Jun 06, 2017

A Culture of Excellence: How Blackstone brought Lean to the Gates Corporation

When Blackstone acquired Gates in 2014, lean was at the heart of our investment thesis. We saw an opportunity transform the manufacturing company, already a leader in producing hoses and belts, through initiatives that improved efficiency and reduced waste.

But how is this change implemented?

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The opportunity for transformative change started during the due diligence process. Our team traveled the world, visiting plants in all regions to uncover where opportunities existed to improve operations. We walked the factory floor to understand the priorities of teams on the ground, track the metrics they had in place and see whether there was a culture that encouraged creative thinking.

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Then through close collaboration with senior management, we not only identified areas for improvements, but started to put in place the infrastructure to create transformative change. Our first step:  hiring Mary O’Neill, their Vice President of Lean Operations, a veteran in lean manufacturing with expertise around the globe.

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Our transformation started with a single process at one plant. We identified the ‘model line’ – a process for producing a single product – then identified the goal: are we reducing lead time? Improving productivity? Improving quality? Improving on time delivery? Reducing inventory?

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Once this goal was identified, we set high expectations. Not 10% improvement, but 50%. That ambitious thinking forced the team to think outside the box. We then executed a series of transformations, changing the ways the line operates, either through the physical layout of the factory floor, the equipment used or the flow of the employees’ movements.

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But that improvement is not the end goal. It’s just the beginning. We worked closely with the company to cascade this solution across other lines within the plant, other plants around the region, then start the process again on the next task. The work is complex and requires iteration, testing and creativity. But the results prove the experiment.

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That transformation was not a one-time fix. Gates nearly doubled productivity in our first year and improved again in 2016. We are creating a culture of sustained and continued improvement. And we believe this culture can drive Gates’s evolution in the years to come.

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Neither this article nor any of the information contained herein constitutes an offer to sell, or a solicitation of an offer to buy, any security or instrument in or to participate in any trading strategy with any Blackstone fund or other investment vehicle.

Past performance is not indicative of future results and there is no assurance that any Blackstone fund will achieve its objectives or avoid significant losses. This article may contain forward-looking statements; such statements are subject to various risks and uncertainties.