Reluctant Hewlett Automates

By Barnaby J. Feder
The New York Times

September 10, 1987

PALO ALTO, Calif. -- The Hewlett-Packard Company is grudgingly becoming a believer in automation.

That is a notable change for a company long known as a leading skeptic about the value of heavy investments in such high-tech equipment as robotics. In the past, Hewlett, a maker of measuring instruments and computers, has achieved remarkable productivity gains by mixing modest investments with skillful management - much to the chagrin of companies that have spent heavily on automation.

These days, however, Hewlett-Packard is borrowing from the manufacturing strategies of companies that have invested heavily in automated production, such as the International Business Machines Corporation and nearby Apple Computer Inc. To be sure, Hewlett-Packard still preaches that people can often be more productive than machines. Even so, its spending on automation is rising steadily, exceeding $300 million last year.

Factors in the Change

One reason is that the components of electronics products increasingly are too densely packed and finely aligned for humans to assemble them easily. It helps, too, that the performance of automation equipment is improving. Finally, Hewlett-Packard and a number of other companies that had focused on increasing productivity by overhauling the way they managed materials and workers now think they are in a position to reap the full benefits of automation.

''They have done a terrific job in laying the groundwork for automation,'' said Steven Walleck, head of McKinsey & Company's manufacturing consulting practice in Cleveland.

Just as importantly, Hewlett-Packard has evolved from the Silicon Valley start-up that made its name with high-performance, high-priced instruments and specialty computers into a feistier company under John A. Young, its current president and chief executive. As computer-related sales have surpassed those of instruments, the company has become increasingly willing to battle for mass markets it would have conceded to rivals in the past. Such battles often require more centralized planning and marketing, high-volume production lines and larger manufacturing-equipment investments than the company has been used to making.

''I have seen people at H-P become much more interested in how other people make things in the past two years,'' said Sara Beckman, manager of strategic manufacturing planning at the company's headquarters here on the peninsula south of San Francisco. ''It's partly because they sometimes do it better.''

For most of the 48-year-old company's history, the great strength of Hewlett-Packard's manufacturing program has been its organization into more than 50 divisions, each with relatively free rein over operations and resources. Although sales had risen to more than $7.2 billion by the end of last year, the company's divisions individually had lacked the resources for heavy capital investments.

As a result, they focused on other ways of simplifying and improving manufacturing performance, most notably ''just-in-time'' techniques popularized in Japan. Just-in-time manufacturers order materials as close as possible to the time they are needed and avoid making components until they are needed for final assembly.

The just-in-time strategy slices the cost of storing, handling and keeping track of materials and parts. It also focuses on production bottlenecks and makes it impossible to overlook quality problems, as there is no backlog of parts to replace faulty ones.

Designing Simpler Products

A number of Hewlett-Packard's divisions also emphasized designing simpler products. By reducing the number of parts in their products, they made it easier to manage manufacturing them. That made Hewlett-Packard one of the front-runners in the current ''design for manufacturability'' trend that is sharply improving manufacturing efficiency in everything from home appliances to automobiles.

During the early 1980's, Hewlett-Packard posted stunning productivity gains in numerous facilities. The printed-circuit-board assembly plant in Cupertino, Calif., for example, cut the time it takes to build a product from 15 days in 1982 to a day and a half in 1984 and the value of parts tied up in production in progress from $670,000 in 1983 to $20,000 in 1985. In the Boise, Idaho, printer plant, output per person doubled.

However, the divisional organization has been a two-edged sword. The company discovered that lack of coordination was leading to competing product designs, inefficient purchasing and confused customers, who increasingly demanded that Hewlett-Packard's products be compatible with each other and those of other suppliers. There was also a worrisome waste of engineering resources on the manufacturing side.

''We at one point had 144 engineers working on various automation and testing projects for printed circuit boards at 26 different locations,'' said Richard S. Love, general manager in charge of computer manufacturing. ''When you have your engineers so spread out, you don't have the depth to work on the things that are going to make you a leader in a couple of years.''

Overcoming Weaknesses

Hewlett-Packard responded to its weaknesses on several fronts. The most widely noted changes were its merging of the marketing efforts of the instrument and computer groups and its decision that all of the divisions making its new Spectrum family of minicomputers would use a centrally developed design.

The manufacturing side of the company also felt the changes. Separate but adjacent computer-manufacturing operations were merged in Germany and in Cupertino and Roseville, Calif., after surveys showed that such moves could increase production without raising overhead substantially.

The company is also consolidating efforts to develop new manufacturing technology. For example, in its search for automated methods to mount microchips on the surfaces of circuit boards instead of pinning them into drilled holes, Hewlett-Packard is letting one division do most of the work and assessing the costs to all divisions that are expected to benefit.

''We are going through a period where we are seeing more recognition of the possibilities of centralization,'' Ms. Beckman said.

That process ought to accelerate, according to some outside observers.

''They have realized that to get the benefits of flexible automation, you have to change a lot of things, but they are taking more time than most people would expect given that everyone agrees they have to do it,'' said Steven C. Wheelwright, a Stanford University professor who is a leading manufacturing expert.

Signs of Centralization

An early sign of the trend was the company's creation in 1984 of its Manufacturing Research Center, now headed by Peter M. Will, the designer of I.B.M.'s first robot. The center has 50 engineers and numerous visitors from the divisions working on a variety of projects, including major robotics systems that are too expensive for any one division to develop.

Despite such developments, Hewlett-Packard is a long way from becoming an equipment salesman's heaven. At Roseville, for instance, the company's newest production line is making a family of computer terminals without a single robot.

The components have been designed to snap together, with only one screw necessary to fasten the whole unit. Employees assisted by simple lifting machines that bear most of the weight do jobs such as nesting picture tubes inside the plastic casings far less expensively than robots could. A computer-controlled system from the Universal Instruments Corporation that cost more than $1 million handles the insertion of most microchips and some quality testing, but about 15 percent of the odder-shaped parts are manually inserted.

''The goal is not to automate but to make things automatable,'' Mr. Love said. ''Then people can do it more easily and it's just a business decision whether to buy robots or other machinery for a particular part of the job.''

Hewlett-Packard will not say how much it has spent on equipment at Roseville, but the figure is already above average for the company and likely to grow.

Max Davis, Roseville's manager of manufacturing, said, ''We have automation projects for this line stretching out over the next year.''

GRAPHIC: Photo of steps in computer terminal assembly for Hewlett-Packard's new line in Roseville, Calif. (NYT/Terrence McCarthy); graph comparison of build time, printed circuit assemblies and cycle time for old, new and high end model computers. (Source: Company reports)

Copyright 1987 The New York Times Company