AI interview with Michael Fitzpatrick, General Manager of PSI Repair Services.
INTERVIEW - Expert repair firm, PSI Repair Services, is today more in demand than ever before. The company is in the business of repairing and servicing production machines on factory floors. Recognizing the importance of the role of PSI, Automotive News and consultancy Ernst & Young, gave the company their first PACE award. One of the innovations that the Livonia, Michigan-based PSI created, is a program called Repairable Asset Control or RAC® to track, certify critical parts such as electric motors and controllers for production machines.
PSI assigns a person to a customer's factory who then collates an extensive database on the parts of the factory's machines. When a part is needed, PSI can find it quickly on the factory's shelf or elsewhere. The company also tracks warranties on electric motors and other equipment, which factories rarely bother with. According to William Klag, a PACE judge, at one Ford plant, warranty awards rose from $150,000 in one year to $750,000 in the next.
PSI has been in the repair business for over 40 years. It has a reputation for finding the best and most cost-effective solutions for its customers. PSI’s customers belong to a range of industries ranging from automotive, aerospace, defense and semiconductor manufacturers, “Savings aren't merely a result of paying less for repairs. Plant managers say their assembly lines run more efficiently now that an in-house account representative to the site. The rep is not there to sell services. Due to the enormous volume and range of the contractor's repair experience - electronics, process instrumentation, hydraulics, motors, ballscrews and more - the rep is on site to monitor repair needs and identify flaws in production lines. When problems arise, the firm alerts the clients to the specific weakness and then offers a permanent cost-saving solution. Operation costs drop when equipment performance improves,” says PSI.
For its customers, PSI transports all the parts that need to be repaired to a 80,000- square-foot facility in Livonia. This state-of-the-art environment operates entirely under lean manufacturing principles and is ISO 9001:2000 certified. Each piece is bar-coded and tracked through the entire process so that a customer can be updated on the status of a job at any time. The company says that plant managers in the auto industry know that when a pilot valve breaks down they will pay about $6,165 to replace it. Yet a survey reveals that by outsourcing repairs to a qualified firm like PSI, the valve can be repaired - and possibly made better than new - at a cost of about $760 – which means that its costs just 12% of what a new unit would cost. Similarly, the cost to replace a broken spindle motor in that same automotive plant would cost about $18,000 while repairing it would mean an outlay of $5,000 – a 73% savings.
According to Michael Fitzpatrick, General Manager of PSI, his firm is the largest industrial repair company in the world. He takes pride in reducing processes to an absolute minimum of movement, with no wasted energy or time. But there is another benefit: Depending on the part it is repairing, the company offers a 12-month warranty, a far cry from the standard 90-day warranty offered by most OEMs. This is possible because often a repaired part is made stronger than the original.
Another issue PSI takes seriously is global pollution. The company believes that by improving the overall efficiency of a manufacturing plant not only saves money but also cuts pollution. “When you look at what it takes to manufacture a new robot, manufacturers and suppliers from all over the world are contributing material to the project. The carbon footprint in transportation costs alone is significant, let alone the amount of energy actually required to produce the product. Yet if we repair or refurbish the robot, the carbon footprint is substantially reduced. We recondition or reuse the parts on the robot that are still functioning within the OEM specifications and replace the worn or defective parts. There is absolutely no need to ship the product back to Europe or Asia, incur the transportation emission and have an OEM consume more natural resources to replace parts even if they are not defective.” says Fitzpatrick.
He gives the example of an assembly line at a local company that was continually going down and operating at only 65% capacity. By seeing the big picture and going to the heart of the matter - not just repairing one malfunctioning part - PSI was able to bring productivity up to 90%.
In today’s financially turbulent times, PSI offers manufacturing companies an option to cut costs. Because despite financial constraints, many manufacturers lose out by not keeping track of warranties, needlessly replacing components instead of repairing and the costs of higher inventories.
Automotive Industries spoke to Michael Fitzpatrick, General Manager of PSI Repair Services.
AI: How has your approach changed today when selling your services to potential customers?
The overriding concerns for our customers today are reducing inventory costs and keeping their MRO department under budget. Our customers are keeping less spares than ever. We cannot just look at our customer’s equipment and think repair. We need to dig into our customer’s production processes and find ways to root out unnecessary time and expense. When we work more closely with our customers and identify critical items that need to be turned quickly, we can design innovative solutions to help reduce their inventory costs and improve turn times.
