When Henry McCoy first laid hammer to hot iron in Edmonton in 1914 he couldn’t have imagined the company that would eventually grow out of his humble blacksmith shop.
McCoy Corporation is now a massive, multi-layered business that manufactures products and provides services to the oil and gas industry. While they specialize in manufacturing parts for drilling rigs they offer too many services to name. They have two facilities and their head office in Alberta as well as plants in B.C., Louisiana and Texas.
Employing over 200 people in Alberta alone, it was in 2004 that CEO Jim Rakievich embarked on a productivity improvement initiative. It was done in order to ensure the company’s survival in North America. McCoy was not interested in relocating to an off-shore location to find lower input costs, so it redesigned the layout of its plants, documented the processes and eliminated wasteful steps along the way.
Manufacturing power tongs, for example, used to take a long time at the assembly stage. McCoy’s engineers designed little tabs so everything now snaps together and assembly takes a third of the time that it used to.
Now that McCoy has embraced lean and improved their productivity we talked to Rakievich about why he did it and the lessons learned.
PA: What has happened since the plant updates in 2004?
JR: We invested in and embraced lean manufacturing practices to get more out of what we had. Instead of increasing our square footage we increased our throughput. We did a lot of the things that a lot of the companies that went after lean did. We got some expertise, we got some help and learned a lot. What’s happened since then is we’re working on moving beyond lean.
One of the things in manufacturing, particularly in Alberta, that’s become a limiting factor to our ability to manufacture is our access to skilled labour. We want to grow our business and grow our sales but we are limited by our inability to hire skilled people. We’re attacking that on two fronts. The first is automation. We’re embracing more automation in our plants than we have in the past. We’re starting to invest in more automated and more efficient equipment.
The second thing is we’re really going after a model that embraces more outsourcing. Rather than thinking that we have to build every part and piece of our product we’re outsourcing the stuff that isn’t rocket science. Rather than trying to do absolutely everything and keep hiring people and buying more equipment we’re going to become more assembly oriented.
PA: What are some goals and strategies related to automation and outsourcing?
JR: Our goals are to increase our throughput in our plants by 25 per cent with the same amount of staff through more automation and more outsourcing. That’s our immediate short-term goal.
PA: What did you end up learning in going down the lean path?
JR: In my opinion the most important lesson we learned was that there is always savings and waste in any process when you’re a manufacturer. Even when you think you’ve squeezed it all out of the rag there’s still more. We learned not to accept the status quo. Even when we got to a certain level and caught our breath and were pleased with our success there is always something else and there is always something to improve. We’re in a global economy now, if you take your foot off the gas when it comes to eliminating waste it’s going to catch up to you. The exciting thing is that we know there is always an opportunity to be better. You become a “learning” company as opposed to just a “doing” company.
PA: What’s next for McCoy
JR: We live in the oil and gas world, almost all our revenues come from that industry, and it’s busy. Rig activity worldwide is strong but the most exciting thing is that we’ve put a stronger focus on new product development. We’ve beefed up our design and engineering group and we have some new products in the pipeline that are going to be coming out in the next 24 months that we’re really excited about. The new products we’re bringing out will enhance our position in the horizontal drilling market.
PA: As CEO how hands on are you with these kinds of productivity issues?
JR: My job is to develop, with our executive team, the strategic direction of the organization and to communicate that through the company and to make sure we have the right people in operations who can execute it. My job is really nose in, fingers out. I need to be involved enough to know what’s going on because it is exciting and everyone wants to know that the CEO knows what the hell is going on. But when it comes to actually getting the stuff done we have fantastic people and they’re a hell of a lot smarter than I am at getting these productivity initiatives completed.
