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 user 2007-11-06 at 11:00:00 am Views: 32
  • #18913

    Local Canon plant setting own course
    The Newport News operation is testing a variety of ideas that could mean hundreds of new jobs.
    2007 A few years ago, the top corporate managers at electronics giant
    Canon quietly set a plan in motion to allow their subsidiaries in the
    Americas, Asia and Europe to chart their own futures.While the
    corporate functions for Canon Americas are in New York and the research
    is in two other states, all the heavy lifting is done by 1,400 workers
    on the Peninsula. Canon’s only manufacturing facility and a separate
    distribution center are in Newport News, and a major printer toner
    cartridge recycling plant is in Gloucester.Many of the manufacturing
    functions have shifted from here to overseas as electronics
    manufacturers increasingly compete on price. That left a lot of space
    at the Newport News plant, where every employee from CEO Takayoshi
    Hanagata on down wears a blue uniform shirt with red pinstripes, to use
    for whatever workers could dream up. And that has spurred the
    development of a variety of unique new business models that are now
    getting tested.A plant once used for manufacturing core products for
    Canon is being literally converted in every corner into new
    service-based manufacturing and troubleshooting business lines. The
    changes could result in hundreds of new hires.”Now we’re allowed —
    actually requested — to go in other directions too,” said Brian
    Strangways, director of the business development division for Canon
    Virginia.The local managers are re-making the Canon business around a
    model of advanced support services for Canon products and manufacturing
    for companies that need to outsource to a sophisticated operation with
    tight quality control.

    Servicing Canon products — called
    insourcing — is part of a corporate wide shift to vertical integration
    for Canon, which is known for its printer, copier and fax machines and
    cameras. Instead of sending them to be fixed by an outside company or a
    landfill when there is a defect, Canon is bringing such services
    in-house for better quality control.While many other electronics
    manufacturers have outsourced to countries such as China, Canon’s own
    Asia operations are maintaining control, albeit in low-cost regions.
    The Newport News operation is now targeting a void left in domestic
    advanced manufacturing that emerged when U.S. production shifted
    overseas.”The mature, high-volume products went to low-cost countries,”
    said Strangways.Canon Virginia was hired this year by 3-D Systems to
    mass-produce a desktop 3-D modeling machine. With an appearance similar
    to a commercial printer, the machine can sit on a desktop and a 3-D
    drawing is actually turned into a small physical model inside the
    machine.While Canon wants to win more business like this, contract
    manufacturing is not new there. Canon has long produced laser printer
    cartridges for competitor Hewlett-Packard. The companies are rivals for
    ink printer cartridges, but not for laser cartridges.”We’ve been doing
    it for 20 years, and it’s been successful for both companies,” said

    The cartridges, not the printers, yield the profits.
    The cartridges are the heart of the machine, and require the most care
    to manufacture. That is why the production stayed in Newport News. One
    of the plant’s first outside manufacturing clients moved production
    from China to Newport News because the necessary quality control and
    constant communication with engineers didn’t work
    overseas.”Manufacturing in China is great if the product is simple,”
    said Strangways.The Newport News plant has developed expertise in
    making expensive molds used for mass-production plastic parts. While
    once used for its own printer and copier manufacturing operations, the
    plant is now making molds for outside customers.Canon has invested $6
    million in the Newport News capabilities in recent years and wants to
    annually double sales to become one of the top-10 toolmakers in the
    country. This was another business line that evolved as manufacturing
    moved overseas and put smaller machine shops out of business.Yet
    another outgrowth of the American outsourcing phenomenon has been a new
    problem when it comes to repairing expensive equipment with
    defects.”Logistically, it doesn’t make sense to send that back
    overseas,” said Strangways.Canon sees a huge potential business in
    reverse logistics, which is troubleshooting problems in returned or
    warranty products.Canon is mostly starting by doing this work for its
    own products, but it has also started working for other manufacturers
    and wants to expand its work for outside firms in the future.Besides
    the problem of not being able to send returns back overseas, shrinking
    electronics profit margins and environmental concerns make it more
    costly than ever to follow the old practice of often disposing of
    returned products. Canon sees a future in salvaging some parts and
    recycling others.”Because of that, there’s really a whole new industry
    starting up,” said Strangways.Canon’s Industrial Resource Technologies
    facility in Gloucester salvages metal and plastic for all the black and
    white toner cartridges in the Americas. The materials — about 10,000
    tons a year — are reused or sold. The plant may expand into color
    cartridges soon.But goal one is to fix the returned products. Already,
    rows of Hewlett-Packard laser printers inside the plant await diagnosis
    from Canon technicians. Of course, Canon is applying that expertise to
    its own printers.

    The dealers that sell Canon copy, print and
    fax machines often would have third-parties service the machines. That
    could lead to quality problems with both the service and inferior
    substitute parts. The ensuing repeat problems could sour dealers’
    relationships with their corporate clientsTo improve the service and
    cost and make Canon more appealing to dealers — who could choose to
    sell a competing brand — Canon brought the repairs back in-house in
    Newport News. The move is part of the vertical strategy of improving
    quality, cost and speed by controlling the process internally.Canon’s
    digital camera sales are still growing at a strong clip. That also
    means the demand for repairs is growing.The new camera repair shop has
    about 23 employees now and hopes to grow to about 300 workers over the
    next few years. A large new space in the plant is getting overhauled
    right now to accommodate the expansion.Canon still has 160 acres of
    land near its Newport News campus that are being held in reserve to
    grow the business. The company hopes its successful transformation will
    mean more buildings and high-paying jobs there in the future.The
    changes already mean Canon is becoming more technically-oriented and
    searching for engineers, supervisors, toolmakers and machinists. Some
    of the lost manufacturing jobs of old at the plant are being replaced
    by more challenging, advanced positions with bright futures.”It’s
    exciting for our employees because we’re going through the changes,”
    said Rick Hammond, Senior Director of Human Resources.Perhaps most
    tellingly, Canon is even hiring its first marketing employees to help
    win outside business. As an internal cog for Canon, the local plant
    never needed to market itself to new clients now it does.