King Leads Lennox Stuttgart Through Quiet Transformation

When Skip King arrived to start his new job at Lennox Industries in Stuttgart a couple of years ago, he was struck by one thing: mosquitoes.

And not the average pesky type either. The New York native’s welcoming committee was the monstrous Stuttgart version.

Rather than bemoaning the endless plains of swampy rice fields that propagate the creatures, King investigated the problem. Now more than two years later, King’s house, guarded by garlic plants – a natural repellent, King found – has nary a mosquito in sight.

“I live on an acre-and-a-half on the water in rice country. And I don’t have mosquitoes,” he said.

That same problem-solving tenacity is what drew Lennox headhunters to hire King from his previous position as vice president of operations at Fedders Corp. of Liberty Corner, N.J.

“I do believe there’s always a way to figure it out,” King said.


Turnaround M.O.

Production in the commercial air-conditioning industry declined 35 percent in 2009, King said. Production at Lennox was down 40 percent this year.

As of October, the most recent data, combined shipments of commercial and residential air-conditioning units were down 15.5 percent, said Courtney Nogas, spokeswoman for the Air-Conditioning, Heating & Refrigeration Institute, a trade association. The AHRI doesn’t separate commercial and residential shipment figures.

“If people aren’t moving and buying new houses, then there’s less growth of stores to support the market, so there’s fewer commercial buildings going up, less remodeling because there’s less money in the system,” King said. “So that affects our business.”

King added that industry experts expect production to fall another 5 percent in 2010.

With a difficult market and a struggling facility in Stuttgart, Lennox sought some outside help.

This wasn’t the first time King has been called in to boost a commercial air-conditioning firm to profitability. King led similar initiatives at Fedders, York International Corp. of York, Pa. and Munters Corp. of Amesbury, Mass.

“For the last 10 years, pretty much, the air-conditioning market has been on pretty much a growth spurt,” King said. “This is the first experience they’ve had here, maybe ever, going the other way. And coming down’s pretty hard.”

King said the first task, always, is changing corporate culture. “I believe if you can create a work environment that at the end of the day the employees feel that they’ve had an opportunity to make a difference or contribute, you’ve got it,” King said.

One of King’s philosophies is working with and keeping in place the current employees when he enters an organization, a practice that likely earns the trust of the work force. That trust comes in handy when King replaces a job with an automated process.

During a taxing walk-through of the 750,000-SF factory, King noted several processes that would become automated to yield a more efficient operation. However, those jobs lost to automation will merely be shifted to the new business that King imports. Lennox will begin building a new heating product in January that will require those hands.

King said that goal of striving for efficiency so Lennox can add operations encouraged employees to propose ways to streamline processes. That compares to some factory settings, where automation of processes translates into a reduced need for workers.

“It’s really about people. We have technology and all this exciting stuff, but it’s really about people, and you try to motivate them and help them grow in a very positive way,” he said.

Another measure King has instituted to become more efficient is a four-day workweek for the plants.

When King arrived in Stuttgart, the number of employee absences was very high, he said. “It’s a problem because if you have 1,300 people and there’s 100 people out every day, it’s a big freaking deal,” he said.

The factory employs up to about 1,300 people during the on-season, which is between March and September. Lennox currently has about 850 and will be adding 75 more employees in January, King said.

Rather than taking any action, King studied the problem for several months.

“When I go into a new environment, I try to not come in with the answers. I go in with the questions and through that develop the right recipe for success,” he said.

So King held focus groups to ascertain the reason for the elevated absenteeism rate.

“It came down to: people want their time off. And that’s a very powerful thing,” King said.

After months of intensive research and discussion, King settled on motivating employees with a four-day workweek.

“I like it. I like having a three day weekend,” said Tommy Stewart, a crew leader in assembly at Lennox. “After some adjustment with the different hours and the scheduling, I definitely prefer it.”

But employee morale isn’t the only advantage gleaned from the measure. “It also gives us improvements on efficiencies because you’re running the factory four days, not five days,” King said.

Absenteeism has since improved by 15 percent, King said.

Though the factory is open one less day, the shifts are two hours longer, so the factory is open nearly the same number of hours each week. Still, the four-day workweek decreased utility costs between 3 and 4 percent, King said.


Other Changes

King’s discussion approach extends to other areas, such as cost-cutting.

When looking for ways to curb expenditures, King got everyone involved.

“By nature of this dialogue, they feel more part of it. And just by nature of feeling more part of it, they get on board,” he said.

From those sessions, Lennox Stuttgart has envisioned ways to standardize certain parts so that one part can perform the same functions as two or three parts, which means there are two or three fewer parts on the shelves. That measure and others have cut the operation’s inventory down to one-third of the previous amount, King said.

Even small things have made a difference in the operation’s performance. The office switched from printing color copies to black-and-white copies, a savings of 8 cents per page.

“At first people didn’t know how they could contribute on this cost journey,” King said. But the discussions began to propagate ideas.

The factory is now re-insulating and switching to all high-efficiency lighting, which is about twice as bright at a fraction of the cost. The operation also now sells wooden pallets to a company that recycles them for their application in biofuels.

Lennox Stuttgart improved efficiencies by 8 percent this year, King said.

“Communication is so important,” he said.


‘Help the Group See’

King has also reorganized the structure of the Stuttgart operation by expanding and tweaking some roles in the organization.

“We’ve kind of gone from a functional organization to a matrix organization,” King said. “So there’s a lot more crossing and team building and fewer silos.”

For example, King noticed an existing employee’s passion for energy conservation, and provided an opportunity for him to succeed by adding that to his role. “We’ve complemented what he likes to do to a business need. So we’ve pretty much covered all the areas with the team in place, in a different way,” King said.

“I try to put strengths in the right place, put the right people in the right place.”

Though King doesn’t suggest he has all the answers, he does usually know where to find them, which is why he takes the crew on the occasional field trip for a team-building exercise he calls “exposure.”

“We’ll take a little road trip,” King said. King takes employees to some of Lennox’s suppliers or other companies that aren’t in the same competitive market to analyze how different firms solve problems.

Another change King has made aims to take some pressure off the employees.

“One of the things I do is bring in some techniques to systemize solutions, if you will, … try to put in solutions that won’t necessarily rely on somebody to remember to do the right thing everyday. We can put some systems in there that make it easier for people to be successful.”

To accomplish that, King instituted a barcode system, in which a quick scan tells employees that the part they have fits into that bar-coded place.

Some of the changes are just ways to improve the Lennox image from the inside out.

For example, before King arrived in Stuttgart, the doorway from the factory to the executive offices looked like what one would expect in a factory: drab and dingy.

King had an 8-foot sheetrock wall built around the doorway, complete with a Lennox logo, to improve a guest’s impression of the facility.

King has also done a bit of leading by example. Whenever he saw a scrap of trash as he guided a guest through a tour of the enormous factory, he stooped his 6-foot-5-inch frame to scoop it up.

“Everything is the way it is for a reason,” King said. “The trick is to learn why it is the way it is.”


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