Survival Of The Fittest

Lagging Behind?

The majority of small manufacturers were not--and are still not--aware of many of the changes occurring in manufacturing, contends Kevin Carr, director of the Manufacturing Extension Partnership (MEP), a program of the U.S. Department of Commerce's National Institute of Standards and Technology in Gaithersburg, Maryland. "A lot of small firms are not taking advantage of the [latest] technology to make themselves more profitable," says Carr. "What's even more dangerous is that a lot of firms aren't even aware this technology is available.

"The primary reason [small firms] are not adopting state-of-the-art technology is cost. They may also feel they lack the expertise in-house to apply the new technology, or they may not know what to buy."

Although the going was rough initially, one Philadelphia manufacturer knew cutting-edge techniques would give his company a competitive edge.

"We needed a lot of help managing high-volume customers. And we wanted to ship as fast as possible," explains John Strotbeck, a former Olympic rower whose company, Boathouse Sports Inc., custom-manufactures athletic outerwear for high school, college, professional and international sports teams.

In 1993, Strotbeck decided to adopt kanban manufacturing, a Japanese technique that eliminates the need for lots of expensive unit production equipment. "You re-engineer the facility and manufacturing production so the whole factory is set up in small groups, and each group totally completes a project," he explains.

Among the challenges Strotbeck faced in adopting kanban technology was building trust between himself and his workers, who had to undergo cross-training. "In the garment industry, most people are managed under an `us and them' philosophy," says Strotbeck, adding that the industry also has a reputation for exploiting workers. Boathouse's switch to the kanban production philosophy helped the company achieve 30 percent annual growth and has kept the 100-employee firm at the top of a competitive niche industry.

But not all small manufacturers are able to overhaul procedures, and those that can't must find other ways to stay competitive. Marlene Alter, president of two auto-related companies in Gardena, California, relies on innovations instead of the latest technology to stay in the game.

"We don't have the latest computers, but I'm not sure having the latest is very important in a small corporation," muses Alter, who with her husband, Roy, runs Prestige Motorcoach Corp. and Era Products Inc., which handle high-end van conversions for Chrysler, Chevrolet and Dodge.

For the Alters, whose two firms together employ about 90 people, money is the deciding factor when purchasing equipment. "How long will it take to get a return on our investment?" she says. "Often `the latest' is very expensive, and the return is [often not worth the cost]. On a larger scale, you might be able to absorb the expenses, but it doesn't work that way in a small company."

Instead of relying on state-of-the-art technology, the Alters stay at the forefront of the industry by concentrating on product innovation. "We're always [developing new products], always trying to improve on what we're doing." Innovation and attention to quality helped the company grow 50 percent in 1996, and Alter expects similar growth this year.

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This article was originally published in the September 1997 print edition of Entrepreneur with the headline: Survival Of The Fittest.

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