The biggest job in pumps During ITT Fluid Tech~ology’s recent Technology Fair, President took time out from the proceedings to explain to orld Pumps how the company is adapting to meet the demands of the modern corporate environment and the challenges of staying number one.

Bob Ayers has a lot on his plate. President of the largest pump group the world has ever seen, he has three extremely demanding constituencies to keep satisfied: customers in every corner of the world, colleagues in most of them and shareholders on Wall Street. Where, then, does he focus his efforts with so many to please? Under the direction of ITT Industries’ President Lou Giuliano, ITT’s executive council members

Bob Ayers, President of have set themselves three areas to be

ITT Fluid Technology. known for: leadership talent, growth

and operational excellence. Digging deeper into these areas, opens the door to understanding how ITT operates and where it is going, as well as telling us more about the man at the helm.

Operational excellence or management clich0? Two of Giuliano’s fundamental prin- ciples for ITT Industries are working within a value-based approach and creating a learning organisation. The commitment to a value-based organi- sation is reflected in both the corporate structure and the management app- roach. When talking about operational excellence, it is clear Ayers has taken the principles of a learning organisa- tion to heart. In recent years the organisation has learned about best practice from across the spectrum of industrial manufacturing disciplines and in the process has adopted an impressive set of acronyms - VBSS, NIMBA, VBPD. But is there substance behind the jargon? Ayers is quick with the facts behind the value-based six sigma (VBSS) programme which ITT is counting on to deliver the manu- facturing efficiency that is at the heart of achieving operational excellence. 10 000 green belts are being trained for the programme (Ayers has recently won his), with 1% going on to be black belts and champions.

Operating on such a scale makes it difficult to share best practice but all black-belt projects are shared on the

ITT intranet and every year 15 best practice projects are chosen for a best- practice seminar attended by senior managers and black belts. A measure of the success of the project is the number of best-practice examples submitted: two years ago 50 projects were submitted, a year ago that had grown to 75, this year it was 126.

Ayers stresses how much he values the close contact between senior mana- gers and the younger people in the organisation that this project has facilitated, indeed he meets all the black belts. This helps the initiatives to be seen as inclusive, even unifying, rather than divisive. This is reinforced by adopting a common vocabulary, mixing up colleagues from all parts of the organisation and investing heavily in training (typically 12 to 15 weeks each).

He has been delighted by the results of the programme, attributing 2002 cost savings of greater than $85 million to VBSS and seeing operating income increase by 10% over the previous year.

Growth through innovation The great challenge facing pump makers at present is finding growth when markets are growing very slowly and margins are extremely tight. Ayers believes technical product leadership and innovation are essential and again the company has looked outside the pump industry to

28 WORLD PUMPS February 2003 0262 1762/03 0 2003 Elsevier Science Ltd. All rights resewed

find techniques that can help deliver

the right new products as quickly as

possible.

Product development for ITT starts

with listening to the voice of the

customer and recognising both the

value the company has in its huge

customer base and that the customer is

not always who you think it is. To

capitalise on the strength of this large

customer base, the NIMBA system has

been introduced. This systematises the

gathering and processing of customer

information, enabling the company to

Barriers to innovation A key part of ITT’s marketing strategy

has been the promotion of life-cycle

cost calculations in pump selection.

But Bob Ayers insists it is more than a

marketing exercise: “I believe in life-

cycle cost. I believe it is good for

industry and I believe it is good for the

environment”. He also believes ITT

has led the world in promoting and

measuring life cycle costing although

there is still a long way to go to change

attitudes in some industries.

“I believe in life-cycle cost. I believe it is good for industry and I believe it is good for the environment ”

understand customer functions and

identify needs.

The next step, explains Ayers, is to

have robust techniques for dev-

eloping products to meet those needs.

ITT Industries has long been a

follower of Dr Genichi Taguchi’s

robust design approach and in

recent years the Fluid Technology

group has adopted the principles of

Taguchi’s teaching. In addition, the

group is using a “Stage-GateTM”

approach (see sidebar) to manage the

product development process. All-in-

all these elements add up to ITT’s

value-based product development

(VBPD) approach.

The significance of new product

development is demonstrated by the

significant contributions to ITT’s

sales revenue that have come from

recent innovations such as Hydrovar,

N-pump and PumpSmart. But there is

another aspect to commercial success

over and above producing technically

superior products, and that lies in

selling their benefits to a complex

mixture of customers across a broad

spectrum of industries.

Ayers recognises that the Hydraulic

Institute is playing a crucial role in

selling the concept and he praises

their strategy of focusing on individual

industries.

Another barrier that pump makers

have to overcome is the fact that

customers are comfortable with the

processes they are operating regardless

of what suppliers may come along with

in terms of pumping technology. Ayers

admits he has ambitions to influence

process design so that their customers

can make full use of the most

advanced pumping technology.

Innovative service As well as delivering technical ad-

vances, Ayers recognises that custo-

mers are looking for innovative

service. ITT has moved closer to the

customer in service, looking to pro-

vide not just parts and repair but also

solutions. Ayers cites the example of

creating services in rental of drainage

pumps and goes on to explain how

ideas like this lead to cross-pollination

of service capability through all the

ITT companies.

Understanding the vocabulary of ITT’s management

VBSS - value-based six sigma is ITT Industries’

interpretation of the six sigma approach to leaner

production and faster product development. Like the

successful schemes at companies like Motorola,

General Electric, ABB and DuPont, VBSS uses statistical

tools and techniques to improve processes. VBSS

differs though in its emphasis on value creation. This

means that projects are ranked on the basis of the

value they create for the organisation.

