The making of an old-fashioned toy from scrap metal offers a lesson in how technological advances have helped revolutionize business. It also illustrates some shortcomings.
By Washington Post
January 27, 2002
One lazy afternoon last fall, Mayra Gutierrez, 15, tagged along with her mother to a KB Toys store in Gaithersburg, Md., to pick up a birthday present. As the cashier rang it up, Mayra picked up a toy she couldn't resist.
She added it to their purchase -- an extra $3.99. Mayra had never owned one before: an old-fashioned steel Slinky, the kind that, as the famous commercial ditty goes, walks down stairs, alone or in pairs.
Mayra knew nothing about the software that figured out how to melt the steel in that Slinky, or the satellite tracking of the truck carrying the steel to the Slinky factory, or the Internet tools that let the manufacturer monitor sales at big retail chains.
But it was just such digital technology that turned junked cars in a Tampa scrap yard into the 63 feet of flattened steel wire, coiled into 89 loops, that now sits on Mayra's desk in Maryland.
Over the past decade, as Internet companies attracted immense attention for their boom and bust, a quieter revolution has taken place in traditional businesses. All kinds of enterprises have cut costs through technological advances rooted in the microprocessor.
Slinkys are among the most old-fashioned of toys. They're manufactured on the same machines built by the inventor in 1945; the only design change has been to crimp the ends of the wire for safety.
Nonetheless, a trip along the Slinky's production and distribution path illustrates how digital technology has streamlined the way even the simplest toy is produced and distributed, which in turn helps illustrate how the United States achieved stunning economic growth through the late 1990s and into the start of 2000.
The current recession is in large part a hangover following the nation's wild enthusiasm for the new technology at the turn of the century, when eager investors pumped up tech stock values and enthusiastic business executives made or bought more high-tech products than the world could use.
At the same time, some economists think the widespread adoption of digital technology has made businesses more nimble and flexible, which has helped make the recession a relatively shallow one.
But the Slinky's journey also shows the possible limits of that technological revolution. In some situations, promising tech innovations are proving unworkable in practice. In others, the efficiency gains of the 1990s were one-time bumps, not ongoing improvements. And in some cases, potential benefits from new technology are outweighed by their high cost.
The making of the Slinky helps explain why the reality of the revolution sometimes lagged behind the hype.
The Slinky's journey to Mayra's shopping bag started about a year earlier in Tampa, on the dusty lot of North Star Recycling Co. Flatbeds rumbled in, carrying stacked hulks of junked cars. Pickups brought in roadside trash. They came to sell their scrap metal for $39 a ton.
North Star employee Diane Hart drove her big yellow loader to the mountains of metal, picking up load after load and depositing them into a shredder. A computer screen in her cab told her the exact weight of the materials she put in the shredder. In the old days, her employers never knew exactly how much steel came out of those big mountains.
"It's the difference between a dinosaur and a human," Hart said of her new loader.
The steel came out of the shredder as "frag," which North Star Recycling shipped to its sister company, North Star Steel, in Beaumont, Texas. There, the frag was melted down in a massive furnace powered by software that ensures energy is used as efficiently as possible.
The steel was extruded as billet, or 6-inch-square logs. More machines squeezed and rolled the billet until it was thinner than a pencil.
Workers once had to use tongs to grab a steel rod as it zipped out the end of the machine, red hot, at 195 mph, and then measure it for the correct thickness. Now a computer measures it with infrared sensors.
Such technological innovations economywide have meant businesses have a better understanding of what to make and how and when to make it.
But the next steps in the making of a Slinky show why changing the world turns out to be harder than many Internet visionaries thought.
Trucks carried steel rod to Shelbyville, Ky., where rod is delivered at one end of the Bekaert Corp. factory and wire comes out the other. In between, machines squeeze, heat, cool, acid-bathe, zinc-coat and spool the steel to prepare it for its ultimate destination: as staples, paper clips, the spiral coil of a notebook and Slinkys.
The machines pull through more than a dozen strands of rod simultaneously, running in parallel lines. But on the day the wire for Mayra's Slinky was manufactured, only five lines were full, using less than half the machines' capacity.
Technology visionaries would generally describe this inefficiency as ripe for an Internet solution. Theoretically, the company could sell that extra wire, just as airlines sell unfilled seats at reduced prices on the Internet.
But, much as Bekaert national sales manager Allan Hirsch would like that, it just wouldn't work. Manufacturers buying his wire need precise chemical compositions and strength; if they used a different supplier every time, they'd likely meet big delays as wire that wasn't made just right tangled up their machines.
For an airline passenger, a flight from Washington to Chicago is always pretty much the same. Steel wire doesn't work that way.
"The economics just aren't there," Hirsch said.
One bright morning, trucker David Colby backed his rig to Bekaert's loading dock to pick up 40,000 pounds of steel wire destined for the Slinky plant in Pennsylvania.
Colby pulled out a small computer and typed "22," then pressed "send." The message, code for "loaded at shipper," was beamed to a satellite and then to Morton, Ill., and the computer screen of a dispatcher at Colby's employer, Star Transport Inc.
