Malcolm Baldrige National Quality
Award
1998 Award Recipient, Manufacturing
Category
Solar Turbines Incorporated
| Highest Official: |
Donald M. Ings
President |
| Public Affairs Contact: |
Wendy Swanson
Manager, Public Affairs
(619) 544-2453 |
Solar Turbines Incorporated designs, manufactures, markets, and services industrial
gas turbine engines for power generation (including marine), natural gas compression
and transmission, and pumping systems. Solar provides full service support—including
financing, installation, and operation--for all products. In addition, Solar
designs and produces gas compressors, and provides construction services. Revenues
are generated through sales of new products and aftermarket services and support.
Solar is one of the 50 largest exporters in the United States. About 75 percent
of revenues, which totaled nearly $1.3 billion in 1997, come from exports.
A wholly owned subsidiary of Caterpillar Inc. since 1981, Solar is headquartered
in San Diego, Calif. Eighty percent of its 6,200 employees are distributed
among 15 locations in the United States. The rest of the company’s workforce
is deployed at sites in 23 foreign nations.
Quality and Business Performance Achievements:
- With a strategy to "deliver investor-grade returns," Solar has
tripled its annual revenues since 1988 and increased its profit by a factor
of 11, with only moderate price increases.
- Solar’s share of the global original equipment market (measured by
percent industry shipments) has risen from less than 20 percent in 1970 to
a position of global market leadership.
- Levels of customer satisfaction with Solar’s products and services
are high. Between 1992 and 1996, international and domestic customers’ ratings
of equipment performance, a key product attribute, have averaged between
7.6 and 7.8 (Scale 1-10). Scores for important measures of customer satisfaction
with the company’s services indicate steady improvement over the past
five years.
- Results of annual surveys show rising levels of employee satisfaction.
In 1997, 86 percent of domestic employees rated Solar as a good place to
work, exceeding by 32 percentage points the average calculated for U.S. businesses
in the 1997 Wyatt Work U.S. Norm report. Among international employees, 76
percent gave Solar a favorable rating. As part of a bargaining unit agreement,
Solar’s union employees cooperate with the company on work system improvements.
- Solar uses an "authority delegation process" that enables employees
who are closest to the work to design, manage, and improve work systems and
processes. Incentive payouts reward employees for efforts that improve the
company’s performance, helping Solar to meet or exceed goals for increasing
its return on assets for five straight years. Incentive payouts have increased
from 7.6 percent of salary in 1994 to 10.4 percent of salary in 1997.
- A systematic, prevention-based approach to ensuring a safe and healthful
work environment has led to a decline in the frequency of recordable injuries
from 9.53 for 1993 to 3.91 in 1997, well below the industry average of 11.8.
Over the same period, Worker’s Compensation costs have declined 32 percent,
from $532 per employee to $342 per employee, well below the industry average
of $524 per employee.
- Supplier partnerships and a certification program have paid performance
dividends, as the number of certified suppliers has risen from 13 in 1992
to 78 in 1998. Certified suppliers now account for 80 percent of all purchases.
Lead times for critical forged components dropped to 40 days in 1997, as
compared with 90 days four years earlier. Lead times for castings decreased
to 20 days, from 42 days in 1993.
- Solar allocated 13 percent of its 1997 sales for research and development
and capital expenditures, up from 10 percent in 1995. Expenditures for R&D
alone have averaged more than 4 percent of sales over the past three years,
as compared with 2 percent for its nearest competitor.
- Hazardous waste output has been cut in half over the last five years, establishing
Solar as a benchmark for world-class performance and earning it numerous
industry and community awards for environmental responsibility.
- Support for community programs has risen steadily for the last four years,
from $545,000 to $615,000 in company contributions and from $416,000 to $506,000
in employee contributions.
