Challenge

Privately held Hypertherm (Hanover, NH) designs and builds advanced plasma-cutting systems on a vertically integrated, high-mix campus. Early lean tool use wasn’t the constraint; leadership wanted an operation that grew the business, not one that required daily management heroics. Specific pressures included:

  • End-to-end flow across shared machining, assembly and test without production control.
  • A tight local labor market for skilled CNC operators.
  • Supply-chain fragility (notably electronics) and a “no-layoff” people philosophy, including through recessionary demand shocks.

What We Did

Designed a value-stream operating system that lets associates “see flow with their eyes” and correct abnormalities at the source.

Core moves:

  • Flow from receiving > fabrication > assembly > shipping with visual signals (green/yellow/red “thermometer boards”), FIFO lanes and standard responses for abnormal flow.
  • Removed central production control; work is authorized on the floor.
  • Reorganized the office into business teams (Ops + R&D + Sales/Marketing per product line) to couple market signals to execution.
  • Built the Hypertherm Technical Training Institute (HTTI) to create CNC talent in 10-week, full-time cohorts; added autonomous maintenance.
  • Tightened supplier links (more frequent deliveries by signal; line-ready kitting and crate design led by shop-floor associates).

Implementation Highlights

  • Self-healing value streams: Associates initiate fixes (no meetings/approvals) and keep flow on time.
  • Office flow by design: Cross-functional business teams speed decisions and eliminate rescheduling churn.
  • People first, even in downturns: No layoffs; “excess” capacity redeployed to CI, lab/testing, and insourced facilities work—accelerating improvement.
  • Built a capability engine: HTTI graduates feed machining, shorten development loops, and free engineers for product/technology work.

Results

  • 7x sales growth over 5 years, and rapid rebound after external economic shocks, returning to prior peaks roughly a year ahead of plan.
  • Resilience in steep economic downturns: revenue down 36%, yet R&D investment up 20% with more products launched than any prior year, and profit-share paid.
  • Market outperformance: Post-recession growth roughly 2x Public peers; moved to 24/5 production with extra weekend shifts.
  • Global delivery from NH: 25% of output to Asia and 30% to Europe with minimal pipeline inventory.
  • Management time unlocked: Operations run without daily intervention; leaders focus on customers, strategy, and new products.

Why It Worked

  • Flow before tools: Clear normal and abnormal flows defined, visual control, and standard responses made performance self-managing.
  • Associate ownership: Skills, trust, and shared rewards created fast local problem-solving and innovation.
  • Tight market–operations coupling: Business-team structure and HTTI turned operational reliability into a growth engine.