Lu’an Huaji accelerates its progress

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Lu’an Huaji Accelerates Its Progress Author/Source: Lu’an Coal-based Oil Date: 2022-04-12 Clicks: 13 At 9:30 on June 19, 2021, the two gasifiers, which are key components of Henan Jindadi’s 600,000-ton/year soda ash production facility, were successfully lifted into place. The gasifier purchased by Xinjiang Tianye Huihe New Materials Co., Ltd. has been operating at full capacity for a total of over 145 days in a row, setting a new record for the continuous operation time of the Jinhua Furnace 3.0 – regarded as a key national asset – and marking an important milestone in the field of large-scale water-coal slurry gasification technology worldwide. By the end of last year, Jinhua Furnace 3.0 had successfully secured contracts for 27 projects, involving nearly 56 gasification furnaces, generating sales revenue of 5 billion yuan and driving economic activity in related industries worth 20 billion yuan... This demonstrates that the Jinhua Furnace series manufactured by Lu’an Chemical Machinery has effectively achieved the set goals of stability, reliability, full capacity operation, and high quality, while also highlighting Lu’an Chemical Machinery’s strength and determination to promote gasification across China. On April 12, 2022, Lu’an Huaji joined the “big family” of Lu’an Chemical Industry exactly one year later. Over 365 days and nights, tremendous vitality was injected into the company. All the cadres and employees of Lu’an Huaji worked as one, focusing on identifying areas for improvement and making concerted efforts to enhance quality and efficiency. With an approach of \"strengthening strengths and addressing weaknesses to open up new prospects,\" they achieved remarkable growth. Aiming for \"advanced\" standards, what are Lu’an Huaji’s goals? What are the gaps? What are the benchmarking measures? How effective is it? With these questions in mind, let’s take a look at Lu’an Huajī, examine the various benchmarks it adheres to, and see how Lu’an Huajī is accelerating its progress! What’s the goal? ——“Adhering to the approach of identifying areas for improvement and breaking through the ‘two thresholds’, efforts are being made to help key operational indicators cross the ‘survival threshold’ as soon as possible and reach the ‘development threshold’. In the first quarter of this year, Luan An Hua Ji’s production increased by 67.5% on a year-on-year basis ； The output value increased by 61.31% on a year-on-year basis. By identifying gaps, addressing weaknesses, and ensuring effective implementation, satisfactory results were achieved in terms of balancing quality and safety with operational development, thus securing a strong start and stability in the first quarter. “Behind the successful start and steady progress is Lu’an Huaji’s continuous effort to improve itself by setting benchmarks against leading companies in the same industry. In 2021, Lu’an Huaji Group conducted comparisons with companies such as Coal-based Clean Energy Company, Lansi Heavy Equipment, and Yantai Wanhua, carrying out in-depth comparisons in terms of key economic indicators and business management models. From advanced management, we seek quality, efficiency, and growth... Where is the gap? ——Among the benchmark indicators for the “two lines,” 4 items failed to meet the “survival line” standard” ； Compared to the \"benchmark lines,\" Lu’an Huaji has only 4 indicators that meet the standards. Looking at Lu’an Huaji’s performance in 2021, out of the 14 \"two-line\" benchmark indicators set by the group company, Lu’an Huaji’s revenue profit margin, cost and expense profit margin, current ratio, cash flow coverage ratio, return on capital, and ratio of investment in technology have reached the development level; it is necessary to continue working to improve these indicators ； The return on total assets, debt-to-asset ratio, labor productivity per employee, return on net assets, and rate of capital preservation and appreciation, which are at the minimum threshold for survival but not at the level required for development, need to be improved in order to strive for advancement ； The operating profit growth rate, which falls short of the acceptable threshold, the ratio of current assets to these two types of funds, and the interest-bearing debt ratio require all stakeholders to face challenges head-on and strive to achieve success despite those difficulties. In addition to setting benchmarks for the \"survival line\" and the \"development line,\" Lu’an Huaji has also established other benchmark lines. Lanzhou Lanshi, regarded by Lu’an Huaji as a benchmark in the industry, has 10 advantages in terms of the 14 indicators, while Lu’an Huaji itself has only 4 such advantages. In