Another day, another company that doesn’t realize the potential of lean. Actually in this sad case it’s a parent company that doesn’t realize how a subsidiary could teach them a few tricks.
Vitrus Inc., a longtime manufacturer in Pawtucket, is laying off most of its employees as its corporate parent, Tecumseh Products Co., shifts production to India, Vitrus acknowledged yesterday. Founded more than three decades ago, Vitrus produces electrical connectors for the compressors in air conditioners and refrigeration systems.
The parent, Tecumseh, does have problems and needs cash.
Its demise appears to be related to struggles at its parent company, which lost $88.2 million in the second quarter of this year, according to federal filings. In the same period last year, the company reported net income of $33.9 million. Last month, the company sold the majority of its electrical-components operations to Regal Beloit Corp., generating $220 million in cash to pay down debt.
Vitrus has been on the lean manufacturing journey for some time, and has seen results.
Vitrus prides itself on its Pawtucket roots, boasting in corporate literature that its 50,000-square-foot plant is located “where America’s Industrial Revolution began.” But the company’s staff has shrunk since the mid-1990s, when it employed as many as 90 workers. However, Vitrus has said its “lean manufacturing” techniques greatly increased productivity.
I’m hoping they didn’t actually lay off as a result of lean-based productivity improvements. I’ll give them the benefit of the doubt and say it was normal attrition. Too bad they couldn’t grow the business.
If they are truly lean, they probably have minimal inventory. Inventory equals cash. Moving production to India creates significant WIP and especially in-transit inventory on the high seas. Sucking up cash. And here I thought the parent company was trying to raise cash. Funny how traditional accounting works.
For another glimpse into the managerial competence of the parent company, let’s see how they are planning this whole confabulation.
It is not clear if any manufacturing will continue in the facility, at 881 Main St., Itameri-Kinter said. Those losing their jobs include mainly production operators, inspectors and maintenance staff. “The endgame is not well-defined,” Itameri-Kinter said. “There may be some operations still going. There may not be.”
Any companies out there interested in giving Tecumseh more cash by acquiring a subsidiary already on the lean journey? Or at least take a look at some of the lean-trained manufacturing folks.