AI: Are more manufacturers eager to outsource their repairs today or is the opposite happening?
The overall trend is moving toward outsourcing because it just makes sense. These days, plants are in survival mode and they no longer have the luxury of running their own in-plant repair stations. In the current environment, they just do not have the manpower or financial resources to maintain the know-how, equipment and space. That model never made sense anyway. Automotive companies are in the business of designing and manufacturing cars, not repairing equipment. Right now, it’s critical that the automotive manufacturers stay focused on making their processes as lean and cost-effective as possible. That’s where we come in. We lift that entire burden from them and save them a ton of money in the process.
AI: Are more automotive companies coming forward to make use of PSI’s services?
Absolutely! Even in this tough automotive market, we are finding areas of growth. Even before the current economic crisis, we found that some of the struggling automotive customers were absolutely desperate to save money. Some of the purchasing departments went out and looked for companies that could deliver all the services we do for rates lower than what it costs to fix a lawn mower. That is the tough environment we are in.
We recognized early that you cannot save a drowning person that is flailing wildly. They will clutch onto you until you drown and then move on to the next Good Samaritan. I think the plants have seen some of our competitors drown under the weight of unrealistic expectations and fail to deliver on impossible promises. The desperate customers have come to realize that we are a professional lifeguard; someone that can help stabilize and sustain them until a rescue boat can pull them to safety.
We’d always like more, of course, but the customers that we have been with for many years see the value of our services and work with us to improve their operations. Customers that went elsewhere for a while are now seeing the value we bring and are coming back to us. And, you know what? We are happy to have them back.
AI: Are more companies waking up to the fact that your ‘Go green or go broke’ mantra is a hard reality?
Well, “Go Green or Go broke” is really another way of saying, “Spending money buying unnecessary replacement equipment is harmful not only to the environment, but to your bottom line as well.” Because of the current crisis across the automotive landscape, most people are saying, “Look. I know what green is. And I know that it’s a good thing. But I don’t have time for that now. I have to keep my factories afloat.” We completely get that. All we’re saying is, by repairing or buying from our refurbished inventory, rather than automatically replacing worn equipment with new, you’re doing the green thing and saving your company millions of dollars at the same time!
AI: Please tell us how warranties improve with repair?
For starters, in our case, we offer a 12-month warranty, which is significantly longer than the OEMs’. We can do that because once we’ve repaired a particular component, say, a circuit board, through our innovative use of Pinpoint II technology, we know not only what failed, but also why it failed and what is likely to fail soon. We find the weakness in the design or components and eliminate it.
You have to understand that the OEM is trying to produce a large quantity of the same part at the lowest possible cost. That often means using substandard components. Since the warranties are shorter for OEMs, they have no incentive to put the best parts in their products. When we see the same issue over and over, we can upgrade chips, capacitors, coils, wiring harnesses, you name it to make sure that part can withstand the demands of our customers’ process. See, it’s not enough anymore to simply fix the problem. You have to know how your customer uses their equipment, determine the root of the problem and eliminate it. Once you’ve done that, you have effectively made the component stronger than it was when it was new.
I’ll give you a quick example. We had a customer that was having excessive servomotor failures. It was costing them a little less than $7,000 per month, plus the downtime to switch out, on average, two motors per month. Our technicians worked with the customer and performed a root cause analysis. The analysis showed that vibration or shock was the main reason for failure. We designed and manufactured a buffer plate to isolate the motor. Usage dropped from two motors a month on average to one motor per year. This generated over $80,000 in savings, just on the repairs. This did not include the cost associated with changing out that motor twice a month.
Whether you want to call that solution green or not is up to you. But the elimination of 23 repairs a year truly saved energy, resources and money.
AI: How do you advise customers as to when to buy new rather than repair?
Obviously, when an automotive manufacturer is tooling up for new production, they’re going to buy new production equipment. That’s a given, and that’s not our world. But when it comes to maintaining and sustaining certain production lines, if a repair is available and is a lower price than new, it makes zero sense to ever buy new. Unless…and this is a big unless: If a particular component has been running in a plant for a certain time, and no matter what is done to keep it running, it keeps failing, the component is just not right for the application. In that case, it’s probably time to look at a new, more robust type of component or system to replace it. In either case, we’re there to help our customers navigate through the repair/replace issue