News Digest

2000 Baldrige Award Winners Announced


President Clinton and Commerce Secretary Norman Mineta have announced the four companies that will receive the 2000 Malcolm Baldrige National Quality Award. Two manufacturers, a water treatment company and a bank will receive the nation's premier award for performance excellence and quality achievement.

 The winners are Dana Corp.'s Spicer Driveshaft Division, Toledo, Ohio (manufacturing); Karlee Co. Inc., Garland, Texas (manufacturing); Operations Management International Inc., Greenwood Village, Colorado (service); and Los Alamos National Bank, Los Alamos, New Mexico (small business).

 One disappointment in the announcement is the lack of a winner from either of the two-year-old health care and education categories. NIST gained the legislative approval and budgetary support necessary to expand the three-category Baldrige Award program to include entries in health care and education in time for the 1999 awards, but no organization has yet won an award in either of the two categories.

 Of the 49 applications received for the 2000 Baldrige Award, 11 were from educational organizations (two less than in 1999) and eight were from health care organizations (one less than in 1999).

One organization from each of the two categories did reach the site-visit stage of the award process. While all applicants receive about 300 hours of review, those making it to the on-site visit receive closer to 1,000 hours.

 But even without health care or education winners, the 2000 Baldrige Awards ceremony will not be without its firsts. Indeed, 2000 marks the first time Baldrige Awards have been earned by a bank or a water-treatment company.

 In 1988 and 1989, the program's first years, no Baldrige Awards were presented to service companies, which award administrators say is clear evidence that health care and educational organizations will eventually break through.

 Named after a former secretary of commerce, the Malcolm Baldrige National Quality Award was established by Congress in 1987 to enhance the competitiveness of U.S. businesses by promoting quality awareness, recognizing the quality and performance achievements of U.S. organizations, and publicizing successful performance strategies. Since 1988, 41 organizations have received a Baldrige Award. For more information, consult the NIST Web site at .


Baldrige Winner Profiles

The Malcolm Baldrige National Quality Award recognizes organizations that play a major role in energizing our nation's economy, competitiveness and quality of life," explained President Clinton as he announced the 2000 winners. "With their dedication to excellence, these Baldrige Award recipients remind us that just keeping pace is not enough. These award winners can serve as role models for any organization that wants to keep growing and moving forward."

 Award criteria include leadership, strategic planning, customer and market focus, information and analysis, human resources focus, process management, and business results. Applications in education, health care, manufacturing, service and small business are accepted.


KARLEE Co. Inc. (Manufacturing)

KARLEE is a contract manufacturer of precision sheet-metal and machined components for the telecommunications, semiconductor and medical equipment industries. It provides a full range of manufacturing services from initial component design to assembled, integrated products. Founded in 1974 out of a garage, KARLEE's success is based on its commitment to excellence, team leadership and faith-based values. KARLEE is a woman-owned business with 550 team members


Los Alamos National Bank (Small business)

LANB, the primary financial institution for 66 percent of Los Alamos County residents, dominates its market area. Since January 1998, it filed 80 percent of all mortgage loans in Los Alamos County and 9 percent of all mortgage loans in Santa Fe County, more than any other lender. LANB also is the largest Guaranteed Rural Housing lender in New Mexico and the leading originator of Fannie Mae loans in northern New Mexico.


Dana Corp. Spicer Driveshaft Division (Manufacturing)

Dana Corp.'s Spicer Driveshaft Division is North America's largest independent manufacturer and marketer of driveshafts and related components for light, medium, heavy-duty and off-highway vehicles. Spicer Driveshaft has 17 manufacturing, assembly and administrative facilities located in Illinois, Indiana, Kansas, Kentucky, Michigan, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and Washington. Spicer Driveshaft products are also manufactured and distributed around the world by a global network of strategically located Dana affiliates and subsidiaries to offer just-in-time delivery to its customers. In 1999, the division generated more than $740 million in sales, accounting for approximately 6 percent of Dana's total sales. Spicer Driveshaft has a workforce of more than 3,400 employees.


Operations Management International Inc. (Service)

OMI Inc. operates and maintains more than 160 public and private-sector wastewater and water treatment facilities in 29 states, Brazil, Canada, Egypt, Israel, Malaysia, New Zealand, the Philippines and Thailand. The company's primary services are processing raw wastewater to produce clean, environmentally safe effluent and processing raw groundwater and surface water to produce clean, safe drinking water. Ninety-four percent of its customers are public, including cities and counties; 5 percent are industrial; and 1 percent are international. A private company owned by its employees, OMI is a member of the CH2M HILL family of companies. OMI's 1,394 associates include facility operators, mechanics and laboratory technicians.


