2019

The Disciple of Data

Change has been the one constant in the job of Veera Gordijevski, Fortaco Estonia’s production director. Over the last two years the factory has added 200 workers, several welding robots and CNC machines, and introduced tens of new products.

Coping with dramatic growth requires change, and in a modern production environment change isn’t most effective when it’s dictated. Shop floor personnel need to buy in to change and be convinced there is a better way. To make a convincing case, Gordijevski doesn’t consider herself a “person of words.” Data is her tool of choice.

Study the processes
Gordijevski's approach has been to study processes and understand deviations, employing data analysis to isolate the root cause of a problem.

When Fortaco’s Narva factory found itself in the situation of actual orders exceeding customer forecasts, Gordijevsky and her team froze forecasts for two months in order to analyze the lines and verify capacity. "We studied the workflow of every line, balanced resources, rotated people, and eventually optimized the processes. We built a dashboard tool which gave us a global view of production so we didn't lose information." It may sound simple when expressed in a few sentences, but implementing change in a period of heavy growth required a large amount of discipline.

"When I started as production director in 2017 I made the decision that I would take the time to investigate processes myself. I didn't want to take anyone's word for how something worked, and I learned that employees themselves don't always have an accurate view.”

‘Is it possible we’re not right?’
Middle management had worked with the processes for many years and were accustomed to doing things in a particular way. Gordijevski views it as her job to pose the tough question: Is there a possibility that you are not right?

“Sometimes a problem gets identified,” she says, “but that problem represents only a small part of the root cause. In order to convince middle management that change is needed, you’ve got to have the numbers.”

A good example was with pre-fabrication in small machining centers. "There was the belief that we had 400 hours of delays, and we needed to add labor and produce 24/7," says Gordijevski. "But when we carefully analyzed delays and associated hours, we saw that 300 of those hours were due to other mistakes in the process. There were only 100 hours of real delays. We used data to prove it wasn't a backlog and we did not add an additional shift."

"I'm not a person of words," says Gordijevski. "I am confident when what I say is based on figures. I dislike long meetings where lots of time is spent speculating about what might be the problem. Meetings can only give you a hint of where the problem might be and help you figure out ways to gather data."

Sowing doubt
Gordijevski is the first to admit that she can’t be an expert on everything. “I once thought that as production director I should understand all detailed technical elements. But I’ve realized it’s more important to lead.”

“I have great experts on my team. My role as a leader is to rely on these experts. I can use data to sow a bit of doubt, to make them question the way we’re doing things. Should it really work like this? How else might it work? If you can raise doubt in the mind of those doing the work, get them to consider that the way we’re currently doing it may not be the best, then they will find a way to improve it!”

by Fortaco Group

‘How strong you are inside’

Larissa Shabunova, Managing Director of Fortaco Estonia, talks frankly about industry- and personal challenges.

"Fantastic growth" is how Larissa Shabunova characterizes today's business situation in the off-highway industry. It’s not only overall market growth, she says, but growth due to the success of Fortaco's most important customers winning more market share over the last five years.”

According to Shabunova, Fortaco Estonia's most difficult challenge is balancing customers’ rapidly changing demands vis-à-vis capacity limitations, ensuring delivering on required lead times, right quality, and right price.

Fortaco challenges
To handle a 40-percent growth in net sales over the past two years, Fortaco Estonia has purchased and put into use several large CNC machines and welding robot stations. At the same time, it has added 200 new employees to its Narva factory team. In Ida-Virumaa, a county with a total population of only 140,000, this has not proven easy.

"We've been proactive, always looking a few years ahead," says Shabunova. Her team works closely with vocational technical schools, training the best students at Fortaco while they're still in school and hiring them when they graduate. Fortaco Estonia also works closely with the county's unemployment agency to train and hire new workers. And, of course, Fortaco hires from the open market.

"Our salaries are competitive on the local market," she says, "but this is not the main driver. We're working hard to be an attractive employer thanks to the way we treat people, plus how we establish social- and development programs, support and train workers, fund worker education, and even support their children's sports initiatives."

Fortaco Estonia also has an impressive track record for promoting from inside its organization, and there is no better reference case than Shabunova herself.

First female plant director
Shabunova started her career in an assistant position and constantly worked on self-development. Holding a pedagogical education from Narva, she added an MBA from the Estonian Business School in Tallinn, and found herself in HR- and finance roles.

Working with Nordic companies she found the European work culture motivating. In 2014 Shabunova was named Managing Director of the Fortaco Estonia plant. It was not easy being the first female plant director in the history of the factory. "The factory had 70 years of history with men with strong personalities in the top position," she says. "And these men always had a technical background." She says it was a psychological challenge to be the first woman leading a heavy industry company, but any doubts about her ability dissolved when she showed year-on-year positive results in the factory.

