Arrow's Spartanburg, S.C., plant -- one of three the company operates -- is overseen by Lawrence G. Szuhy, formerly of Ford Motor Co. and now vice-president of Arrow's eastern operations. "Coming here really opened my eyes," says Szuhy, a short dark man with manic energy. "At Ford, everything was highly specialized and heavily capitalized." The Spartanburg plant, to be sure, is hardly a mom-and-pop operation: It employs 895 people, occupies 250,000 square feet of space (with a 40,000-square-foot expansion in the works), produces 60% to 65% of Arrow's output, and supplies 380 distributors east of the Mississippi River. But in Szuhy's eyes it is much more a nuts-and-bolts kind of place than he was used to.
"What it really boils down to," says Szuhy, "is finding a better way to make something work again."
That process begins with people like John Haney, a tall, muscular man in sneakers, jeans, and a bold red-and-white T-shirt, who stands at the end of a long U-shaped conveyor in the receiving area of the plant. Battered metal drums filled with an assortment of old auto parts -- generators, starters, water pumps -- surround him on every side. Haney reaches into one barrel, lifts out a generator, jots down the number attached to it, and, with a practiced flip, deposits the generator on the line. As the parts move along, other workers sort them, store them, and pull them for remanufacturing as needed.
Because of the unpredictability of supply -- some 80% of Arrow's parts are salvaged -- and the incredible number of models within any given category, scheduling is a herculean task. Arrow primes its flow of raw materials by dealing with core brokers, who remove parts from junked autos. "There's always the problem of getting an adequate supply of cores," says Holzwasser. In a few instances -- specifically in the case of new items that haven't yet made it into the used market -- Arrow even sends out new parts purchased from OEMs and other sources but relabeled "Remanufactured, Endurance Tested, Arrow." The hope is that when the part is eventually replaced, it will find its way back to Arrow for actual remanufacturing.
Parts are generally remanufactured in small batches. "At Ford," says Szuhy, "we'd produce an item for a week; around here, 30 minutes is considered a long run." That cuts down on inventory, which stands nonetheless at a hefty $16.5 million, and enables Arrow to respond more quickly to customers, who also try to keep their inventories lean. More than 90% of all orders are shipped within one week. Such rapid turnaround is a remarkable feat, given the extraordinarily large number of individual items; although there are only 10 major product lines, the 100-page computer printout on Szuhy's desk lists 30 items per page, or a total of 3,000 different parts.
It is also remarkable in light of the fact that Arrow is working not with quality materials, but with defective goods. "You have a serious quality problem throughout the whole process because you're beginning with damaged goods," observes Robert Lund."You have to be on your guard at all times to make sure that nothing defective slips through. . . . That's kind of a though thing to do."
At Arrow, parts are disassembled and each component inspected, a process that may be as casual as thumping a casting on a tabletop to see if it is cracked, or as elaborate as a complete electrical check. Good pieces are put back into inventory, while bad ones are sent on for repair; only with great reluctance are pieces ever thrown out."Our guiding principle," says Szuhy, "is that anything can be remanufactured." Armatures are rewound, bent shift-lever covers reshaped, worn sections of generator field casings filled with powdered metal -- it is an imaginative exercise in resurrecting the discarded. While Arrow buys some new components from OEMs, in many cases it manufactures its own. And it frequently modifies original designs -- it may alter a part so that it fits several cars -- or even improves on existing technology. Szuhy demonstrates, with some pride, a Chevrolet distributor to which Arrow has added an extra bushing, making it function more smoothly.
All parts are cleaned and, if necessary, repainted, inspected, or tested before they go back into inventory. Pulled out as the plant's production schedule demands, they are reassembled into components that look and perform exactly like new. At the Spartanburg plant, a fleet of 16 tractors and 24 trailers then delivers the freshly labeled and boxed goods to warehouse distributors stretching from Maine to Florida. "It's really difficult to distinguish them from OEM parts," says Szuhy.
Although there are an estimated 2,100 auto part rebuilders and remanufacturers in the United States, most are one-or-two-person shops. And aside from auto parts, the applications of remanufacturing have so far been limited. Excluding the tiny operations, Lund's initial survey identified only 450 major remanufacturing companies in the United States. The range of products includes telephone equipment, computers, machine tools, pumps, robots, buses, and locomotives, as well as auto parts. The Department of Defense, which remanufactures a wide range of military items from election tubes to the M48 A-5 tank and the B-52 bomber (see sidebar, page 61), is the largest individual remanufacturer. But the federal government has been slow to recognize or acknowledge the value of remanufacturing elsewhere. The Urban Mass Transportation Administration, which funds cities' purchases of buses, recently revised its percentage formula to give remanufactured buses a fair share of the market, and, last year, the General Services Administration (then headed by Gerald P. Carmen, an ex-auto parts man) changed its procurement requirements, permitting government agencies to buy remanufactured parts. In other areas, the government has done almost nothing.
