American Metal Market, May 20, 2002

By Scott Robertson

PITTSBURGH, May 17 — Ohio Coatings Co., Yorkville, Ohio, has positioned itself at the forefront of a tin mill renaissance that by most measures has been a success.

Ohio Coatings, a joint venture of Wheeling-Pittsburgh Steel Corp., Wheeling, W.Va., Dongyang Tinplate Corp., Seoul, South Korea, and Los Angeles-based Nippon Steel Trading Co. Ltd. (formerly Nittetsu Shoji America Inc.), operates an electrolytic plating line with a rated capacity of about 250,000 tons per year, a capacity the company is on pace to exceed by some 30,000 tons this year.

That success has come despite financial problems bedeviling Wheeling-Pittsburgh Steel, which is operating under Chapter 11 bankruptcy protection, and the fact that Ohio Coatings is the smallest tinplate producer in the United States in what is universally regarded as a flat market.

The company, which was established in 1995 and was the first electrolytic tin plating mill to be built in North America in more than 30 years, replaced two older tinning lines formerly operated by Wheeling-Pittsburgh. Ohio Coatings got off to a slow start but has seen significant growth during the past three years, according to Kris McGee, its president and chief executive officer.

Ohio Coatings plates steel coils for the food container, general line, oil filter and specialty industry segments. It distributes products to 23 end-user customers through both Nippon Steel Trading and Wheeling-Pittsburgh. More than 70 percent of its black plate raw material is supplied by Wheeling-Pittsburgh, which has its operations just a few miles away, with the rest purchased on the open market.

“We are a stand-alone business,” McGee said. “Measurement is the big word with us. We measure everything–that’s what’s given us the results we have. Our entire business lives and dies by continuous improvement. This is a tough industry, but this (measurement) strategy has helped us become modestly profitable.” Measurements abound throughout the plant–ranging from production, shipments and customer satisfaction to worker safety, statistical process control and many others.

McGee, an engineer who formerly worked with mini-mill giant Nucor Corp., Charlotte, N.C., has instituted a mini-mill culture in a shop where workers are represented by the United Steelworkers union. Workers have taken responsibility not only for individual tasks but also for plant-wide activities and operations.

“You won’t hear anyone here say ‘That’s not my job’,” McGee said. “We work well with the union. We’ve gotten some early contract settlements and we have started the new contracts with the new benefits before the previous contract expired.”

The company’s 78 employees also have enjoyed the company’s gain-sharing program, a monthly incentive program for both hourly workers and management that uses five drivers measured against a matrix to determine a monthly payment.

Ohio Coatings has been profitable for the past 16 or 17 months, McGee said, as a result of the continuous improvement strategy, a strategy which directs the company’s overall focus to its bottom line.

Mike Roth, the company’s purchasing, safety and environmental manager, said the ability of management and employees to work as a team had fostered a safe workplace. There is a simple measurement for the success of that plan, according to Roth: zero OSHA-recordable accidents this year.

There are other key measurements of success as well. The number of customer field claims at Ohio Coatings has fallen steadily during the past three years, according to Lori Clark, manager of quality control. She said that claims had declined from 2 percent in 2000 to 1 percent in 2001 to 0.4 percent thus far this year. Customer field claims averaged only 0.43 percent from October 2001 through April 2002.

Customer satisfaction has risen in kind. On a rating scale of 1 to 5, where 1 is very poor and 5 considered excellent, customers this year have rated the company a 4.4, up from 3.3 two years ago.

One of the reasons for that lies in Ohio Coatings’ Tech Services. The company has two technical representatives who regularly visit customers to get ideas on how the company can improve its performance and to address low marks on customer feedback reports. At the same time, Ohio Coatings maintains a customer complaint board in its lunchroom–McGee described it as a “Wall of Shame”–on which complaints, even poor tinplate samples, are tacked for all to see.

“We want to make sure if something bad goes out the door once, it doesn’t go out that way again,” McGee said. “Everyone takes responsibility and makes sure it’s corrected.”

Ken Domyan, general manager of operations, said the company’s “yield bucket methodology,” which is part of its continuous-improvement program, also is showing results. Ohio Coatings’ total percentage of prime product produced has risen steadily to 96.52 percent this year from 92.06 percent in 1998, while the number of rejects, black plate rejects and delay rate had fallen. Rejects, for example, were running at 1.06 percent through April of this year vs. 4.32 percent in 1998.

Part of the reason for those improvements lies in Ohio Coatings’ statistical process control. Dwain Hultberg, manager of process control for the company, said the tin line design incorporates on-line process sensors coupled with frequent off-line product and process testing. Data is continually archived and checked for proper process control and highest product quality.

The company made the transition to a QS-9000-registered quality system in January 2001, Hultberg said, facilitated by the on-line sensors, routine product testing and the high experience level of the workforce.

And better quality has meant improved sales. “We’re the smallest tinplate producer in the U.S.,” said Gregg Johnston, general manager of sales for Wheeling-Pittsburgh. “But we’re pretty much sold out, and we have been for the past seven or eight months. As the smallest player, we have had to identify some niche markets and operate from freight-friendly locations. We don’t have to do a lot of things the bigger (tinplate producers) do. We have more operational flexibility.”

Being small has not hurt the company–bookings have grown 160 percent since 1998 while market share growth has increased 66 percent in that span. That growth has helped translate into shipping records. Ohio Coatings is on track to ship 15 percent more tons in 2002 than it did in its previous record year. The company set a monthly record with 28,774 tons shipped in January and set a daily record in March when it shipped 2,535 tons in one day.

“It (tinplate) is a flat market,” McGee said. “And we are still a slave to the two large markets, food cans and general line. But we think we’ve made great strides with customer satisfaction and quality, and those things have helped us grow in a flat market.”

Reproduced with permission from American Metal Market.
© 2002 American Metal Market LLC, a subsidiary of Metal Bulletin Plc. All rights reserved.