The path to streamlined and more efficient machine-manufactured cigar production was staked out two years ago. This is generating major changes in an industry that is still characterized by considerable craftsmanship, a myriad of different blends, products and packaging types, demands for rapid delivery and stringent quality requirements. It is also a sector that has undergone comprehensive restructuring and consolidation in recent years. After being one of the most active companies in this process, Swedish Match is now ranked among the worlds largest producers of cigars and cigarillos.
»We have completed many acquisitions, including a number of large ones, in the past ten years. Integrating all of the acquired units has required a great deal of energy. Now its time to initiate the second round of investments - in more effective production. We are entering a period that will be hallmarked by proactivity,« says Peter Nilsson, head of the Continental Europe Division.
THIS DIVISION CONTAINS four production plants - Houthalen and Overpelt in Belgium, Pandaan in Indonesia and Valkenswaard in the Netherlands. It also includes joint ownership of the production conducted in Germany by Arnold Andr笠Now all of these operations are being restructured, a process that was initiated in 1999 but which is now gaining renewed momentum following the transfer of all production in Belgium to Houthalen, and the relocation of certain other manufacturing activities to Indonesia. These transfers include brands sold in volumes that are insufficient to warrant machine production. The finish the products receive in the form of, for example, labeling, is currently carried out in Valkenswaard in the Netherlands but will now also be taken over by Houthalen. Although the restructuring process will result in the workforce in Belgium being reduced by 160 employees through the end of 2003, the main reason for concentrating all production under one roof is to achieve other benefits.
»Based on well-defined goals, all parts of the production chain are now working to accelerate productivity and product flows, while cutting the lead-time from the supplier to customers. This will also enable us to reduce tied-up capital and will provide scope for continued investments,« says NoꪠJanssens, manager of the Houthalen plant.
The investments referred to by NoꪠJanssens are the widespread measures to upgrade the machine park that are being implemented in parallel with the merger of the production units. At present, EUR 5 million has been allocated for investments in new equipment, such as a completely new production line and fine tuning and improvements of production machinery. In turn, this process requires a mobilization of the entire workforce in an effort to achieve continuous improvements, since the machinery and other equipment will be upgraded on site.
THE PRIMARY TOOL used for this work will be the EFQM (European Foundation for Quality Management) model introduced within cigar-production operations in 1999. EFQM is an instrument used by companies to assess their current position in efforts to become world class.
A walk around the Houthalen plant provides a clear impression of the distinctive nature and complexity of the production conducted there. Products include brands comprising 100-percent tobacco - such as La Paz, Willem II and Justus van Maurik - and cigars whose wrapper consists of HTL (Homogenized Tobacco Leaf). Wings and Bellman are well-known HTL brands.
As a result, the plant requires a large amount of storage capacity. Inventories of wrapper/ binder and filler tobacco correspond to seven to eight months of production, a level that is essential since Houthalen uses 18 different fillers and many different wrapper and binder tobacco, since all of them are in demand. Each blended-filling batch weighs 2,500 to 3,000 kg. The plant also has a large refrigerated building for the wrapper and binder material delivered from Indonesia. The various blends require considerable handling and flow capacity. In total, 162 different types of cigars are produced, which are supplied in 470 different forms of packaging, such as wooden boxes, tins and tubes. The products also have to be affixed with various types of labels, bands, EAN codes, health warning stickers, cellophane and so forth, which means that more than 3,000 different items are delivered to customers as finished products.
THE AIM IS THAT the packaging/finishing machine will handle all of the aspects of the finishing process, thus replacing the four different machines currently used. In parallel, work is under way to improve the cigar machines, also with the aim of enhancing productivity and performance.
»We now know exactly what we want to achieve, as does the entire organization, « says Wim Thijssens, head of the Continental Europe Cigar Operations.