Heavy Steel Fabrication

A West Coast steel fabricator who needed to reduce his costs asked us to visit with him to discuss how a Gainsharing plan could help improve his competitiveness.This fabricator, who specialized in making small pressure vessels, faced ever-growing competition. Pricing was a major concern as more and more rivals tried to penetrate his traditional market area. Since he and all his competitors welded the pressure vessels and tanks to NSF/ANSI Standard 61 or ASME Section VIII Division 1 Codes, customers considered pricing first and delivery reliability second when they awarded contracts for new jobs. Labor and material costs were the major factors used to price new bids for tank jobs. Being able to manufacture the tanks reliably with lower labor costs than his competitors allowed him to lower his quotes and beat the competition.

We designed a Gainsharing Plan that showed employees their performance relative to the labor estimates in job bids and how they could help themselves by beating old production rates.

The chart shows how effectively the Gainsharing motivated employees to beat the estimated completion hours it took to fabricate individual pressure vessels.

Click to Enlarge Graph

Heavy Equipment Manufacturing Articles