There was this very interesting documentary I heard this past weekend about NUMMI on NPR. I have always been skeptical of Unions and with that article which includes interviews with past employees there even more so. NUMMI was developed in an unincorporated part of Fremont. Contrary to current belief, the upscale parts of Fremont like Fremont Hills was a fairly recent addition. Before, people lived and built plants out in Fremont because it was dirt cheap to do so.
So what really went on at the NUMMI plant in Fremont, California and other assembly plants across the country?
There has always been a perception of poor quality within the US Auto sector, but I never really realized why until I heard this interview. The employees, who were Unionized, were notoriously difficult to fire. Because of this, they were able to pretty much get away with anything. Many of the coworkers drank or did drugs on the job, and some of them just didn't show up to work at all. When these employees were reprimanded by management for breaking the rules, they would purposely sabotage the assembly by making sure parts were purposely not put on correctly or tightened. This led to vehicles that were at best poor quality and worst hazardous to the hardworking Americans that chose those vehicles. In fact, this practice was so widespread, NUMMI at one time was rated one of the worst GM plants in America. Because of the strife between workers and management, there was a lack of trust. Management felt that if the employees had the power to stop the assembly line, they would have done so constantly because they were lazy. The employees on the assembly line, having to keep up with the moving line, were forced to do their jobs carelessly. From the report, many vehicles that left the assembly line ended up having to be repaired, or scrapped. Engines installed backwards, missing bolts, missing parts, or sometimes even whole interiors missing. Because of this, GM eventually decided to close the plant.
Toyota came in to the picture shortly after with their new management philosophy. They offered to teach GM, a competitor, how to run their assembly plant to create quality products. For the longest time, because of pride, the Americans refused to accept this offer. Only after the NUMMI plant was closed did GM decide to try it out.
Toyota chose to hire the same individuals who worked in the old plant, but offered something radically new. Instead of telling the employees what to do, they allowed employees to have unprecedented input into the process. Each group of assembly workers were put into teams where they can rotate around to different jobs to eliminate the monotony of the work. In addition, each team had a team leader that helped individuals that may be struggling or falling behind in their position. Lastly, management continued to ask the "people in the trenches", the assembly line workers, how to improve the process and make their life easer. Any suggestion of the change of the placement of parts, problems with the current assembly procedure, or suggestions for better tools for the job were taken seriously and quickly remedied.
Of the bat, the quality of the GM products assembled there (Chevy Nova) increased dramatically from before, and the Corolla that was assembled in the newly opened NUMMI plant was at par with the quality they saw in the Toyota plant in Japan.
Why did this amazing learning not translate throughout the GM network of assembly plants? GM was too proud to acknowledge that the process they have developed and invented had been bettered by a competitor. In addition, the Unions were very resistant to any changes. The new NUMMI plant operated 20% more efficiently than other GM plants around the country. Because of the efficiency, there was a risk that if this new process was implemented in other plants, there would have been layoffs, which translates to less due paying Union members. The NUMMI plant in Fremont was more receptive to the changes because when the plant closed everyone was laid off, and they were being offered new jobs (with the new process) where there was none before.
The lessons I have learned from all of this is to never be too proud, because you may miss the bandwagon on the tactical advantage that could carry your competitors ahead of you. You can actually see this happening now with the current Toyota debacle, so even the Japanese are not immune from this. In addition, Unions, although created in the past to protect the rights of the workers, have become this institution that favors their own survival over the competitive advantage of the company and benefit of the workers as a whole.
I strongly believe this lesson applies today to the Unions we see in the medical field with MRI Technicians, Nurses, and the public sector including Police, and Firefighters. Without Unions, they would have the incentive to continuously improve vs. just sitting back and waiting for their paycheck. This is as simple as incentives and fears -- just like when you train a dog.
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