ISO Finalizes and Publishes ISO 9000:2000

The International Organization for Standardization (ISO) has released the year 2000 revisions of its ISO 9000 series of quality management standards for publication. The revised standards—ISO 9000, ISO 9001 and ISO 9004—have been overwhelmingly approved by ISO's membership of national standards institutes.

 The ISO 9000 series, widely considered the most successful and recognized of ISO's more than 13,000 standards, represents the most popular international standards for quality management systems in the world.

 Only minor modifications, characterized as "editorial" in nature, have been made to improve the clarity of documents since their final draft international standard (FDIS) versions. One exception, ISO 9000:2000, required more substantial modifications to its included definitions of auditing terms. The cause of these changes is the continuing evolution of ISO 19011, Guidelines on Quality and/or Environmental Management Systems Auditing, which gives guidance on auditing ISO 9001 quality and ISO 14001 environmental management systems and is targeted for publication in 2002.

 ISO has published all three standards in English and French, and ISO 9000 in Russian—the official languages of the organization. Inquiries concerning the availability of translations of the standards into other languages can be addressed directly to the ISO member of the relevant country.

 To purchase the standards, contact the American National Standards Institute (ANSI) by calling (212) 642-4900 or the ISO Central Secretariat by e-mailing . More information is available at the ISO Web site, .


Brown & Sharpe Sells Metrology Business

Brown & Sharpe Manufacturing Co.'s board of directors voted unanimously at a Nov. 16 meeting to enter into an acquisition agreement with Hexagon, A.B., of Stockholm, Sweden. Hexagon will purchase essentially all of Brown & Sharpe's worldwide metrology business for $160 million, plus an additional cash payment of up to $20 million contingent upon the company's year 2000 profits.

 Brown & Sharpe, which has been struggling financially, announced in July that it was looking for a possible sale or merger. The same month, the metrology giant received inquiries from more than 100 interested companies, five with which Brown & Sharpe seriously negotiated.

 "The acquisition is the best possible solution for our shareholders, our customers, our employees and our lenders," says Kenneth Kermes, Brown & Sharpe president and CEO. "It ensures the continuation of the 167-year Brown & Sharpe history, its strong brand name, and its quality of products and services worldwide."

 Hexagon President and CEO Ola Rollen says the appeal of a Brown & Sharpe acquisition was a no-brainer. "The Brown & Sharpe core high-tech metrology business is strong worldwide," Rollen explains. "The Brown & Sharpe brands are also strong and well-recognized globally, bringing

with them an image of high precision and quality products. Geographically, Brown & Sharpe has a very strong distribution network that can be further expanded to accommodate other related products that will allow Hexagon to expand its business into key industrial markets. We've made a strategic decision to redirect our business to focus on this exciting new high-tech market and fully expect to grow Brown & Sharpe for the longer term."

 Hexagon's purchase will comprise Brown & Sharpe's Measuring Systems Group, with headquarters in North Kingstown, Rhode Island, and factories in Italy, Germany, Lithuania and China; its Precision Measuring Instruments Division, with headquarters in Renens, Switzerland; and its Custom Metrology Division, with headquarters in Telford, England. The Brown & Sharpe's metrology business had sales of $321.4 million in 1999.

 Brown & Sharpe will retain ownership of its software development business, BSIS Inc. The business is focused on the commercialization of its new XACTMEASURE metrology software, which has been in development for approximately three years but is nearing market introduction. Hexagon has also agreed to invest $2.5 million in BSIS at the closing of this transaction for a 16.7-percent ownership stake and will invest an additional $1.5 million in each of the next three years, raising its ultimate stake to a maximum of 46.7 percent.

 At the completion of this deal, Brown & Sharpe will immediately pay off all of the company's outstanding debt to a group of insurance companies and to four commercial banks, aggregating approximately $77 million.

 Hexagon is a publicly owned company that primarily manufactures metals (bronze, brass and steel), transmission components, industrial weight- and temperature-measuring equipment and a wide range of products within the industrial and marine hydraulics markets. The company, which employs about 4,500 people and has annual net sales of approximately $530 million, maintains manufacturing operations in Scandinavia, Germany, Estonia, Latvia, Lithuania, Russia, Sri Lanka, China and the United States.


Customer Satisfaction Improves Slightly

C onsumers' perception of customer satisfaction has improved slightly, according to the latest American Customer Satisfaction Index (ACSI), which increased just slightly to 72.9 with 2000's third-quarter gains by manufacturers of nondurable goods.

 The 100-point ACSI scale is a national economic indicator of customer satisfaction with the quality of goods and services available to household consumers in the United States. Each quarter, scores for one or two sectors of the U.S. economy are updated. Quarterly results include scores for individual firms, industries, economic sectors and the U.S. economy as a whole.

