N E W L A N D C A S E S T U D Y

Husky Injection Molding Systems Case Study 1

Husky Injection Molding Systems

Husky Injection Molding Systems (Bolton, Ontario, Canada) is an OEM of injection molding machines and highly specialized molds; a world market leader in the plastic injection molding industry. In late 2007, Husky management was tasked by its then corporate parent Onex, to embark on an aggressive cost reduction initiative, to increase their margins and make the company more profitable.

As an originally  family-owned business, Husky had made a conscious decision to be vertically integrated to maintain their competitive advantage in-house. However, several times over the preceding fifteen years, they had attempted to outsource their controls and cable assemblies. Each attempt had

been eventually deemed unsuccessful, and the items had returned to in-house production. At this point in time, management felt that these were ideal candidates for outsourcing to contribute to the mandated cost savings, as well as allowing Husky to concentrate on their core competency: the design, manufacturing, marketing and sale of molds and injection molding machines.

A decision was made to look for potential assembly partners in Mexico, and more specifically in Monterrey, capital of the northeastern state of Nuevo Leon. Monterrey has been long considered Mexico’s industrial capital, and it is the home of manufacturing facilities for over 1,500 foreign companies. Its well

educated and trained workforce as well as its proximity to the US border, makes it an attractive near-shoring option

After evaluating several candidates, Newland de Mexico was one of two finalists for the controls and cables business. Prototypes from both companies were requested; in December of 2008, Newland was selected as the partner of choice. A contract was signed, and the outsourcing project officially kicked off in January of 2009.

The Husky control cabinet project was a relatively low volume and high mix assembly operation. Each cabinet controls and powers one of Husky’s injection molding machines.

N E W L A N D C A S E S T U D Y

2 Husky Injection Molding Systems Case Study

These machines are used for a wide scope of applications, but the main one is the molding of PET bottle preforms, for global companies such as Coca Cola, Pepsi Cola, and Nestle.

One important aspect of the project in general, is that practically no two cabinets to be built are exactly the same. Also, each individual order includes not just the cabinet, but also one to three interconnection boxes and upwards to 150 individual field cables.

The cabinets have a labor intensive content therefor require a well trained workforce.

Another challenge is that Husky requires all field cables shipped connected to the cabinet, as well as the cabinet to be 100% tested for continuity and for some essential functions, making it a plug and play component once it arrived at Husky’s suburban Toronto headquarters.

The initial knowledge transfer took place in a two month period. Newland´s personnel traveled to Toronto and spent several weeks learning the particulars of Husky’s products. The cable assembly process was particularly challenging, as each cabinet required a wide variety of cables, from discrete wires to very large 50 conductors cables and specialized fiber optic communication cables that are especially sensitive and can become unusable and near impossible to detect failure if built incorrectly.

Low volume high mixPractically no two cabinets to be built are exactly the same. Each individual system includes not just the cabinet, but also one to three interconnection boxes and upwards to 150 individual field cables

N E W L A N D C A S E S T U D Y

Husky Injection Molding Systems Case Study 3

The scope of the project included the purchasing and inventorying of all raw materials at Newland´s facility.

Over a period of several weeks, the Husky and Newland Supply Chain teams worked together to transfer a portfolio of 54 domestic and foreign suppliers. Whenever possible, Newland was tasked to engage the Mexican version of the US or Canadian supplier to minimize the impact of freight costs.

The most successful of these efforts was the transfer of all sheet metal items from Husky’s Montreal based supplier to Pentair Technical Products, owner of the Hoffman brand of cabinets, with a manufacturing plant conveniently based in Reynosa, Mexico, a two hour drive from Newland’s facility. Sheet metal costs were drastically reduced, including freight costs which were more affordable from Reynosa to Monterrey than from Montreal to Toronto.

Once Newland had ramped up its raw material inventory and

designed and implemented its production processes and equipment, all systems were go for the assembly of the First Build cabinet. This first cabinet was shipped to the Bolton plant in May of 2009.

After a first piece quality review, a production ramp up started. By  the end of the year, Newland was averaging two projects a week, and in 2010 volume grew rapidly.  At the start of Q3, Newland was now averaging one project per day.

Deliveries were scheduled to ship up to five full projects each week. This ensured that freight costs were kept under control. By  2011, the Newland´s workforce had grown by 100% and the company had the second most revenues in US dollars among its corporate parent’s (Canfer

Group) five manufacturing and distribution companies. Four years from its first delivery of a control cabinet to Husky, Newland de Mexico continues to be its only partner for industrial control and cables in the Americas.  Throughout those 4 years, new product families have been introduced and more than 500 new part numbers have been added to the project catalog.

Through its partnership with Newland, Husky has been able to realize different goals. First and foremost, by outsourcing these assemblies to a lower cost location, significant labor savings have been realized without sacrificing on time delivery or product quality.

Second, instead of dealing with over 50 separate control cabinet part suppliers, Husky now communicates with one supplier who manages the day to day business with all the content providers, freeing up Husky Supply Chain team member’s  time to pursue other cost cutting initiatives.

N E W L A N D C A S E S T U D Y

4 Husky Injection Molding Systems Case Study

Third, additional cost savings were realized by moving certain labor intensive raw materials, such as sheet metal cabinets, to a lower cost location supplier without sacrificing freight costs

Finally, by moving commodities such as control cabinets and cables to an outsource partner, Husky has been able to redeploy its resources to concentrate on their core competency. In the four years since the Newland outsource, Husky has introduced several new products, allowing them to further grow both its market share in the Americas as well as establishing a presence in China with a new facility in

Shanghai to service the growing Far East Market.

For Newland de Mexico, the experience of handling the full scope of this project has allowed them to go beyond the typical assembly maquiladora and position the company as a full service partner for companies looking for cost reduction

opportunities by outsourcing their controls and cable assemblies. To that end, Newland has developed a Roadmap to assist companies who are considering embarking in this journey. By leveraging the experience of developing outsource projects from A to Z, Newland can offer this service to potential partners.

Focus on core competencyBy transferring commodities such as control cabinets and cables to an outsource partner, Husky has been able to redeploy its resources to concentrate on their core competency