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Globalization Services

Success Stories and Case Studies

 

Globalization strategy reduces labor rate by 79%

Forced to respond to intensive global pricing pressures, a major Midwest U.S. manufacturer (1.6 billion annual revenues, predominantly in the manufacturing of automotive engine components) approached Continental for assistance. Continental completed a two-year project to relocate all domestic manufacturing facilities for this client to Mexico, Europe or Asian facilities and implement Lean Manufacturing processes to increase efficiency. This effort resulted in the reduction of their composite manufacturing labor rate from nearly $40.00/hr [fully loaded rate] to $8.60 per hour. An even lower labor cost reduction is forecasted over the next 5 years to between $2.00 and $3.00 per hour (fully loaded) as Continental's full globalization strategy and plans are implemented.


CAD platform conversion costs reduced by 78%

An Ohio based company contacted Continental while they were in the early stages of updating their engineering department. Their product drawings were a combination of paper drawings and AutoCAD while ProEngineer had been selected as the company's new platform.

Their in-house estimate to convert the existing drawings and CAD files to ProE was:

  • 900 Paper Drawings
  • 3100 AutoCAD Drawings
  • 4000 Total Drawings
  • 4000 drawings x 2 hrs/drawing x $40/hr design cost = $320,000 Total Cost

This option was unacceptable for two reasons: cost and project timing. The work had to be completed in three months for the paper drawings and six months for the total job. The company did not have the in-house resources to meet the required timeline. Continental offered two solutions:

  • Work done at Continental's USA CAD Design Center
    4000 drawings x 1.5 hrs/drawings x $40/hr = $240,000 total cost
  • Work done at Continental's CAD Design Center in India
    4000 drawings x 1.5 hrs/drawings x $11.98 /hr = $71,800 total cost

Continental produced the work on-schedule at 100% quality with a cost savings of $248,200, a 78% reduction. The job was delivered on time with 100% quality obtained.

Globalization/Out-Sourced Engineering/Manufacturing

Program Summary: Continental was selected by a Fortune 1000 client to lead a major program to create a Global Sourcing Strategy that would enable them to become the cost leader in their industry segment.

Program Stages:

  1. Development of a Global Strategy that included the following:
    • Corporate Management
    • Engineering
    • Manufacturing
    • PC & L
    • IT
    • HR
    • Finance
    • Sales

This was followed by:

    1. Establishment of Goals and Objectives
    2. Creation of a War Room to track all activities
    3. Development of a Timeline (5 years)
    4. Assignment of responsibilities
    5. Tracking/Progress
    6. Status Reporting System

Upon Review of all the above Input Data, the Global Strategy was finalized.

  1. Globalization Strategy Outline
Corporate Headquarters: Remain in USA
Engineering: Concept Development:
Design:
USA
Korea
India
Hungary
  Sample Prototypes: Korea
Hungary
R & D: Concept: USA
Manufacturing: Relocated from USA to: Mexico
China
Poland
India
Korea
Brazil
  1. International Project Management:

Email: Around-the-clock transfer of data

Continental weekly conference calls (9:00 am Wednesday EDT):

United States (Multi-Sites)
Mexico (Multi-Sites)
Korea/China
Poland/Hungary
Brazil
± 2 hours
± 2 hours
10 pm next day
3:00 pm
± 2 hours

Note: All Engineering Managers speak English during Conference calls.

  1. Summary of Results:

Continental is in the third year of this project with the following results:

  • Client is now the global low cost provider in their industry segment
  • 100% on-time delivery of product by Client to customers
  • 24% growth in business
  • 18% Improvement in Quality
  • Client named Supplier of the Year by major customer

Case Study: Manufacturing "Down-Sizing"

Opportunity: One of Continental's clients had the opportunity to sell one of its product lines (that was no longer in their core competency). After a review of several potential buyer's offers, one became the primary candidate.

Drawback: There was one major concern: The primary potential buyer wanted the four manufacturing sites (all USA) reduced to two locations before the sales process could continue.

Evaluation: Continental was selected by this client to evaluate all four manufacturing sites in the following areas:

  • Manufacturing Cost
  • Quality Metrics
  • Transportation Cost
  • Social Charges
  • Union Relationship

Plan & Implementation: After completing this evaluation, Continental created a "down-sizing" plan that incorporated the most optimum strategy for right-sizing the business unit for the primary candidate. Upon completion of the plan, Continental was then re-hired to do the actual implement of the plan.

Results:

  • Four plants were reduced to two manufacturing facilities
  • No labor stoppage problems occurred during "down-sizing"
  • 100% on-time delivery of products during "down-sizing"
  • No Quality issues occurred during "down-sizing"

THE SALE OF THE BUSINESS LINE WAS FINALIZED.

 

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