Rick Drumm has been with D’Addario for more than seven years. Headquartered in Farmingdale, New York, the U.S. manufacturer of all things musical, from strings and drumheads to reeds, cables, and drumsticks, takes its lean approach to production very seriously, managing its own global supply chain and often building its own equipment. D’Addario not only marches to a different beat, it dictates the rhythm of the industry. And Drumm has his finger on the pulse of the company’s new production technologies, energy management, lean manufacturing, reshoring, and site selection.
PS: What sort of factory automation allows you to make higher-quality musical products and do it as efficiently as possible?
RD: Throughout our factory, the D’Addario family’s DNA and basic business philosophy is taking and reinvesting a large part of our profits back into the company, and we’ve done quite a bit of those investments in automation and more importantly into the training of our people and management in lean manufacturing. We started down the lean path in 2007, and it’s a core of our manufacturing philosophy in all of our acquisitions.
PS: What sort of maintenance and reliability department do the plants have to ensure equipment is operational? Are there any particular types of condition-monitoring technology, such as vibration, ultrasound, or lubrication, that’s used?
PS: How has D’Addario been able to avoid layoffs and save jobs in its manufacturing facilities?
RD: We give a lot of credit to lean. With lean, we’ve been able to free up 70,000 sq ft of manufacturing space. We’ve been able to reduce our overall costs. We’ve been able to reduce inventories by $10 million, which we’re able to use to pay down debt and invest in new equipment. As a result of lean, even at the peak of the recession, we did one small layoff, and within six months we were able to hire double the number of people we’d laid off and added another 50% above that because of new business we were able to acquire from competitors. We actually started to manufacture some of our competitors’ products. These are jobs that were overseas. We had two examples of that. Between those two jobs, that equated to 80 positions.
PS: D’Addario also has a long history of reshoring jobs – for example, the guitar-strap-making operation from China. Is there a significant advantage to manufacturing 95% of your products in the United States? Is it based on supply chain, customer base, employee availability?
RD: When I first joined here in 2006, about 87% of our products were made in the United States, and now of course we’re at 95%. When the recession hit and we went through lean, we began to realize that, even with the small percent we were doing overseas, there were hidden costs. There were quality issues. There were lead time issues. We found that, with a little extra work, we could bring those jobs back in-house or, in a few instances where we didn’t have the equipment — say, injection molding, which isn’t one of our core competencies — we were able to find other U.S. manufacturers that could produce the products at the same price, a little better price, or in some cases a slightly more expensive price, but when you weighed everything, it was an advantage to having those products made in our own backyard.
PS: How does D’Addario decide on the locations of its manufacturing facilities?
RD: We look at the necessary resources. All of our manufacturing for strings — guitar strings, bass strings, violin, viola, cello, harp strings — is done here in New York. We manufacture about 700,000 strings a day. The drumheads are manufactured here. We have our engineering staff here. We manufacture the vast majority of our own production equipment here in our own facilities. Our automation is done here. We have eight engineers on staff to design the equipment. We have a very fully equipped machine shop, so we can build our own equipment here in New York. We employ 800 people here on Long Island. When we look at another part of our business, Rico Reeds, we acquired that company in Sun Valley, California, about 3 miles from downtown Burbank. There we have people who have been manufacturing reeds for decades. The supply chain is different. We actually control everything literally from the ground up. We have hundreds of acres of plantations located in the south of France and in Mendoza, Argentina. We have a two-hemisphere strategy in place to guard against bad-weather patterns. It takes two to three years for the crop to reach maturation before harvesting. We harvest the crop in France in December and January. The Argentina crop is harvested in June and July. We do a little bit of processing in France on the cane poles, and then they’re shipped to Argentina, where they’re turned into splits and then sorted and then all of the splits from Argentina and France are shipped to California, where we actually make them into the reeds. We kept that plant there because there’s a tremendous amount of knowledge that was there long before we purchased the company.
PS: Energy measurement and management have gained the attention of most plant managers. At what level do your plants monitor energy usage, and how do you leverage that information?
RD: We have Long Island Power Authority here, and we’ve installed smart meters at our main factory here on Smith Street. They monitor electrical usage for our 208 and 480 electrical services. The smart meters provide technology to measure and analyze our energy usage and help to reduce our energy consumption. We’ve got roughly 300,000 sq ft of facilities here on Smith Street. Our objectives are to reduce our energy demand and costs and to reduce our carbon emissions. We’re looking at the possibility of adding solar. We have quite a bit of roof space. We’ve installed LED lighting in three of our New York facilities. That’s reduced the amount of power we’re using significantly. We also have a gas-fired boiler on our main facility, which has helped to reduce our electrical consumption.