Black Belts - ITT’s VBSS black belts are specially trained

facilitators who guide the VBSS project teams.

NIMBA - NIMBA is a Swedish management consulting

firm focusing on product planning and integrated

product development. ITT is using NIMBA’s value

model approach to capture the voice of the custo-

mer. The objective is to identify and record the needs

of the customer, as opposed to identifying existing

solutions.

Taguchi robust design - Dr Genichi Taguchi is

renowned as a quality guru in the modern industrial

world. He has changed thinking about quality by

focussing efforts on reducing quality loss rather

than increasing quality. ITT Industries has been a

strong adopter of his approach and runs an annual

Taguchi Symposium at which engineers share stories

on how they are successfully incorporating Taguchi

methods and robust design into product design.

Over the 15 years that these symposia have

been run, attendance has increased from 50 to

180 engineers.

For more information on Dr Taguchi and his methods,

you are referred to the American Suppliers Institute

website www.amsup.com/BIOS/g_taguchi.html.

Stage-gateTM - Stage-gate is a trade-marked product

development approach introduced by Dr Robert

Cooper. Essentially it breaks the product development

process into a combination of stages with gates

between stages at which progress is reviewed. More

information is available in Cooper’s book “Winning

at New Products” of which the third edition was

published in 2001. Full details about the book and

Dr Cooper’s methodology are available on his

company website (http://www.prod-dev.coml).

www.worldpumps.com WORLD PUMPS February 2003 29

Acquisition expands market reach in water and wastewater solutions

In December 2002, ITT Industries, announced that

it had acquired the assets of PCI Membranes from

Thames Water. The PCI Membrane products com-

plement ITT Industries Fluid Technology’s pumps,

mixers, aeration equipment and wastewater process

systems, and will provide significant expansion

opportunities for ITT Industries’ Sanitaire in the

growing filtration and disinfection segments. Terms of

the transaction were not disclosed.

“PC1 Membranes is a perfect addition to our portfolio,

and helps us in our objective of migrating ITT Indus-

tries, Sanitaire division from a provider of products to

a provider of total systems solutions to the municipal

and industrial treatment markets. PCI products and its

design capabilities strengthen the value of the solutions

we provide to our customers, and will accelerate our

growth in our core market,” said Bob Ayers, President

of Ill Fluid Technologies.

PCI adds important chlorination disinfection tech-

nology to the group through its Portacel division loca-

ted in Winchester, UK. In addition, PCl’s membrane

technology and expertise will be leveraged within

Sanitaire to develop both MBR (membrane bio-reactor)

and secondary effluent filtration products.

PCI Membranes employs approximately 174

employees in the UK and has operations in Laverstoke,

Swansea, Winchester. In the USA, the company has

operations in Cincinnati, Ohio and Zelienople,

Pennsylvania. Full-year revenues for 2002 are

expected to be approximately $26 million.

Sanitaire is a leader in diffused aeration systems,

SBR technology and reverse osmosis systems for

municipal and industrial facilities. Product lines include

SANITAREB, ABJB, Royce Technologies, Water

Equipment Technologies, C’treat and WETTEC. Sani-

faire provides a comprehensive offering consisting

of biological treatment, process engineering, support

services, project management and partnered ser-

vices such as contract installation, civil engineering,

operation management and financial solutions.

Sanitaire has operated in the wastewater treatment

market since the mid 1960s and was purchased by

Ill Industries in 1999. Sanitaire is headquartered

in Milwaukee, Wisconsin, with other sales and

production facilities throughout the United States, the

UK and China.

Achieving any kind of meaningful sharing of technical expertise is a tall order for a company as large and widely distributed as Ill Fluid Technology. It is, nonetheless, a worthwhile aim and the company’s first Technology Fair, held in the Finger Lakes region of New York state last year was an admirable step in the right direction. More than 100 young engineers attended from pump and system design teams in Sweden, Italy, Austria, Germany and right across the United States. A number of groups were singled out to receive awards for their innovative technology. In addition a special award was made to Per Strinning, one of the most remarkable and influential pump designers in the modern pump industry, who is pictured here receiving his award from Bob Ayers (left) and Richard Duffy (right), VP and Director Business & Product Development at ITT Fluid Technology.

Other routes to growth ITT has traditionally achieved

much of its growth through acqui- sition and the last twenty years have witnessed massive consoli- dation in the global pump industry but Ayers admits that the scope to grow further through acquisition is very limited.

Rather than bolting on more manufacturers of pumps or ancillary products like seals, Ayers is much keener on system integrators and suppliers of packaged systems. Sys- tem integrators now contribute $150 to 180 million to the Fluid Technology Group revenue. He describes this as forward integration and in some cases it means buying former customers.

The recent acquisition of PC1 Membranes (see sidebar) is an example of this strategy where a product supplier (the Sanitaire division) is being migrated into a complete solution provider in a core market.

Measuring success “Good is the enemy of great,” says Ayers. “ITT Industries aspires to be recognized as a premier multi-industry company, with annual growth between 8 and 10% and an operating ratio of 15%. The Fluid Technology Group will play a big part in achieving this status.” At the moment, Ayers is happy with the progress being made but remains cognizant of the many opportunities for further improvement.

Looking forward he is equally confi- dent: “We’re leading the world in moving into China, with five out of six divisions manufacturing there now.” He acknowledges that there are risks associated with the Chinese market, citing cultural differences, distribution difficulties and poten- tial monetary instability; but the opportunities are overwhelming. In particular he is quick to praise the excellent quality of people they are working with in China. Furthermore, he recognises that the Asia Pacific region is where real economic growth will come in the future so ITT has no choice but to be there.

30 WORLD PUMPS February 2003 www.worldpumps.com