Catchy phrases like “workforce development” and “employee empowerment” get tossed around in business quite a bit, but at the Siemens Charlotte Energy Hub, nothing gets tossed around lightly—not safety precautions, not the multi-ton sections of turbine equipment, and certainly not the concept of workforce development.
In 2005, when the company talked of moving the Siemens Charlotte plant to Europe, it was workforce development—combined with lean manufacturing and better process control—that turned the plant around, demonstrating that Charlotte is a powerful place to be.
Siemens, the German-based global behemoth, involves itself in so many industry sectors that nearly everyone knows the name, while few can say what exactly they do. With 405,000 employees in 190 countries and over $100 billion in sales each year, they describe themselves as a “global powerhouse in electronics and electrical engineering, operating in the industry, energy, health care and cities/infrastructure sectors.”
What Siemens does is complicated. But what the Siemens Charlotte Energy Hub does is really quite straightforward: They make turbines and generators for energy plants. Specifically, they take raw chunks of metal, roughly shaped, machine them down to extremely tight specifications, and assemble them into gas- and steam-powered turbines and generators, which are then shipped around the world to provide decades of energy service.
Generating a Return
The Charlotte plant has mastered what it takes to produce goods in a competitive global market where most manufacturing has gone overseas, but it hasn’t been easy. In 2002, Siemens Charlotte cranked out 80 generators. In 2003, the market collapsed and the organization had to cut 350 jobs to make ends meet. By 2005, talk had turned to closing the Charlotte plant and moving its operations to Europe.
That’s when Mark Pringle was brought in as director of operations and given a chance to turn things around. He convinced Siemens leadership to give the Charlotte plant responsibility for order management, supply management, and all the support functions necessary for production. At the same time, he promoted the adoption of lean manufacturing principles, creating a more efficient production process.
Meanwhile, says Pringle, the new leadership team began the process of “rebuilding employee trust.” In the prior several years, management had cut back on employee benefits and in other ways attempted to squeeze cost out of the employees creating, in Pringle’s words, “an ‘us versus them’ mentality.” As a result, many in the Siemens global leadership thought Europe would be a better employment climate for the plant.
Pringle saw things differently. He says that rather than punch a clock and get through the day with a minimum of effort, the Siemens Charlotte’s workforce were willing to put in a fair day’s work and to contribute to productivity, but they needed to feel like their contribution was welcomed and honored.
“I was convinced that if they got excited about what they could accomplish,” he says, “they would even do extra. It’s a positive work ethic.”
But when he first arrived, all that potential was wrapped up in distrust between management and employees. “We would go out and have meetings in the shop, and the employees would stand there with arms crossed and leaning back,” he remembers, “body language saying ‘I am not with you. I am looking for something that I can attack.’”
Pringle says they began to change that attitude simply by showing that management could be trusted to do what they said they were going to do, and that they valued everyone’s input. Part of the process included an initiative called Kaizen, a Japanese word meaning “improvement.”
Under Pringle’s leadership, Siemens Charlotte began facilitating regular “Kaizen weeks,” during which employees were given permission to stop production in order to look at their processes and uncover better ways of doing things.
For example, a group of machinists looked at their work station during a Kaizen week and realized that they were wasting time walking around the work station gathering tools for each portion of the job. During their Kaizen week, they designed a tool box that containing everything they needed and located exactly where they needed it. Management gave them the resources to create a prototype, then approved a budget and helped implement the idea.
Kaizen projects like this benefit the organization by improving processes and increasing efficiency, while at the same time giving employees a sense of ownership. “People are more motivated by seeing that they are accomplishing and creating something than just by the salary that they are getting. You turn their minds on to participating,” says Pringle.
As a result of the changes, Siemens was able to reduce the number of hours it takes to build a generator to 30 percent of what it took in 2005, making the Charlotte plant one of the most cost-competitive plants in the Siemens global network. By 2008, Siemens had decided to remain in the Charlotte market.
In 2010, Siemens set their stake in Charlotte in an even bigger way with the announcement of a new gas turbine plant, which, with a recently completed expansion, totals 1.2 million square feet and an investment of $350 million. In January 2012, Siemens Charlotte announced it was part of a $1 billion sale of 10 gas turbines to a combined-cycle energy plant in Saudi Arabia.
Siemens Charlotte’s accomplishments are all the more remarkable for the fact that they have been achieved in what is a notably challenging workforce and manufacturing environment. The energy industry in particular faces significant problems in the U.S. thanks to an aging workforce and the availability of cheap labor overseas.
Partnerships with the University of North Carolina at Charlotte (UNCC) and Central Piedmont Community College (CPCC) represent a few examples of initiatives that are continuing to bolster Charlotte as a hub for energy workforce development.