addition, Lu’an Huaji uses the gross profit margin from production as the main benchmark indicator, and takes the proportions of raw material costs, labor costs, manufacturing expenses, and electricity costs relative to revenue as four auxiliary benchmark indicators to compare itself with Lanshi Heavy Equipment. Based on the comparison results, while Lu’an Huaji’s labor costs, manufacturing expenses, and the proportion of electricity costs relative to revenue are roughly on par with those of Lanshi Heavy Equipment, its gross profit margin and the cost related to raw materials differ significantly from Lanshi Heavy Equipment’s figures; its gross profit margin is 3.37% lower than that of Lanshi Heavy Equipment. The main reason for this is that Lanshi Heavy Equipment has a larger share of high-value-added core products in its business portfolio. How are the measures? ——Strengthening the leadership role of Party building, improving the accounting system, and making good use of the formula \"Profit = Revenue – Expenses\": Lu’an Huahua Machinery adopts a lean management system centered on the implementation of a \"accounting\" culture, with integrated approaches to comprehensive budgeting, performance evaluation, and salary distribution. It has issued the \"Lu’an Huahua Machinery Group Lean Management Manual (2022)\”), setting minimum targets, goals for improvement, and challenging objectives for various departments, factories (workshops), and teams. Responsibility holders, safeguard measures, and reward/punishment criteria are determined, and each indicator and task is broken down into specific positions and individuals. Strict evaluations ensure that the principle of \"everyone being an operator and everyone contributing to efficiency\" is put into practice, while full-process and all-round control helps to achieve the annual goals. Make good use of the formula \"Profit = Revenue - Expenses\" and perform addition, subtraction, multiplication, and division correctly. Insist on seeking efficiency from the market, from production, and by tapping potential. Strengthen strategic partnerships to reduce material costs ； Implement process optimization to reduce manufacturing costs ； Recover funds by using loans to settle debts, thereby reducing capital costs. Leverage the advantages of intelligent manufacturing and Jinhua furnaces, adopt new business models such as EPC and BOT, accelerate innovation and improvement, strengthen the team of professional talents, and persist in achieving greater efficiency through transformation, upgrading, and innovation. Strengthen the awareness of labor productivity, return on assets, and resource utilization. Based on the amount of assets used and resources consumed, improve input-output accounting. Shift from focusing solely on manufacturing costs to considering total costs, and move from focusing only on production profits to considering overall operational profits. Reduce the size of accounting units, shorten the accounting cycle, and enhance the control over various expenses. What’s the outcome? ——Efficiency, effectiveness, and productivity have seen significant improvements, with the pace of digital and intelligent transformation accelerating. In 2021, all employees focused on their core tasks and worked hard; various lean manufacturing indicators showed steady improvement. By seizing opportunities, key projects achieved notable results. The market share for new materials and new energy-related products expanded rapidly, while orders in the custom manufacturing sector increased by 72%, setting a record high since the company’s establishment. Production volume increased for three consecutive quarters, revenue rose by 15%, profits increased by 10%, and tax payments increased by 18%. The future has arrived, and it is believed that Lu’an Huaji will prove through its actions that it is committed to \"fully achieving its goals, striving to meet challenging objectives, and contributing its share to helping the group company attain its overall goals.\" It aims to \"establish itself as a high-quality supplier of equipment and a provider of comprehensive solutions that covers the entire industry chain for chemical equipment – including research and development, design, manufacturing, installation, maintenance, inspection, and repair services.\" Furthermore, it seeks to \"create a new development model driven by intelligent manufacturing, based on traditional chemical equipment manufacturing, focused on the production of equipment for new energy and new materials as well as on gasification plant construction and operation services, with high-end innovation platforms serving as a catalyst, in order to become a leader in the chemical equipment sector nationwide.\" All of these goals will be achieved step by step through hard work!