Smarter workers turn around parts maker

WORKFORCE training and a corporate makeover have helped automotive metal fabricator Metalsa turn from loss to profit within 12 months.

Based in the Melbourne bayside suburb of Cheltenham, Metalsa is a metal stamping and welding operation that supplies 10 million parts a year to Toyota Australia and Ford Australia.

A key part of the company’s turnaround was the enthusiasm employees had for building on their skills and working towards gaining a diploma, associate degree or certificate, said plant manager Murat Kirem.

The more highly skilled workforce had also made Metalsa more competitive, he said.

“Well, a better qualified workforce does influence price, at the end of the day.

“We are now able to cut costs and quote more competitively.”

Previously, Metalsa had been operating in the 75 to 80 per cent band on its “people performance” index. Now, uninterrupted running and minimal wastage are paying big dividends.

Left: Metalsa plant manager Murat Kirem.



“Machines are running constantly, people are hitting their targets constantly, and therefore man and machine, the sum of those two, which is the output, is at world-class level, above 95 per cent,” Mr Kirem said.

“We send 10 million parts to Toyota each year. We have a reject rate of zero PPM (parts per million). This is not Six Sigma, this is better than Six Sigma.

“It’s a massive achievement,” he said.

(Six Sigma is a widely used approach to manufacturing which aims to improve processes, thus eliminating defects and variability.)Mr Kirem said the transformation happened after Dana Corporation sold the company to Mexico-based Metalsa in 2009.

The Cheltenham operation had lost money every year since 2007. Mr Kirem was made plant manager in 2011 and implemented a restructure to try to curb the losses.

“With the help of the people here and a bit of a clean-up and a consolidation we were able to turn the company around to a profitable state,” he said.

“We achieved an $8 million turnaround in earnings in a $40 million-a-year company. How did that happen?“I was able to make redundant 35 people out of 195 with the same level of output. So what were those other 35 people doing?” he said.

Unfortunately, in one sense the improvement in efficiency will lead to eight more retrenchments at the end of this year, Mr Kirem confided.

As part of the transformation, Metalsahuman resources manager Espi Sugay called in training advisors from Manufacturing Skills Australia (MSA), a non-profit training organisation operated by employers, unions and the Federal Government.

The advisors did a skills recognition exercise which showed many employees already had most of the skills that would earn them an official qualification.

Encouraged by delegates from the Australian Manufacturing Workers Union, and with financial and other assistance from the company, some employees started working towards earning a diploma or certificate from Kangan TAFE.

They were soon joined by others, and now more than half the workforce is engaged in skills training.

Mr Kirem said the company knew the workers had the right competencies thanks to the strict lean manufacturing program that Toyota operates.

“But there was nothing to bring it all together and give them the recognition they deserved,” he said.

To help the employees, Metalsa gives them one hour a week, sometimes two, away from their machines so they can attend MSA sessions, which are run on the premises.

Spreading the study time out like this dilutes the effect so it doesn’t have an impact on production.

“We work in teams. It’s like when someone has a sick day off, the team covers for the person who is off.”

Apart from productivity and efficiency, the training has also helped build morale at Metalsa.

“It’s actually a morale builder. Our morale was turned in 2011, `12 and `13 when new management came in and set some targets, goals and strategies, and were very open and transparent to the people,” Mr Kirem said.

He said he explained to the employees – more than half of whom are of Vietnamese descent – that the qualifications also gave them a Plan B.

“If the industry goes down, we will know it wasn’t us that ruined it. At least you will have something to fall back on,” he told them.

“You now have a piece of paper to show you are quite valuable. You can take this to any other manufacturer, in the food industry or pharmaceuticals, and say at Metalsa we did this, this and this, and I’m competent in process control plans or whatever.”

In the meantime, however, Metalsa is very happy with the benefits of the extra training, Mr Kirem said.

“We have a highly skilled competent workforce that is ticking away like a Swiss watch, giving the company part of its competitive edge.”