Flex-Ability Goes Lean, Stays Flexible

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Flex-Ability was founded in 1987 when brothers Mike and Steve Holding and their friend Dane Mills uprooted themselves and their families to move 300 miles north, from Portsmouth to Hartlepool on the Northeast coast of England. Everything they had (including the proceeds from the sale of their houses) was invested into a brand-new 6,000 sq. ft. factory and a mixture of refurbished and new equipment.

Everything was done on a budget with loans from Cleveland County Council, UK Steel Enterprise and Nat West Bank. Hartlepool Borough Council even subsidized the mortgages of the three founders because they were paying themselves so little in the early days. Dane Mills says, "Looking back, I can't believe that we actually did what we did. I would not have the nerve to take such a huge gamble with my family's lives now."

The first few years were a struggle. Flex circuits were still in their infancy and much time was spent on "missionary work," convincing engineers to design flexible circuits into their products. However, this changed during the 1990s and the flexible circuit market grew rapidly. At that time there were relatively few manufacturers of flexible circuitry, so any company that was technically competent and reasonably well-managed was likely to prosper. Flex-Ability was just such a company. They grew steadily in terms of turnover, profit and staffing levels until 2001.

"We established ourselves as a medium-technology manufacturer," Mills says. "We were never sufficiently capitalized to purchase leading-edge technology, but were proficient in spotting where the market was going and following it. Within our capability window we were (and still are) willing to manufacture anything from one to one million circuits, and believe we were responsible for changing the market standard lead times with our fast-turn service." This is a service which we continue to be proud of.

Changing Times

However, there were clouds on the horizon and perversely it was the very success of flexible circuitry that caused it. By the turn of the century practically everything electronic contained a flex circuit. Volumes for mobile phones, PCs, etc., were going through the roof. In order to meet these increasing demands, and with the drive to reduce costs, buyers of flex and rigid-flex were turning to Asia for their circuits, especially high-volume, lower-technology product. In addition the OEMs, our traditional customers, were also departing to Asia in ever-increasing numbers.

Flex-Ability have always had a reasonable proportion of high-volume jobs, primarily in IT and telecom. But these markets started to disappear, and Flex-Ability was slow to react. There was still plenty of available work, but in much lower volumes; this led to a bigger variety of jobs being processed through the plant at one time. This, in turn, highlighted skill shortages on the shop floor; the company was just not adept at dealing with a wide variety of product on a daily basis.

The volume of new product introduction caused bottlenecks in the engineering department, and our system was not robust enough to handle the logistics of dealing with the number of different jobs, processes, materials, etc., that were now demanded of us. These shortcomings led to quality issues and delivery problems. As customers became increasingly unhappy, production schedules were being constantly changed to satisfy those who shouted the loudest. This severely disrupted the workflow and led to more quality and delivery issues and a vicious circle was established

These problems were compounded by the fact that the directors had stepped back from the day-to-day running of the business, leaving it to the management team below them. However, this was done with insufficient measurement and accountability, so that the directors did not recognize early enough the level of problems within the business.

"Perhaps there was also an element of hiding our heads in the sand," explains Mills. "We had been very successful for a number of years and were comfortable with that. We hoped that the problems would go away, and probably were not relishing the effort and sacrifice that was needed to change things."

Also, the three founders/shareholder/directors had never been able to agree about which one of them should be managing director, so all three directors were equal. And the three had quite different ideas about how the business should be run. This led to confused messages being passed to the management team. This did not seem important when the company was successful, but as problems multiplied the lack of a single, clear strategy became critical.

Things continued to deteriorate and came to a head in 2002 when the company posted a substantial loss - the first in its history - and was on the point of going out of business. Change was essential. One of the original director/shareholders left, and another stepped back in to a non-executive role, while retaining his shares; he has also subsequently departed. Mills raised further funds to invest through remortgaging his home, and assumed the role of managing director. Two members of the management team, Mark Merifield and Nick Wass, also invested in shares and became directors.

Learning to be Lean

This was the start of the new regime. Where to begin? How to change? Over the years a "them and us" culture had arisen and the long-serving workforce were very cynical about any proposed changes. Some quick "wins" were achieved by changing the directors' reserved parking spaces to visitor parking and getting the entire workforce, from managing director to cleaner, to wear company polo shirts in the factory. But we still lacked focus and direction.

Then the company encountered lean manufacturing. Nissan and its Tier 1 suppliers were spreading the "lean" gospel throughout Northeast England, and Flex-ability took advantage of the free assistance that was available.

We began to reorganize the factory layout so that there was a process flow rather than the traditional grouping of similar machines together (e.g., drill shops), with the aim of reducing the distance that panels and people travelled. We also divided the company into small self-sufficient cells, each responsible for its own quality, cost and throughput. Comprehensive training programs, primarily conducted by external providers, have rejuvenated the workforce, helping convince them that they really do matter, while developing their skills significantly. We have now joined the SC21 initiative to take the company to another level.

The company has reacquired its knack for spotting market trends and has created its own niche in the market. The combination of a genuine in-house, fast-turn service and medium-volume production capability is enhanced by partnerships with two Asian manufacturers for high-volume, low-cost solutions. The biggest growth area has been in the company's assembly facility, which now incorporates a fully automated placement capability to complement the manual assembly team, all of whom are qualified to IPC's "J" military standard.

In addition, as the company has become more successful again, we have been able to make substantial investments in new plant. Part of the budget for the next two years includes acquiring laser technology to boost capability. We are also recruiting additional technical expertise from within the industry in order to extend technical support and capability development. We also survived the liquidation and subsequent bad debt of our biggest customer in 2006.

The company has developed a set of corporate values that dictate the way in which it conducts itself. As part of this, we are happy to share our main key performance indicators with our customers, so that they can see what level of performance they can expect from the company, and that our year-on-year this performance level is improving.

The key to Flex-Ability's future is to continue to identify where the market is going and to ensure that we have the skills and technology in place to meet those market needs. We then need to provide our customers with the level of service that the 21st century demands. Our mission statement is to be considered world-class by every organization and individual that we have contact with. We are not there yet but we are on the road.

Dane Mills is managing director of Flex-Ability, a flex circuit manufacturer in Hartlepool, England.



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