operators log key measurements for each of the
plant functions, and the first line manager (FLM) meets his team
to list that shift’s improvements in safety, health and environment
(SHE), production, cost, quality and any people issues.
Perfection is elusive because PTA production involves taking
1,300 or more readings a week and a few are bound to be out of
range. If readings stay steady for long, managers tighten the
band to set off the next round of improvements.
Plant managers’ set up Flowdown-driven, business-measure
based CI teams as needed. This prevents pet projects focussing
on £10 pump seal leaks when dryer faults are causing £300,000
shutdowns. Once aims are identified, middle managers are
charged with specific targets aligned with those aims, but they
and their volunteers decide how to go about improvements.
Flexible working and multi-skilling are now central to teams’
success. The dryer faults were caused by tube layouts, the use
of non-demineralised washing water, faulty gas flows, over-high
operating temperatures and other causes. “It’s only by involving
the engineering and process people that you can build up the
entire picture to resolve the problem,” says Conroy.
All staff now have a detailed training structure, says Dohring.
FLMs appraise every operator and engineer twice a year and
agree once a year what training they need for the next 12
months. The training both helps flexibility and addresses future
skills shortages. Each FLM can build a team with a range of
skills: “We needed shift teams trained in appropriate skills,”
says Lakin, “not everyone trained in everything.”
RESULTS
PTA’s uptimes have moved from just above 70 per cent to
consistently near 95 per cent – or 10 per cent above normally
assumed ‘world class’ standards. The 30 year old T7 plant is
performing better than since it was built and will improve
further, says Dohring. T7 is even selling to China – its exports
are at 10 times their 1999 level. Product quality is above 99 per
cent, and output is now around 550,000 tonnes a year at a cost
per tonne around 73 per cent of 1990 levels: “That’s the key to
selling into China and other places,” says Lakin. “That allows
you to take 15 per cent off your margins and still make an
additional 15 per cent, or take the full 30 per cent off and keep
your volumes. That’s its power.”
It’s a never ending journey, says Dohring. ‘World class’
benchmarking can mislead: “You can’t sit back because, as
you’re moving up that tree, there will be other people moving
up too.”
CHALLENGES
“We always thought it would take a long time,” says Lakin,
“but in our heart of hearts we thought it would be quicker
than it was.”
An early hurdle was his management team’s expectation
of early results. They would set up teams to deliver a five
per cent uptime improvement and expect them to deliver in
three months.
It takes a long time to align everyone with the new culture, says
Lakin. “You have to communicate, communicate,
communicate.”
Senior operational managers found it difficult to get used to
spending what was needed on important plant repairs that
might have a long term effect. They took a while to get used to
the idea of spending wisely rather than not spending at all.
Steady, modest investment is a better medium term bet than
cost cutting.
THE LAST WORD
Chris Lakin, Sabanci’s manufacturing improvement manager,
identified the opportunities and provided the financial incentive
that forced people at all levels to behave in a different way.
He says, “There are no silver bullets or magic tools. The
key is to use a variety of tools as appropriate as part of the
overall journey.”
This case study was sourced from the Cranfield School of
Management.
DTI is not responsible for the content of external websites and
inclusion in, or exclusion from, the above list does not imply
recommendation, endorsement or otherwise of any company,
product or service. Remember that technologies and markets
change rapidly so it is always wise to undertake your own
independent research.
For more information on Achieving best practice in your business:
● Visit our website at www.dti.gov.uk/bestpractice
● Call us on 0845 015 0010 to order from our range of free
best practice publications or visit www.dti.gov.uk/publications
● Contact your local Business Link advisor by visiting the website at
www.businesslink.gov.uk or calling 0845 600 9 006
Published by the Department of Trade and Industry. www.dti.gov.uk
© Crown Copyright. URN 05/727; 03/05