Ramping up its Presence

BSH established a U.S. beachhead in 1991, when it began exporting dishwashers there. Models were functionally nearly identical to those sold in Germany. Four years later, the company made a decision to build a U.S. manufacturing plant. It selected a former Robert Bosch Power Tools location in New Bern, NC, U.S. Groundbreaking at the 100-acre site took place in April 1996, and dishwasher production began a year later. The company added cooktops and ventilation products in late 1999.

Another big step was in July 1998, when the company acquired U.S. built-in appliance producer Thermador and its line of cooking and other kitchen appliances. Thermador's manufacturing factories were in Vernon, CA, U.S. and La Follette, TN, U.S. BSH's U.S. entity and Thermador merged into one company under the name BSH Home Appliances Corporation in early 2000. The company is based at the former Thermador headquarters in Huntington Beach, CA, U.S.

"We discussed a U.S. expansion for a few years," recalls Dr. Clemens Schaller, executive vice president of Manufacturing and Engineering for the U.S. company. "Our customers were telling us that we needed a full product line for this market. We also reasoned that we were under-represented in the U.S. But it was a big investment - $180 million just for the factory expansion - and a tough decision for the board."

After putting off a decision following the U.S. terrorist attacks of Sept. 11, 2001, the board gave the go-ahead in late 2001. Groundbreaking quickly followed in February 2002. The first ranges were produced in late summer 2003, and the first batches of washers and dryers came off new assembly lines in October 2003.

U.S. Factory, German-Style

When visiting the New Bern factory, it is quickly evident that there is a European connection. Much of the equipment and systems are from European - especially German - companies and are state-of-the-art. A case in point in the dishwasher area is a fully automated expander based on BSH technology.

Another installation, in the new 250,000-sq-ft range building, consists of eight 315-metric-ton presses with automatic tool changeover and storage. The system removes the old tool and has the new tool ready to use in just 3 min. These presses produce large parts for ranges and cooktops. Metals used in the fabrication area are decarb steel and stainless steel.

This press area is at one end of a U-shaped material flow pattern within the factory. The shop floor organization is managed by teams with team leaders. These teams use a just-in-time system to supply the part to the next team and use information boards to keep track of quality and the status of production.

The press area supplies parts to an automated welding system for oven cavities. The oven cavities are built with a thermal decoupled front frame, which allows airflow between the walls. This reduces oven heat-up time and cuts energy usage in the large oven cavity.

A highlight of the range plant is its highly flexible porcelain enameling facilities. Parts to be coated go through an alkaline parts washer and then through a dryer. Two booths with sprayers automatically apply powder coating to cooking appliance parts.

Other parts such as oven cavities are routed to spray robots. This system uses wet porcelain, initially in a blueish-gray color. However, colors can be changed easily. All porcelain parts then go through a furnace, heated to 1,625°F.

The company places a high value on environmental safety. Notably, its wastewater is better than city standards for oil, total solids, and heavy metals. Wastewater is monitored and then goes into the city sewer system.

Range assembly takes place on several lines. These lines, unlike the fabrication area, use little automation to permit greater flexibility. "Our approach in New Bern is to have flexibility regarding production capacity," says Lars Schubert, plant manager, Cooking Products. "If needed, we can add shifts to handle increased production in fabrication or outsource parts, which is possible because of our standardized tooling concept. In assembly, we can also adjust our manpower to increase output. Also, the factory building can be expanded cost effectively. With all of that, we can readily double freestanding range capacity."

Assembled ranges are tested and then receive accessories such as cookbooks, pans, meat probes, and so on. The first ranges will be shipped in cardboard boxes, but the company has installed a stretch-wrap hood packaging system, which is new for ranges in the U.S. This will provide a clear plastic shrink-wrap around the units. The company views this packaging as providing a quality advantage. This type of packaging is common in Europe. Completed units are trucked to a remote warehouse.