Technology has revolutionized the trucking industry in the past decade. Trucks go no faster and drivers still need sleep, but software and satellite technology allow truckers to spend more time hauling goods and less time sitting around or driving empty rigs.
Colby sometimes would have to drive hundreds of miles between loads with nothing in his truck. Now, Star Transport's computer system is connected to satellite-based devices that constantly update its trucks' locations, lessening downtime between jobs.
The software also sets prices for different routes, so Star Transport charges enough to be competitive without losing out on potential profits. Company president Glenn Werry Jr. said the software and wireless devices, installed in 1990, have increased the amount of hauling each driver does by 15 percent.
But 80 percent of Star's productivity improvement came in the first two years after the tracking system was installed, Werry said. Gains have been much harder to come by since. And there are no revolutionary technologies around the corner that will offer efficiency gains of the scale seen in the 1990s.
The low-hanging fruit, he says, has been picked.
If many of the efficiency gains of the 1990s were indeed one-time bumps, as at Star Transport, there are big implications for the economy as a whole.
During the economic boom of the past decade, there seemed almost no limit to growth. A decade ago, most economists thought it was impossible for the economy to grow faster than 2 to 3 percent a year without spurring inflation, as too much money would be chasing too few goods.
The only way to grow faster than that without driving up the inflation rate, then, would be if productivity -- the amount of stuff made for each hour worked -- improved faster than it has historically.
Too much money wouldn't be chasing too few goods, because the nation would be making more goods.
Many economists think that's exactly what happened in the 1990s, and that digital technology is a big reason. Manufacturing productivity increased by an average 4.7 percent annually from 1995 to 2000, compared with an average increase of 2.8 percent over the past 50 years, according to Labor Department data.
That let the economy grow at an unprecedented rate -- almost 4 percent annually from 1995 to 2000, compared with an average annual growth rate of 3 percent since the end of World War II.
That means the buoyant good times of the past decade can be at least partly attributed to the technology advances so apparent in the making of a Slinky.
But if those gains are indeed petering out, as the Slinky trail suggests, it would mean the economy will grow from now on at closer to the historical norm: 3 percent, rather than 4 percent. And that one percentage point is worth a lot of money and jobs when it's 1 percent of a $10-trillion economy.
Colby plugged across Ohio and on to Hollidaysburg, Pa., where he dropped off the wire at Poof Products Inc., the company that makes the Slinky. While a forklift operator unloaded the wire, Colby tapped at his computer to read the address of his next pickup, a few towns over.
Just a few hours later, the wire was hooked up to the Slinky machines, which flattened, coiled and cut it. Workers crimped the ends of the still-hot Slinkys and placed them on a conveyor belt, which carried them to the machine that boxes them -- each Slinky walking toward its own box.
First a Slinky hit a bar, flopped over and went down a step. A mechanical arm pulled a box from a stack, opened it and placed the box next to the Slinky, which was then automatically pushed inside.
The process isn't mere theatrics; it's a system of quality control that Slinky inventor Richard James devised in 1945. A Slinky wound too tightly or too loosely won't walk down into the box correctly.
The boxes were sent to the warehouse. Over the years, the company has received plenty of pitches from companies offering to streamline the warehouse with bar codes, forklifts equipped with infrared scanners and handheld computers.
Instead, the company uses carbon paper stuck on the side of boxes to keep track of its warehouse contents.
One might think the fancier inventory tools would let the company use warehouse space and workers' time more efficiently. But shipping supervisor Bertie Michaels said: "Our people know exactly where our inventory is. We just draw our own little maps."
When a truckload of Slinkys arrived at KB Toys' Clinton, N.J., distribution center, a worker unloaded the merchandise on wooden pallets, attaching a bar code sticker to each pallet.
When another worker pulled up in his forklift, a scanner on the machine read the bar code. His handheld computer flashed information directing the Slinkys to a specific slot in the massive warehouse; because Slinkys sell moderately quickly, the computer knew to put them on a moderately accessible aisle.
When the KB Toys store in Gaithersburg ran low on Slinkys, the company's inventory-tracking system fed the order to New Jersey, where the computer of another warehouse worker told him to pick a case of Slinkys, slap a bar code on it and send it to Maryland.
Most of KB Toys' innovations were installed in the past five years, at a cost of hundreds of thousands of dollars. But in early September, when the facility's manager, Louis Nacke, discussed his wish list, it was decidedly nontechnical. (Nacke died in one of the planes hijacked by terrorists on Sept. 11.)
Nacke wanted more standardized bar coding from his various suppliers; in companies' rush toward the latest technology, they've ended up with different standards, resulting in more work. He spoke of finding new ways to recruit workers. And those conveyors could use higher-horsepower motors to speed things along.
Nacke and other KB executives said computer technology has paid big dividends, and that the company will keep making such investments. But making those investments work has proved to be harder and slower than a software sales brochure would suggest.