Abilities tested
Shabunova’s leadership abilities were critically tested in crisis situations. Recently, the core problem haunting Fortaco Estonia was related to capacity planning and machinery availability challenges. "We took a holistic view on the customers’ forecasts, putting all forecasted and non-forecasted demands into one software. We were amazed how many non-forecasted requests we got in the end – for example product modifications, new products implementation, new product development, engineering change requests. It meant overall demand was much bigger than original forecasts and, at the same time, problems with machinery from time to time reduced capacity.”

Shabunova buckled down and focused on leadership and execution. "You must find the root cause of a problem and attack it. You plan and then you make sure the planned actions are properly executed.” After a few months, her team started to see positive results. After six months, she says results were excellent. “Results were good enough that nobody asked any more questions!”

Don’t fear a challenge
Shabunova is a non-technical person in a highly-technical job. Yet she says that can play to her advantage. "There is benefit if the leader has a technical background, but there are also disadvantages. You might be tempted to dictate what should be done. For me, however, I rely on my people and give them the opportunity to use their skills. I empower them. And we are very successful technically speaking."

Shabunova realizes that as factory director she not only occupies a high-profile position at the plant, but in the entire community, as well. She frequently finds herself in front of young women who are faced with making decisions about their own futures. Her advice: Don’t run from a challenge. "Men are used to challenges. But women’s first reaction may be 'Oh, I won't cope.' My advice to them is to be braver."

Take the chances life offers you, she says. "My credo is that it's better to take the opportunity. If you don't try it, you'll regret it your whole life. Take it. Give your maximum. You don't yet understand how strong you are inside."

by Fortaco Group

The Economics of Safety

India has always been a source of vast wealth. In the 18th century, before India's deindustrialization at the hands of the British Raj, it held over 24 percent of the world's wealth. Today, India ranks second worldwide in farm outputs. Agriculture employs 50 % of the Indian work force and contributes roughly 18 % to country's GDP. India is a market to be reckoned with, and a great opportunity for companies with meaningful experience to contribute.

Your grandfather’s tractor
If you want to get a sense of tractors in India, do a Google image search using the term “tractors India.” The cabinless machines may make you nostalgic for your grandfather’s farm, the open air and the smell of the harvest.

“Some companies are still producing tractors introduced in the 1960s,” says Aki Komulainen, Fortaco's Director of Cabin Technology, “and that’s because they’re very good machines for their purpose: simple, robust, easy to service, and proven in the field.” Small tractors make sense in India, where the average farm size is estimated to be 1.15 hectares, and there is not a culture of farming collectives where equipment is shared across multiple farms. Government policy also serves to keep farm size small and encourage family farming.

New regs, new cabins
But as India reasserts itself on the world stage, a culture of safety is on the rise. In the next few years, new safety regulations are coming into force for newly manufactured tractors. “No one yet knows exactly what the new regulations will call for, but we can be sure they’ll include European-style ROPS and FOPS,” says Fortaco’s Komulainen, referencing roll-over protection and falling-object protection. “And because of the recent rise in family car comfort in India, farmers are also demanding air conditioning in tractor cabins.” The new cabins will minimize vibrations and noise, include air filtration systems for pesticide handling, and be delivered at a cost significantly lower than in Europe.

Typically, a cabin for the Indian market must be delivered for around 1,500 euros, versus a European cabin which could easily cost ten times more. “But a one-to-one comparison here is not appropriate,” clarifies Komulainen, who notes that a typical Indian cabin is a drop-on cabin with no floor structure, pedals, or heating unit. “However, cabins for the Indian market cannot be stripped-down European cabins. They must be specifically designed and manufactured for the purpose to meet all needed requirements.”

Local partnership
In September 2018, Fortaco and Tata AutoComp Systems Limited signed a memorandum of understanding. Fortaco will provide technical expertise, cabin know-how, and design competence. Tata will provide the manufacturing facilities near the city of Pune in western India, home to many global OEMs.

“The tractor market in India is estimated to be 700,000 units per year,” says Komulainen, “and a good partnership like this is the key to growth in the market.”

Beyond agriculture, other off-highway businesses in India are also experiencing growth. According to Construction Week, manufacturers in the construction and mining equipment market have enjoyed double-digit growth. Aki Komulainen says Fortaco is also looking at the construction market, participating in the last Bauma expo to develop construction contacts in India. There are plenty of Indian OEMs, plus European manufacturers are showing clear interest in the Indian market.”

Bringing flexibility
India continues to compete neck and neck with China for the title of world's fastest-growing large economy. In 2018, India’s economy improved 23 spots in the World Bank’s Ease of Doing Business ranking.

It’s a dynamic market waiting to be served. “Local manufacturers often make cabins for only one specific customer, or they are limited by geography,” says Komulainen. “Fortaco’s 30 years of experience mean we can bring real flexibility to the market.”

by Fortaco Group