Esterline Technologies: Lean Manufacturing

Case Study

Tiye Cort, Robert Morris, Evelyn Ozburn, Braulio Soto,

Key Facts:
Characters:
Robert Cremin- Chairman, President and Chief Executive Officer of Esterline
Technologies
Tom Heine- Director of Organizational Effectiveness
Frank Houston- Corporate Group Vice President
Richard Schonberger- expert on world class manufacturing and lean methods
Michael Taylor- Senior Production manager
Gary Dytrt- Korry president
Cary Gammon- Korry lean staff member
Allison Eiford- Korry lean staff member
Annette ONeal- manager of Korrys Customer Service department

Partners:
Boeing
Airbus

Financial Performance:
- 2004, revenues of $614 million, and income from continuing operations of $29
million
- Closed 2005 with revenues of $835 million and income from continuing operations
of $51 million
- In 2006, revenues were expected to exceed $1 billion

Timeline of the Case:

1976-2006
Issues
Conflicts

1. To simplify systems so they dont need to be tracked with complicated IT systems.

2. Using flat panel screens for schedule display:
- Implied big brother is watching
- Gave employees a sense that they would never be finished
- Imposed a sense of measurement anxiety for operators
3. Implementing lean manufacturing into fabrication
Central Problem
Interface Standardization: Different clients had various ways of communicating with
the company for orders, but since Esterline was becoming the best in its industry,
they are trying to mandate a standard interface method for consistency.
Analysis:
In 1995, Esterline was a multi-industry company with $350 million in revenues.
Becoming CEO in 1999, Cremin and his corporate team brought down the
companys focus to key industries and technologies. The 30 new acquirements made
between 1999 and 2005 strengthen Esterlines targeted market-product position.
With all the changes and possessions they made, by 2005 the company was in a
solid financial position. But things didnt always look as bright for Esterline
Technologies. Around 2000, Esterline had placed process improvement efforts such
as Total Quality Management (TQM) and Quality Function Deployment (QFD) which
returned mixed success. A problem however is that Esterline had not given enough
authority and ownership to employees at the operating level. Another problem was
that employees tended to narrowly focus on isolated process steps, making certain
improvements that had unintentional negative effects on downstream operations.
Performance measurement supported the implementation of lean initiatives.
Each business unit implemented annual goals where 3 were set by the corporations
such as:
1. Profitable Growth
2. Return on Investment
3. Aggressive Lean Implementation
Employees received monetary rewards based on their business units achievement
of annual goals. Though Esterline Technologies had a few problems, overall they
didnt have major issues due to the fact that action was taken as needed.
Conclusion and Recommendation:
Some of the recommendations that we have in order for them to be
successful is that management should work to create an environment that honors

the true value that people bring to the business. If they learn to value the people
then the people will feel more respected and will begin to trust the company. It is
important to engage the people more in the business, encourage their ideas and put
them to work. This can be achieved by investing in training and actively involving
the employees. Overall if they fix the minor problems instead of focusing on an
isolated section then there is no doubt that they will be more successful.