Washers/Dryers

The 160,000-sq-ft laundry area also features U-shaped material flow. Pre-painted side panels are formed on one press, while the pre-painted fronts are formed in a four-press unit. Cabinet welding is automated; however, drum assembly is completely mechanical. The company has found that mechanical joining of drums is an easier and more repeatable process than welding.

Completed cabinets and drums are lifted into an overhead buffer area. Cabinets are identical for washers and dryers, while the stainless steel drums differ from each other.

In assembly, after a short initial area, units are routed to parallel washer and dryer lines. Because the washer line requires more steps, it incorporates more loops.

Assembled units are tested for all functions. Washer function checks include spin, voltage, water movement, and cycling. At the same time, some units are given life tests either in the factory or off-site. The first units will receive cardboard packaging, but later units will have clear wrap.

The company maintains a close relationship with supply partners on both the development and production front. Especially in the laundry area, the company uses single sources around the world. Worthwein, a producer of tubs and door assemblies, and Prettl-Noma, which supplies control panels and wire harnesses, both established locations within half-hour drives of the BSH factory.

"In all, we have about 80 laundry suppliers, and 150 range suppliers," reports Dr. Schaller. "We offer a base for European suppliers here. But more of our European suppliers will set up operations in the U.S. and bring with them employment and knowledge transfer. We want to increase local content and minimize exchange rate fluctuations."

Designs for the U.S.

Up to now, all or most of the appliances BSH has sold in the U.S. were European designs. Even the U.S.-made dishwashers fall into that category. "In the early 1990s, we began our business in the U.S. by importing products from our factories in Europe. Today, most of our products are sold in this market are manufactured in our factories in New Bern, NC; La Follette, TN; and Vernon, CA, U.S.," explains Mr. Bosshard. "This provides important flexibility in product development and manufacturing and the opportunity to offer our customers products that suit the U.S. lifestyle. Bigger is often better. European products are often not adequate for the U.S. market."

The new ranges are the company's first freestanding models for the U.S. market and include extra-wide 25-in ovens. Oven capacity is 30 to 40 percent greater than typically seen in European models. The electric, dual-fuel, and gas convection models offer self-cleaning, which is a less-common feature in Europe. Front-loading Nexxt washers and dryers use European technology, but come in a larger size. Washer capacity is 18 lb. The inclined washer drum lifts upward for easier access.

"The range development project has been run out of New Bern, with close communication with our German factories. Even the factory and equipment were specified here," says Dr. Schaller. "We are following a standard multi-stage program called the Project Engineering Process (PEP). This had been developed within the BSH group over the years, and includes safeguards to ensure quality. There are eight 'toll gates' at which progress is assessed. The last toll gate will come after 1 year into production."

While the ranges and laundry appliances are U.S.-specific designs, the laundry project was initially based in Berlin, Germany. The company has had extensive experience in centrally developing laundry designs and production. New Bern was the fifth such project, following work in China, Spain, Poland, and Thailand. A U.S. core team became involved in April 2002.

Even dishwashers are being affected by the need to design for the market. According to BSH, its previous racks were more European-style and optimized for wash results, but not good enough from a cosmetic standpoint for the American customer. A "good" European rack typically has just enough wires to hold the dishes, but a "good" American rack looks strong with a lot of wires.

Designing the new racks was done completely at the BSH factory in New Bern. Teams benchmarked existing racks, came up with marketing concepts, built prototypes, and ran tests. The new racks are "beefier," but also more flexible than the previous ones. The new design, BSH says, will enable the consumer to put dishes where they want them to be, rather than where the rack allows them to be.

People Priority

BSH has a heavy emphasis on employee training and education. The company values highly motivated employees with the best possible qualifications. It feels it is their knowledge and skills that will put the company in a position to meet future challenges.

In New Bern, the company has a nucleus of staff from BSH facilities in Germany and elsewhere. These are especially found in the more technical positions. There has also been a flow of workers visiting back and forth between Germany and New Bern. In the laundry and range areas, U.S. workers spent several months in Germany, doing hands-on training in products and support.

