BY MIKE BREZONICK
When GE broke ground on its new engine manufacturing facility in Canada a few weeks ago, it marked a significant step toward the end of one era and the beginning of the next.
In 2018, when the new plant in Welland, Ontario, goes fully online, it will mark the close of some 112 years of engine manufacturing in Waukesha, Wisconsin.
Yet more importantly, GE said the “brilliant” factory being planned will help position its Waukesha and gaseous-fueled engine business for significant growth in the years to come.
“We are embarking on a new industrial manufacturing era with our brilliant factory in Welland,” said Heiner Markhoff, president and chief executive officer of the GE Water and Distributed Power Business. “At this greenfield plant in Welland, we are planning to invest $165 million. We will run three-dimensional machining simulations and use real-time analytics to better understand the operating conditions of the machines or the test cells. We’ll be digitally connected to all our global sites and engineering centers.
“We’ll be able to install lights-out machining and combine it with all kinds of advanced lean manufacturing practices and tools. This will allow us to be much more productive, competitive in a very competitive segment and bring new components and new products to the segment almost 30 to 40% faster than we can today.
“This is a cornerstone for our future. As we grow our reciprocating engine business for decades to come, this will be the backbone.”
The establishment of the Welland plant is the result of a confluence of a variety of different factors, chief among them the U.S. government’s allowing the charter for the Import-Export Bank (Ex-Im) — the federal agency that provides loans and financing assistance to U.S. companies involved in international trade — to lapse for a time in 2015.
“We have a great and growing relationship with Canada’s Economic Development Corp. (EDC),” said John Rice, vice chairman of GE. “This is a country that understands the importance of global trade and there are a few countries that we operate in that don’t understand that importance and that don’t think they need to support exporters.
“We have institutions around the world that are ready to work with us because they know the U.S. is debating whether it needs an export credit bank or not. They are rolling out the red carpet. They understand, just like the EDC does, and Canada’s federal and provincial government does, that if you want to compete in this world, that is one of the tools that you have to have. The countries that understand that are going to get more investment.
“We have institutions around the world that are ready to work with us because they know the U.S. is debating whether it needs an export credit banker or not.”
Welland also made sense from the perspective of geography. Only about an hour west of Buffalo, New York, it offers access to significant highway, rail and water transportation and it’s also in proximity to another GE reciprocating engine facility, GE Transportation, in Grove City, Pennsylvania.
The move is also an obvious outgrowth of GE’s determination to remake itself as a “digital industrial” company, one that will increasingly rely on highly integrated, high-technology, “brilliant” facilities to produce its many products. It’s hard to bring a significant amount of brilliance to a facility like the Waukesha site, where engines have been manufactured since the early 1900s.
“There’s only so much you can do with an existing facility in terms of improvements,” Markhoff said. “It’s smarter to build brilliance into a brand new factory and lay it out that way than refurbish an existing facility.
“The plant in Welland will really be a step change and we can apply all the learning we’ve seen in our factory in Waukesha and in Jenbach in Austria, where we manufacture the Jenbacher product line.
“We have a long history – 110 years of Waukesha gas engines, 50 years of Jenbacher gas engines. That’s 160 years of reciprocating engine technology experience that will be applied in Welland.”
The Welland facility will initially produce GE Power’s 275GL, VGF and VHP Waukesha engines. The multimodal design will ultimately allow production to expand to include 60 Hz versions of Jenbacher gas engines, as well and components for reciprocating engines produced by GE Transportation in Pennsylvania.
While the floor plan isn’t finalized, the facility is expected to cover approximately 450,000 sq.ft. (41,800 m3) Depending on the building construction, GE is aiming to begin moving machinery into the site next summer.
“We actually have a pretty conservative timeline for that,” said Scott Parent, senior general manager, Technology & Operations for GE’s Distributed Power Business. “We expect by third quarter of next year to be moving some equipment in and ahead of that, to start training and employing people.