Siemens has co-designed a program with UNCC’s Energy Production and Infrastructure Center that can deliver highly trained engineers and other skilled employees to Siemens upon graduation. Similar programs at CPCC and other local colleges likewise prepare students for careers in energy.
But young people don’t have to save up for a four-year degree to benefit from Siemens educational programs. The Siemens pilot apprenticeship program recruits students straight out of high school who may not be planning a college career, but have the aptitude for highly skilled work.
They are offered hourly jobs on the plant floor, and simultaneously work toward an associate degree in mechatronics through a partnership with CPCC. After three and a half years, they graduate from the program with the skills and ability to run the machines and operate the control systems inside the plant.
Once inside the organization, employees are engaged in a variety of programs that encourage inter-generational knowledge sharing and relationship building. Pringle says, “At one time, employees believed that knowledge hoarding provided job security. Now, skilled employees are successfully encouraged to engage in developing standard operating procedures and documentation to facilitate knowledge transfer.”
Pringle explains that initially, these ideas were pushed out to employees, but, “The interesting thing to watch was how more and more people started running with it. Now our people have grown into a culture where they improve and learn and share on their own, because things are under their own control.”
In addition to these initiatives, Siemens has made diversity a part of their mission, seeking qualified employees among diverse backgrounds. For an industry that has traditionally been highly white male dominated, Siemens is making great strides. Among the six individuals currently employed through the pilot apprenticeship program, two are female and four are Hispanic. Similar improvements can be seen throughout the organization.
New Energy Capital
In Charlotte, Siemens has been visible as a leader in the push for our city to be known as the New Energy Capital. Pringle says he’s proud of their role in that development, and believes the city is well poised to capitalize on that title.
“We have 250 businesses here that have to do with energy, which is near the top for U.S. cities,” he says. “And the education infrastructure is here. We have a kind of fraternity of folks in this city that are in the energy business, and we get to know each other and see where we can help each other.”
For instance, in January an Italian company called Turbocoating will begin construction on a $30 million factory in Hickory that will provide parts for the gas turbines Siemens builds. The deal came about thanks in part to a coalition of interested energy-related businesses who coordinated to demonstrate the benefits of a Charlotte location.
Just recently, Pringle gave a plant tour to a group of representatives from another energy company that is considering moving to Charlotte. Executives from Duke Energy, Piedmont Gas and Celgard had joined the group. “The more energy companies that come here,” explains Pringle, “the more we can develop the things we all need.”
Pringle is bullish on Charlotte as the New Energy Capital, but he says we’re not quite there yet. Transportation infrastructure needs improvement, as roads and public transport haven’t kept pace with Charlotte’s growth. Plus, rail is currently the only option for transporting product out of Charlotte, and only one rail line serves the city. Pringle would like to see more options.
“We’ll know we can truly claim the title of Energy Capital when anyone in the whole United States thinks of Charlotte first when they think of energy,” he says. To get to that point, he believes city leaders will need to focus on getting the word out about Charlotte’s great energy education infrastructure, the resources available here, and all the great reasons to bring energy companies to our city.
“I told the gentlemen this morning that if you made a matrix of all the attributes of the city you wanted to move your companies to—international air travel, standard of living, ease of recruiting, education infrastructure, weather—Charlotte would place high in every category,” says Pringle. He adds that city leaders could design a visual for that matrix and market it to the world.
Siemens Charlotte in the Future
Siemens Charlotte has come a long way since the early 2000s, and they won’t be resting on those laurels. They added 700 new jobs with the plant’s expansion in 2011, and plan to add significant new jobs over the next few years. They’ll be providing $400 million in exports during 2012, including the new contract to Saudi Arabia.
To support their growth, and that of Charlotte’s energy hub, Siemens continues to initiate workforce development programs and educational support throughout the region. Currently, they are looking for more high school graduates to join the pilot apprenticeship program preparing for a career in energy.
Pringle is enjoying his tenure as head of operations in Charlotte and expects growth to continue. The Charlotte plant produces innovative products that work well in modern environments and create efficiencies for energy plants. One Siemens model of turbine cycles up and down quickly, making it more compatible with sustainable methods of energy generation than old fashioned turbines have been. And because natural gas is a highly efficient form of fuel for turbines, he expects demand for their products to surge very soon.
Pringle knows Siemens Charlotte Energy Hub will be ready: “We have an advantage here with a lot of property. We have 450 acres that we own, and we’re not using even half of it right now. We have room to grow.”
And thanks in part to the Siemens team’s efforts, Charlotte’s workforce has room to grow too.