Neapco Solves Labor Issues, Sees Record Sales
With reverse engineering becoming more commonplace, it’s increasingly difficult for U.S.-based manufacturers to compete with foreign competition that can price below a company’s standard costs. Pottstown-based Neapco is tackling this growing problem thanks to a corporate culture that embraces change.
Neapco manufactures drivelines for automotive, agricultural, heavy-duty truck and small vehicle markets. For years, lingering labor and workflow problems chronically impeded the 78-year-old company’s prospects for growth and expansion.
Those days, thankfully, are now past. According to Bob Mangini, executive vice president, the company just had its most profitable year in a long time.
“The manufacturers who are going to survive are those who are willing to change,” says Mangini. “Over the past 10 years, we’ve become a lean manufacturer, switched to a cellular production setup and dramatically improved our labor relations. That’s why we can deliver quality product faster than our foreign competition.”
According to Mangini, innovative engineering and efficient manufacturing have enabled Neapco to contain costs and maintain strict tolerances on products. “Our driveline products last longer and perform at peak efficiency. The result is fewer warranty and service concerns for our customers.”
The Challenges of Embracing Change
But wholesale change throughout an organization is one of the most difficult tasks an organization can set for itself. “For employees, willingness to embrace change is critical,” Mangini says. “Once everyone embraced the fact that we needed to change in order to survive, we experienced better communication and trust between labor and management.”
That’s where Ben Franklin stepped in to help. In 1996, Mangini learned about BFTP when he was applying for job-training grants. He quickly learned Neapco could also get assistance with much larger issues plaguing the company.
“We had some serious labor problems that originated between the previous union leadership and plant management,” says Mangini. “The two parties did not trust each other. They wouldn’t even talk with each other. We’d have 30 to 40 grievances a month.”
Bridging the Communication Gap
BFTP’s Bob McHugh, a seasoned facilitator and former UAW representative, was brought in to bridge the communications gap between the union and management. McHugh’s credibility on both sides of the table expedited the relationship-rebuilding process.
“Bob helped us form a labor-management steering committee that met once a week for an entire year,” says Mangini. “Understanding each other’s viewpoint was a big step in the relationship. Morale improved gradually, and today, we have only three or four grievances a year.”
With improvements in labor relations underway, Neapco focused on improving its manufacturing operations. BFTP provided $187,000 in funding and connected the company with Lehigh University’s Enterprise Systems Center (ESC) to implement a cellular-based manufacturing flow to improve efficiency.
“ESC personnel spent seven to eight months determining how parts will run through the process,” says Mangini. “The results were immediate. The first cell alone led to an inventory reduction of over $700,000. Now we’re moving from raw state to finished state much more quickly for our customers.”
Improvements across the Board
Neapco approached its relationship with Ben Franklin staff with an openness that led to further improvements in other areas such as marketing. All told, Ben Franklin’s help contributed to increases of 18 percent in sales and 14 percent in productivity and reduced setup costs by 50 percent. More than 30 new jobs were created and 70 jobs retained.
“We absolutely plan to keep working with Ben Franklin, especially in the technical arena,” Mangini says. “They continue to provide us with the resources we need to keep innovating. And innovation is absolutely essential in today’s manufacturing environment.”
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