“We want to be producing here by early 2018 and at full load by mid-2018. That could move a quarter forward or a quarter backwards and we’ll be keeping an eye on how things progress.
“We have a ramp-down plan with the plant in Waukesha that we’ve discussed with the labor force there. But if the segment demand comes back a little sooner, that’s something that might be adjusted as well. Again, those are things we’re keeping an eye on.”
The “brilliance” of the facility will come through new technologies aimed at driving significant gains in productivity and efficiency, Markhoff said. “It will be a brilliant factory meaning software, meaning lean and applying all kinds of analytics and new tools to really drive productivity, cycle time,” he said. “When it’s built, it will be one of the best, most efficient plants in the GE system. We have about 500 plants in the GE system and it will be a showcase.”
“A lot of the infrastructure will be created, but the equipment will also see sensor enablement that’s not there today,” Parent said. “You’ll see a lot more wireless gauges and lot less manual measurements. And then you’ll see more automation, either for safety, like heavy lifting, or for speed. This factory will have a foundation of production automation that we do have today. We started to do some of that in Waukesha but the limitations of layout and legacy processes have minimized the opportunity to optimize that.”
That, GE said, will lead to some significant gains in productivity in light of the variations that are required by the customer base for Waukesha engines, which are primarily used for gas gathering and transmission applications in the oil fields, as well as distributed power generation, including combined heat and power (CHP).
“We have three product lines and more than 100 deviations of those product lines based on applications and customer packaging needs,” Parent said. “When you want to track that amount of variation in product, you don’t want to have a lot of variation in the plant. So we look at lean ways to improve the cost of quality, cycle time, inventories, etc. — these are our key metrics to measure.
“What’s unique is that a lot of the equipment will be brought in from Waukesha and it will be re-sensored or reapped. In some cases, new control systems and sensors can be placed on older equipment that’s precise enough, but the controls don’t have the necessary level of sensor enablement and/or monitoring connectivity. The standard of IT horsepower this factory will have will be 10 to 100 times more than the structure we have in Waukesha.”
There will still be a direct connection to Waukesha, however, where the company will maintain its engineering, testing and sourcing functions for Waukesha gas engines.
“The production test labs here, which we use to run every piece of equipment before we ship it, will be connected to the engineering test labs in Waukesha,” Parent said. “Both digitally from a data standpoint and through video, to maintain a high level of collaboration. There will be real-time video interaction with engineers from the site in Waukesha to the site here, so we’re having to make investments in Waukesha as part of the work we’re doing here.”
Along with serving as a showcase for its manufacturing capabilities, the Welland facility will also include Waukesha-driven generator sets, including one providing CHP, that that will be used for peak shaving with the local utility. “We will come off the grid at least 12 days a year or when we’re requested to power our own plant,” Parent said. “We also do that at our Jenbach facility and we will be providing that same service for other GE facilities. So from a facilities management standpoint, it will give us a flexibility advantage.
“And it’s for us a demonstration to customers — they can come see the engines, see the control software that our business produces and how this allows us to manage the equipment. A lot of our customers are CHP customers so this is an opportunity to have a demonstration and show how it works and how it’s managed.”
While the first phase of construction at Welland will cost US$165 million, that number is likely to rise over time as GE is already planning for potential expansion, based on improvements to the business climate.
“We’re only occupying a relatively small part of the land in the first phase,” Markhoff said. “There is room to grow and that certainly was one of the strategic elements that led us to pick this site as well.”
And by the time Welland comes fully on line, business is expected to be better, Markhoff added. “Like other engine manufacturers, we’re going through this downturn and hoping we see some light at the end of the tunnel,” he said. “The reciprocating engine business is a strategic growth business for GE and being a multibusiness company, we have the ability to invest in a counter-cyclical way which helps us build this factory quickly and in a cost competitive way.
“When the segments come back, we should be ready to run here and so from that respect, the timing is pretty opportune.”