As many of you know, there is an unscientific poll in progress ranking various lean companies. The results are interesting, rather dynamic, and even downright surprising.
Coincidentally the July 17th issue of Manufacturing News has an article by Cliff Ransom, President of Ransom Research. Cliff is one of the few Wall Street analysts that truly understands lean manufacturing and the impact it can have on company performance and valuation. Some of us have heard him speak at various conferences like last year’s Lean Accounting Summit, and I’ve been lucky enough to serve on a board with him. Three years ago Superfactory reprinted an interview with Cliff by Doc Hall of AME. But lets return to the Manufacturing News article.
Ransom continues to view investment opportunities through the prism of lean management and production techniques. He says that more companies are beginning to apply lean concepts (including waste elimination) to other areas of their enterprises, including finance, supply chain, sales, planning, marketing and new product development and launch. “There may be only a dozen truly expert practitioners of the black art of lean on this planet, but there are plenty of companies that are trying to achieve that status,” writes Ransom.
Not sure I’d call lean a "black art," but since I know he knows real lean I’ll give him a pass. So which companies does Ransom favor? In the past I haven’t listed his picks as he’s been careful to not put them in print or has verbally given a disclaimer, but since they’re now in a widely-distributed newsletter with full credit, here they are. He groups them by category.
The All-Time “Super-Achievers”:
Danaher, General Electric, Illinois Tool Works, United Technologies
The Potential Next Generation of Super-Achievers:
Ametek, ITT, Pentair, Roper, Wabtec
“Get Rich Slow Schemes” (which, for those of you who don’t get it, is a compliment):
Actuant, Aqua America, Harsco, Teleflex, Toro
“Works In Progress” (which includes some truly ancient companies!):
3M, American Standard, Belden, Home Depot, Idex, Ingersol Rand, Kennametal, Masco, McCormick, Newell Rubbermaid, Regal Beloit, Robbins & Myers, Rockwell Automation, SPX, Stanley Works, Textron, Trinity Industries, Tyco
Assorted Small Cap Growth Stocks (including some turnarounds):
3D Systems, Courier, Daktronics, Flowserve, Raven Industries, Watts Water
Major Infrastructure Plays:
Caterpillar, Manitowoc, Oshkosh Truck, Terex, United Rentals
Small Cap Energy Rebuild and Infrastructure Plays:
AZZ, Circor, GSE Systems, Lindsay, Team Inc., Titan International, Valmont
Emerging Mid Cap:
Crane, Esterline Technologies, NHI Corp. Aerospace and Defense: Alliant Technologies, Astronics, Boeing (which is also a “work in progress”), Circor, Esterline, Hawk, Heico, Moog, Precision Cast Parts (which is also important in power generation), Raytheon, Timken, Triumph Group
Aqua America (which clearly is also a “Get Rich Slow Scheme”), General Electric (which categories does it not fit?), Insituform Technologies (been a “Get Rich One Day Scheme” for too long?), Pentair (Hummmm…Ditto the Insituform line?), Roper (becoming a real force).
Interesting list, isn’t it? We’ve written about many of them in the past, and obviously some of them are also on the poll. I haven’t been a big fan of GE’s lean efforts, and Bill often contends that they are simply an outsourcer, but Ransom has a much more positive take.
“Investors should not overlook GE’s astounding presence in almost all these [infrastructure] markets. Yes, it is hard to move the financial needle at GE, but its chairman calls his enterprise, ‘The infrastructure company,’ and he contends that the game is still ‘in early innings.’ I would also love to talk to any investors about the push that GE has undertaken in the past two years to fuse lean manufacturing and lean processing techniques with its prior focus on Six Sigma an operating philosophy.”
The rest of the article has considerable additional detail on other companies and industries. This particular article is only available to Manufacturing News subscribers, but the depth of this and other content could make a subscription worthwhile.