Blue-collar exodus brings new challenges – 11/30/06 – The Detroit News Online:
UPDATE: In case some of you don't know my history of writing about how Ford and mass production companies typically don't respect blue collar workers…. the word “Dummies” in the title refers to what Ford management appears to think of the workers. I know first hand, from working at GM in the past, that the workers aren't dummies. As Toyota would say, the workers deserve respect… more than they've gotten from Ford.
More than half of the blue collar employees at Ford are accepting voluntary buyouts. How sad. Sure, Ford is overstaffed because they aren't selling enough vehicles, but they aren't overstaffed by 38,000 people. Much of the cost savings from these type of cost savings plans comes from hiring cheaper workers to replace those who are leaving. From the Chicago Tribune:
“… the mass exodus of UAW workers will save money because temporary workers can fill in at plants that are scheduled to close at lower cost than permanent workers. Temporary workers are paid $18.50 an hour without benefits, compared with $27 an hour for permanent UAW workers who also receive generous benefits.”
It's a shame that Ford can't work harder to reduce waste instead of just relying on cheaper labor to save them. In the traditional mass production thinking, “Workers” are interchangeable cogs — robots to be switched in and out at will. God forbid that they have experience, knowledge, or some special skill. We want to bring in cheaper workers and want to assume they can do the same work, with the same quality, and the same results. That kind of thinking is very insulting, it doesn't show “respect for people.”
From the article:
“Manufacturing expert Ron Harbour said the buyouts would have posed more problems for Ford a decade ago. Over the past 10 years, he said, Detroit's automakers have come a long way toward adopting standardized procedures for every job on the assembly line.
‘The processes and the quality systems are better than they were 10 years before. Today, not only do you have much better training programs and the facilities to do that training, but also you have a much better organized workplace. There is basically a recipe for how it's done,' Harbour said, adding that Ford has made strides. ‘Is Ford mature at this? By no means. Have they made huge steps? Definitely.'”
Having good standard work, an organized workplace (through 5S), and training programs are all good lean concepts. They are NOT intended to make workers completely interchangeable, as Ford is trying to do. It's not “lean” to say “we're going to completely systematize the work so we can bring in any temp worker off the street to do the job.”
If this was lean, Toyota would use nothing but temporary workers. They would do like Henry Ford used to do — workers didn't have permanent jobs, they lined up at the door every day and managers selected who would work that day.
Toyota invests in their people. What about that can't the mass producers figure out?? Why in the hell do most companies still treat most “workers” as people who aren't capable of thinking or contributing to continuous improvement? Why do non-lean companies still think that workers are overpaid dummies who should be replaced at a whim by someone cheaper who can merely follow the recipe?
A person with no experience might be able to follow a recipe. But they won't be able to immediately make suggestions. But, it doesn't matter if management just sees them as a “cost” and isn't willing to listen to them, yet alone invest in them.
The contrasts between Ford and Toyota coudn't be any more clear. No wonder Toyota is thriving and Ford seems doomed. This is the lean thinking that the new CEO is bringing from Boeing?
Blah.
Keep in mind that as Mark Fields says the following, in an email to all employees, he is jetting around in a private jet each weekend.
“At the same time, even as we reduce our costs and capacity and make tough-but-necessary decisions throughout our business…”
This all makes me very mad. I'm glad I'm out of the auto industry. Good luck to those of you who are still there.
Update: Wall Street loves the Ford moves, no surprise there.
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Thanks for your sympathy to those of us still in the automotive business, Mark. We aren’t all like Ford (or GM or Delphi), though. Some of us are doing quite well her in the US by learning, doing, and improving–just like good old Toyota. I hope some of the Ford employees who took the buyout show up at my door because I will value their talent and experience enough to offer them a job.
Why do you call the people leaving dummies?
I thought I was being clear…. it’s Ford management who considers these workers dummies. I think the workers are smart for leaving — assuming they can find a job where they’ll be respected more than they were at Ford. If a company is willing to let experienced employees walk so they can hire cheaper replacements…. it’s Ford management who thinks they had dummies and they can get cheaper dummies to do the same jobs.
Your comment about “bring in any temp worker off the street to do the job” reminds me of an (apocryphal) story that I heard in the Toyota Motor Sales cafeteria a few years back – about a reason why Toyota had fewer manufacturing facilities in Mexico than the US. Apparently there exists a cultural standard that, when an employee wants to take time off, a relative will show up to cover that employee’s job. Since Toyota Associates must complete months of training before actually working in vehicle assembly, that doesn’t work at a Toyota plant. I cannot vouch for the veracity of the story, but the rigorous training for Associates is true.
That rigorous training at Toyota, as opposed to Dell where, in a busy season, they would bring temps in off the street and have them building computers without much training. At least that was true a while ago…. one reason they aren’t really a TPS company although people like to call them “lean.” They are lean if “lean” means low inventory and fast response, but there’s more to it than that.
As long as “labor” is a separate cost category in the product, and salaries are rolled into “indirect costs” or G&A, blue collar workers are going to be targeted.
I’m not sure temp labor is the driver, because you do need fewer workers when you close plants.
And don’t forget, retirements are attractive because you pay the same people out of a different pocket, somehow making everything all right.
I’m not a financial person, so I might have gotten some of the cost accounting jargon wrong, but I think there are a lot of people who would agree that wrong-headed thinking is at the root of the mass layoffs.
By the way, there’s a large category of white-collar buyout offers that will be conditional. If too many people choose to go, the conditional buyout offers can be withdrawn.
I just read a great new book on Ford – Ford and the American Dream – Founded on Right Decisions by Clifton Lambreth. Mr. Lambreth discusses Ford’s failed strategies and the difficult balancing act with the UAW. He does the best job ever of giving the average person an inside look at Corporate America and Ford. This is a must read for every business person around the world!
[…] them with cheaper ones. Or maybe it’s already called the “Circuit City Method.” Ford has been doing the same thing, as have other auto suppliers. It’s the standard playbook anymore, unless you’re Toyota […]
[…] Mark Graban on February 8, 2006 · 0 comments Here is a current blog posting (11/30/06) for those of you looking to read about the accepted Ford […]