TRAVERSE CITY, MI – North American governments should consider a European Union solution to international transport, beefing up external border security and eliminating border crossing difficulties, suggests Linda Hasenfratz, CEO of Canadian parts maker Linamar Corp.
Trucks bringing Linamar parts from Ontario to the U.S. waste an average four hours crossing the border, and trucks coming north from Mexico can be held up for three or four days.
“It’s a clear waste of time, effort and money,” says Hasenfratz as the Management Briefing Seminars moved into high gear on Wednesday.
Hasenfratz is supporting the North American Competitiveness Council, an international organization of private-sector companies designed to propose changes to government rules to reduce what she calls “external waste” in the system.
A second target of the group is the different regulations that make cars slightly or significantly different in Canada, the U.S. and Mexico.
She says manufacturing businesses are overburdened with rules that are senseless and hamper a company’s ability to innovate.
There are so many rules on safety, for example, that people focus exclusively on meeting rules, while forgetting proven safe practices. “If there is no rule, people think it must be safe,” she says.
She advocates a lean approach to office work as well as manufacturing. “We look for waste every day, and every day we find some little thing,” she says.
Linamar’s Cost Attack Team, led by her father and company founder Frank Hasenfratz, brings together people from different functions to look at operations in purchasing, equipment, logistics, manpower, tooling and processes.
“It can take six to eight hours,” she says, “but the cross-functional group can find 5%-7% cost improvement,” and some 60% of the cost savings the group finds actually can be implemented.
Linamar, which makes precision metal parts for powertrains and chassis, began expanding globally only a decade ago. It now has four factories in Europe and three in Asia, including a new one in China that has picked up four manufacturing contracts in the last 18 months.
She admits, in the short term, prices that are “30% or 40% cheaper pay for a lot of miles of shipping,” but she argues North American companies need to retain their basic skills in their home markets.
“The competitive edge of China will only last for another 15 or 20 years, maybe less,” she says. “Chasing low-cost labor will never pay off in the long term. We need to be more thoughtful about what to resist. It’s like quitting smoking: You know it’s bad for you, but sometimes you can’t help but take the next cigarette. The answer is moderation.”
Meanwhile, the company continues to expand in North America. A plant is under construction in St. Louis that will open late this year, and two at the home campus in Guelph, Ont., are ramping up.
Linamar this year got a C$50 million ($45 million) grant from Ontario to support a C$1.1 billion ($982 million) investment over five years that will add 2,000 jobs. The province “has been great” about backing the auto industry there, she says.