Skills Forged To Conquer The World
Circuits - June 1996 - By John Hatfield
"A silicon giant has sprung into action with increase confidence," notes John Hatfield.
Silent running is a favorite technique of submariners, from the U-boat men to Trident crews, who wish to avoid detection by those who would like to drop depth charges to them.
Until recently it had been an apt description of National Semiconductor's low profile presence in Scotland. But now the American integrated circuits giant is making enough noise to register on everyone's screens.
The noise is the sound of plant and equipment being ripped out and reinstalled as the Henry Ford production line model is turned on its head. "Diagrams of our old production process looked like a child's scribble drawing," says Bruce Diamond, managing director of National's Scottish operation, who expects to save $1m a day by totally re-engineering the 25-year-old Greenock plant.
"We're getting rid of the one-job, one-piece mentality, and forging teams with new skills in its place."
Previously, National had good reason for silent running: it had nothing worth shouting about. In 1991, when the semiconductor market was still reeling from the effects of global over-capacity, the company made a pre-tax loss of $149m.
Last year's pre-tax profit of $330m indicated that the strategy of chief executive Gil Amelio had succeeded in turning it around. But according to Diamond, making the group viable is only the first part of the new deal. The current preoccupation, under the Aspiration 2000 banner, is to increase the $2.4bn sales level by making the group a world-beater.
"It's an aggressive schedule. We're going for turnover of $8bn-$10bn by 2000, and we're ahead of schedule, but the last 15% is going to depend on guts, style and getting out into the market place."
The battle plan is based on achieving Amelio's vision of establishing National as the industry's prime mover and shaper. With Intel now dominating the processing turf with the Pentium chip, and the Japanese and Koreans lording it over memory and storage technologies, National has staked a strong claim to the territory where digital technology connects to the real world, the analogue world.
According to Amelio, National aims to be leader ion creating devices which alter the form - but not the substance- of digitalized data, giving it a form which is meaningful to humans: "Without our sophisticated analogue and mixed analogue and digital technologies, the world's fastest microprocessors and largest memories are deaf, mute and blind."
It is estimated that by 2000 the sales of components in this field will grow form the present $27bn to $80bn, faster than the semiconductor market, so there is a great incentive for Diamond: "Nobody has carved that market out yet," he notes.
Now the big, laid-back Californian with an appetite for strong coffee is breaking in this manufacturing approach for the whole group. Where Greenock leads, California, Texas, Utah and Maine will follow.
"Our role is to pioneer the delivery of value to customers and the focus of what the company is going to become. Santa Clara is hanging on our coattails. All the pressure is Greenock's, but so is all the glory."
In the past National had been content to produce and ship wafers without bothering to get involved with the end-user. Now production staff is being taught how the entire wafer is made, how it works and why their particular role is important. Diamond uses large, colorful wooden models, similar to a child's early learning toy, as part of the training program.
Since July one-third of the staff at the largest of Greenock's three fabrication plants have been going through the re-engineering process. By Christmas one-third of the entire plant will be involved, after which it will be rolled out to take in the whole workforce.
Diamond argues that production suffered in the past because staff was alienated by performing monotonous tasks without any idea of what they were making or why. He has already reaped substantial benefits: "The first part of the lone was losing a ton of money, but in the last week it made revenues of 102.7m.
He and personnel director Gus Cannon have incentivised staff by showing then what they contribute to the Bottom line each day. Basically it is a refinement of the standard quality control charts, which tally the number of faults and accidents each day. Bu National's aim is to accentuate the positive.
"Every group has control over what they pay for," says Diamond. "Each shift sees exactly how much wealth they generate, how much investment they receive and how much revenue they make. Now they are actually beating their targets because they are connected to the product and to each other."
Boosting research and development is a key element in plans to give Greenock a competitive edge. While it boasts a team responsible for product design, Diamond will add a team dedicated to the more fundamental R&D. This is crucial if National is to flourish in a cutthroat market. "Time to market is critical: technology lead-times are only four months. If we can take out some of the hand-offs and add more value to the silicon then there is an advantage in that for the customer."
Over the last three years National has quietly created 500 jobs with an investment of 50m in upgrading production lines. Diamond sees potential for more employment in the technical and professional occupations, but says that any expansion must be earned. "Nothing guarantees our future like our performance."