 Manufacturing nondurables continued its three-year pattern of improved ACSI scores with its 81-point rating in 2000's third quarter, important given the level of competition within the sector. Customers have many brand alternatives among nondurable products, which include packaged foods, beverages, apparel and personal care products. And because the consumption period for such products is short, customers have numerous and regular opportunities to replace products that are not meeting their expectations.

 "One company—H.J. Heinz—clearly has a recipe to create value by producing what customers want at a price they're willing to pay," says Jack West of the American Society for Quality (ASQ). "While more companies are experiencing difficulty keeping their products and services from being perceived as commodities, Heinz shows that some well-established companies in traditional industries continue to distinguish themselves by offering products that satisfy their customers." Heinz, a consistently high performer in the ACSI, has led the food processing industry for five consecutive years and is now the highest rated company in the ACSI with a score of 90.

 The third-quarter results for 2000 saw six of the eight industries measured in the nondurables sector improve their satisfaction score, as did 25 of the 39 companies. ACSI scores dropped for only six companies, while scores for eight remain unchanged.

 The ACSI is produced through a partnership between the University of Michigan Business School, ASQ and the CFI Group. More detailed ACSI scores, an explanation of the methodology used and commentary are all available at .


E-Commerce Customer Satisfaction Recovers

Following the one-year anniversary of the much-maligned performance of many e-commerce companies during 1999's holiday season, ACSI's 2000 rating of the industry shows that customers are now more satisfied shopping online than at the traditional brick-and-mortar retail chains and discount stores.

 The 13 dotcom companies providing portals, brokerage services, retail and auctions that make up the ACSI's e-commerce rating improved their overall score to 73.2 in the third quarter of 2000, the highest score for any service industry and more than a full point higher than the most recent rating for traditional department and discount stores. And as the number of commerce Web sites continues to swell, the amplified level of competition that trend brings is making customer satisfaction an increasingly critical predictor of success.

 "Even though e-commerce provides higher levels of customer satisfaction overall, this is not true for all e-commerce companies," says Claes Fornell, a professor at the University of Michigan Business School. "In view of the intense competition, the high cost of customer acquisition, and the ease by which customers can switch vendors and abandon their current suppliers, it seems safe to predict that companies that fail in satisfying customers will face difficult times."

 As an industry, e-commerce scores very close to the ACSI national average, which was most recently rated at 72.9, just 0.3 points off of the e-commerce score. However, there are substantial differences in customer satisfaction among the various elements of the industry. The lowest scoring facet were Internet portals, which scored 63, lower  than the most recent scores for telecommunications (72), the U.S. Postal Service (72), hospitals (69), the federal government (69), fast food (69), and banks (68). While Yahoo scored a respectable 74, America Online (AOL) earned only a 56. Customer expectations for the two companies are virtually identical, though AOL has many more customer complaints and much weaker customer loyalty.

 Among the e-tailers, leads with an Index rating of 84, a remarkably high level of customer satisfaction for any category, especially retail. The highest scoring brick-and-mortar retailer, PUBLIX Supermarkets, scores an 82, while Costco is at 79 and Wal-Mart earns a 78. The combined brick-and mortar retail industry's 73.3 indicates that e-tailers, which earn an overall score of 78, are doing a better job satisfying their customers. Other high-performing e-tailers include (78) and Barnes & Noble's e-commerce business (77).

 Among auction sites, eBay's ACSI score of 80 soared above that for any of its competitors. While U-bid scored a 67 and a 66, the overall e-auction ACSI rating is 72.

 A complete breakdown of the 2000 third-quarter ACSI ratings for e-commerce is available at .


ISO 9000 & ISO 14000 Registration Data Available on CD-ROM

The International Organization for Standardization (ISO) has released a new CD-ROM that for the first time makes available industry sector breakdowns of ISO 9000 and ISO 14000 registrations worldwide on a country-by-country basis. This is also the first time that The ISO Survey of ISO 9000 and ISO 14000 Certificates is made available electronically.

 ISO created the CD-ROM in response to frequent requests for increasingly more detailed information on the spread of its management system standards. An alternative to an exceptionally cumbersome document, the CD-ROM is compatible with Windows, Macintosh and UNIX operating systems. The industry breakdowns are provided according to the 39 sectors of activity making up the European Accreditation of Conformity classification code used by many accreditation and certification bodies.

 Until this release, The ISO Survey has provided worldwide, regional and national totals of certifications to ISO's quality (ISO 9000) and environmental (ISO 14000) management system standards only in hard-copy form. It's available free as a paper document and is downloadable from the ISO Web site.

 The CD-ROM includes all the information presented in the paper version, including the table of national adoptions of ISO 9000 and ISO 14000, but in a more accessible form.

 For more information, visit the ISO Web site at .

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