Employment is currently around 800, making it the third largest employer in the area. BSH could eventually employ up to 1,400 at the New Bern facility. New Bern is an eastern coastal city of about 30,000 (double that in the vicinity); the name came from early Swiss and German settlers. Dr. Schaller reports that local and state governments have welcomed the BSH expansion and have strongly supported the company.

Also welcoming the company, apparently, have been many of the area's residents. "We've seen considerable interest in employment with us," says Charles (Chuck) Dale, Jr., manager, Human Resources. "We had a job fair, which was attended by some 1,500 people. Of those, about 600 have gone on to take pre-employment training classes at a local community college. It teaches basic knowledge of the metric system, blueprint reading, manufacturing processes, quality systems, team building, and other subjects. This class runs two-and-a-half hours a week for 14 to 16 weeks.

"We've also worked with the community college to help them get sheet metal equipment," Mr. Dale continues. "The funding came from a grant we applied for from the state's Golden Leaf program. This was established with tobacco settlement money."

Some of BSH New Bern's key people came through an apprentice program that was operated by Robert Bosch Power Tools. It was especially aimed at tool makers and electronic technicians. BSH has adapted the program, and it now emphasizes machinery skills such as sheet metal working and model making. It currently has 10 apprentices in the program.

"We go to the high schools, cooperate with school counselors, and give presentations to students and their parents about this program," Mr. Dale says. "We've had 35 students tested so far. Our purpose to develop young people to work with us in specific skill areas. We hope the program will develop some of our team leaders of the future."

Program participants work at BSH 3 days a week and take classes at the community college other days. They work a 40-hr week. Within 2 years, a student can get a certificate as a manufacturing technician. If a student continues another year-and-a-half, he or she can get an associate's degree and a journeyman card in a specialty such as electronics technology or prototyping.

In another program, BSH works with school counselors to identify high school students for training in the information technology (IT) area. Enrolled students can obtain certificates from Cisco Systems while still in high school.

Setting Benchmarks

In the U.S., as elsewhere, the company says the main Bosch brand stands for optimum functionality, simple operation, and absolute reliability. The Siemens name is a guarantee of innovation, leading technology, and top-quality design. Thermador will remain a U.S.-designed premium brand. It recently added sourced refrigeration, which makes it a full-line kitchen appliance company. Gaggenau is a high-end, technology-driven European-produced brand.

"These mid-level to premium brands fit together well in our strategy," says Mr. Bosshard. "Each has its own strong personality and goes to its own market segment, and there is not much overlap.

"We have excellent coverage in the marketplace. Our products sold through independent dealers and National Accounts such as Sears, Lowe's, Expo, and Best Buy," Mr. Bosshard adds. "We have a pretty good network, and with new products we can quickly double sales. We have many dealers who want to grow with us, and we will also work on strengthening our channels."

To handle customer demand, the company is emphasizing flexibility in its factories. It has a project aimed at getting faster response time to customer orders. The company forecasts more than a doubling of its total output between 2003 and 2004. It is also working on eventually getting more derivatives - specific models for specific customers.

What about a Bosch refrigerator? "Evaluating product portfolios and business categories is an ongoing process. Bosch refrigeration is under consideration," says Mr. Bosshard. Certainly such a model would make sense by giving the company a full U.S. major appliance line. But U.S. refrigerator designs differ significantly from typical European designs.

There would also be a question about what kind of refrigerant to use. BSH was a leader in the drive to phase out CFC and HFC technology. It and other European producers use hydrocarbon technology, while U.S. companies use HFCs. Regarding the switch to hydrocarbons, Dr. Robert Kugler, BSH's executive vice president in charge of Product Areas and Environmental Protection, notes: "We took the issue up because we saw both ecological and economic opportunities in it. And because our brands are held up as models internationally, we were soon able to bring about the necessary breakthrough in technology at world level."

However the question on refrigeration is answered, Mr. Bosshard feels that his company is well positioned in the U.S. based on three strategic initiatives. "Customer focus, product leadership, and operational excellence will guide management and employees to bring the best home appliances to the American consumer," he says. "Our vision is to be the benchmark of the industry."