In 2004, the Semine Plant got the status as the top class plant in the Sandvik group in aspects of “quality�E “lead time�Eand “production cost.�EThis is the very reason why the head office in Sweden decided to centralize the managerial resources in Semine. Before acquiring this status, concerted efforts were made to reform the Semine Plant gearing for its survival.
In 1976, Sandvik established its manufacturing base in Semine. This was due to Miyagi Prefecture’s enthusiasm for attracting foreign investments and excellent human resources from Tohoku University, Iwate University, Ichinoseki National College of Technology, etc. Another factor for the decision is that the climate and geological features of Semine resemble those of Gimo, a Sandvik plant site in Sweden. Before siting the plant, the staff from the head office in Sweden flew over Miyagi Prefecture by helicopter and viewed it from the air to make a decision. In addition, the Sandvik group has a policy of constructing its plants in rural areas rather than in urban areas because the employment stability of workforce is higher in rural areas, ensuring smooth technology transfer. Presently, most of the recruits are from nearby areas, along with an April 2009 recruiting plan of nine graduates from universities and national colleges of technology and three graduates from senior high schools.
Dating back to 1998, Sandvik built a plant in Beijing China to manufacture super hard throw away chips. In early 2000, there was a rumor that most of the production lines might be transferred before long to China from the Semine Plant, whose production cost then was high among the Sandvik group, and it would be closed down.
To overcome this, substantial efforts were addressed to reform the plant. The first target was to shorten production lead time while introducing Just-In-Time (JIT). Consequently, reduction of lead time to half, from 21 days to 10 days, was achieved in a year by reviewing the time required for the first process (super hard powder press ? sintering ? polishing ? coating ? inspection and packaging) up to shipment. Mr. Kanji Suzuki, director, manufacturing and plant manager of the Semine Plant, who took a lead in this reform, reflectively says, “The machines we were using at that time were only manual ones. Under this condition, we declared that we would shorten the lead time to 10 days against 17 days of the plant in Sweden where they were using advanced automatic machines. No one in the head office in Sweden believed this.�Ebr> This commitment was realized after one year, which was a big surprise to the head office in Sweden. In addition, the lead time was shortened from 10 days to seven days in the next two years. Totally, the lead time reduction to one third was achieved whereas the cost of reducing the lead time was only about one million yen that covered the consultant fee and the expense for plant layout change.

The Semine Plant had a reputation for the quality of its products then and before. Since the mid 1980’s, the plant had mostly been retaining a No. 1 position in three evaluation criteria, specifically, the “in-process failure rate�E “spot check score (random samples from in-stock products at the logistics center are submitted for quality evaluation)�Eand “claim rate from customers.�ELead time reduction was achieved and added, which led the head office in Sweden to making a 180 degree turn in their evaluation.
However, high production costs would be an impediment to growth. Subsequently, reducing the production costs was targeted. The goal was to reduce costs by 30% in three years from 2002 to 2004, which was successfully achieved. It is no wonder that this was again a surprise to the head office in Sweden because, until 2001, the Semine Plant ranked first by far among the 50 plants worldwide of the Sanvik group in high per hour labor cost.
Reduction of the manufacturing costs came from an increased machine operation rate and total elimination of unusefulness. The context is described as follows.
While the evaluation by the head office in Sweden was improving, the order quantity gradually increased along with an economic upturn. Meetings were held to have talks with the labor union of the Semine Plant about working on a three-shift system. The resultant agreement allowed an annual machine operation of over 350 days or more thus leading the machine depreciation rate per unit of products to be smaller. At the same time, a 5S activity [seiri (sort), seiton (straighten), seiketu, (sweep), seisou (sanitize) and shituke (sustain)] was strictly pursued along with the elimination of unusefulness. In addition, aiming at relatively reducing the average cost for wages, temporary employees were hired on a fixed-term contract so that permanent employees intensively performed the work that needed high value added experience. Needless to say that a route to promote temporary employees as permanent was provided to raise their motivation.

How on earth did the plant succeed in drastic reform? “To tell you the truth, I myself didn’t think that I could do it to this level. Actually, we fell into fixed thinking at the plant. When working at the same place for more than 20 years, we are likely to think what we are doing is the best that can be done. The key to success is whether we can change our way of thinking,�Eplant manager Mr. Suzuki says, putting emphasis on the importance of the change in thinking.
Now that the Semine Plant has taken a lead among the company group, what is its next target? “We will increase our lead from the second runner and ‘enter the Blue Ocean area (no-competition area) where other plants of the Sandvik group worldwide cannot compete with the Semine Plant, �E�Eplant manager Mr. Suzuki says, expressing his hopes.
At the Semine Plant, the Proposal for Improvement is part of the employees�Ework. Employees are required to make 12 proposals a year, and with actual performance. This is the quota assigned to them, though seemingly they do not feel that they are bearing a burden. The reason is not due to the incentive study tour to the Asia-Pacific Logistics Distribution Center, Singapore, that is given to the employee with the best proposal. The plant is cleaned and well organized inside, each machine has a label that shows its own nickname given by the employees, and ornamental foliage plants are grown, which impresses visitors with the comfortable and neat working environment for the employees. Improvement and reform of the work are directly linked to the pleasure of working and the enhancement of skills, bringing about a desirable circulation between them.
A flag showing the “world No. 1 position�Ewill further continue to wave in Tohoku.