Dec 15, 2008

Do autoworkers get paid $70/hour?

“Mathematically and intellectually dishonest” says Keith Olbermann Nov. 24 on MSNBC about the figure of $70/hour allegedly made by autoworker. He quotes the Center for Automotive Research’s figure of $28/hour, and adds $10 for benefits for a fully loaded $38/hour.

He says the $70/hour includes pensions of currently employed workers, plus pensions and benefits being paid to retirees and surviving spouses. If you divide that by all the hours worked in the time period under consideration, you get something like $70. This falls in Mark Twain’s category of statistics he called “damned lies.”

I didn’t check out Olbermann's math, but I’m sure MSNBC has some sort of fact checking process. Portraying autoworkers as greedy and overpaid is propaganda, pure and simple. Millions of Americans getting by on $10-15/hour would develop a lot of animosity to automotive workers hearing that figure, not to mention managers imagining having to carry a payroll like that.

Yes, the union has gotten generous pay for their members. Maybe more than they ought to get, by some standards, though not the millions paid to higher-ups.)

This is as ridiculous as calculating labor cost as a percentage of a vehicle’s cost. Wouldn’t the figure go up and down as fewer or more vehicles are made? Labor is a step variable cost, not an infinitely variable cost. You don’t add or subtract workers one-by-one according to demand.

As far as I know, and I’ve looked, the auto industry does not reveal the proportions of various categories of total cost of producing vehicles. I have a sneaking suspicion that, though legacy costs are higher than the transplants, things like logistics and warehousing cost far more than direct labor. My guess is that white collar and managerial costs are likely to dwarf the cost of hourly labor. We hear that parts cost different percentages of a total vehicle’s cost, but not what purchased parts, hid as inventory “assets,” make up in the overall consumers of cash. There’s a heck of a lot of waste in the system outside the cost of the workforce that builds cars.

I got this from the UAW’s website. Partisan of course, but Keith Olbermann is probably not being paid by the union to investigate claims of extravagant pay for autoworkers. You can watch the video of his report at:
MSNBC's Keith Olbermann on autoworker pay

Dec 14, 2008

I Promise America

My friend AJ O'Neil, proprietor of AJ's Music Cafe and famed for his Danny Boy Marathon, impulsively started a campaign called "I Promise America to Buy American," (and we'll give you coffee.) with the offer of a free cup of coffee if you take the pledge. From a handwritten sign-up sheet on the coffee counter to a TV news item, he's gotten attention. You can sign on at I Promise America.

To my international readers - you should understand that layoffs here in the Detroit area are getting to the point of being devastating. And we should understand that job losses are worldwide.

The lesson to learn is that AJ's gesture has helped to brighten the gloom and add some hope for anxious people in our community. At least they feel some support. You might ask what gesture you could make in your community to make a scary economic situation feel safer for your neighbors.

Dec 1, 2008

Barriers, real and symbolic

It's been almost a year since I started work on my article about DTE Energy's continuous improvement and lean journey, but it's been worth the wait. Jason Schulist, Director of Continuous Improvement, and Tia Umfress arranged interviews for me with three high-level leaders at the company. Their enthusiasm about the company's new initiatives was sincere and genuine. They shared stories about what they had been seeing and doing in the field where they had been leading classroom training and hands-on improvement events. Here's one about real and symbolic barriers that can be removed almost instantly--

Vince Dow, VP, Distribution Ops, in the electric side of the company, worked with a team of front-line people tackling a service center truck flow problem. He told me, “It was stop and go. Everybody waited at one point and it became congested. One of the people said, ‘The problem is this big metal stanchion.’ It was holding material, blocking part of the aisle. They said, ‘That’s our problem, but we can’t do anything about it because that’s not our area.’”

Dow asked them, “Why can’t you just take it down?” They started to say, “There’s this permit and that permit…” and Dow asked, “Well, who said?” They went through all of the reasons why until they got to the end. “By the end of the fourth day, the stanchion was gone,” he says. “They disassembled it themselves. Took all the material to other positions throughout the yard. Created a traffic flow pattern and the next day, all the congestion disappeared.

“Everyone said it was symbolic,” says Dow. “It not only freed the trucks up, it freed their minds and their hearts. Everybody became engaged after that thing was moved. They were saying, ‘You guys actually moved something that we all knew was in the way, but we never thought we could do anything about it, and now we know we can.’”

Dow talks about what he learns when he works with the teams, saying, “What’s always enlightening is finding what the roadblock is and trying to figure out how a decision, even one I made, filters down and comes out causing a problem. You made a decision but you never even thought about all the impacts. So you find these things and get them fixed.”

There's a humility about Vince Dow's recognition that good decisions can have bad side effects. We've seen a lot of examples lately of irresponsible executives remaining blissfully oblivious of the havoc wrought by their decisions. I can't help but feel encouraged about what I heard from DTE in the last few months -- sorely needed light in the gray landscape of Detroit in 2008.

And, yes, Dow and his fellow leaders are going back to the sites where they have led these improvement events, and going back repeatedly.

--The courses taught include C1-C4 principles elucidated in Chasing the Rabbit by Steve Spear, reviewed in a previous Lean Reflections post.

Nov 26, 2008

Schmula interview with Zappos CEO

Pete Abilla, has a good post today on Schmula. It's an opportunity for a Q and A with Tony Hsieh, who has built a culture and a company that wows the customer consistently - Zappos.com. It is a shoe paradise. From couture to sturdy walking shoe, it's all there. I don't know how they make money, since you can order an unlimited (as far as I know) number of shoes at one time and then return them all - free. So I posed the question and will see how he answers.

Worth a look.

Nov 19, 2008

Steve Spear's new book - read it!



Chasing the Rabbit: How market leaders outdistance the competition and how great companies can catch up and win



In this book, Steven Spear’s years of observing Toyota* and his studies of other companies, both successes and failures, have led him to distill a set of principles other organizations can use to be more successful. Spear indicates that great leaders seem to practice them instinctively, yet it is not easy for them to articulate exactly what they do. That makes it difficult for the rest of us to understand what makes them good leaders.

Spear says that simply copying what Toyota does, for example, is not going to replicate the thinking behind how Toyota manages its business. Do you have to be steeped in the culture of Toyota, as Spear was, in order to fully absorb the way it does things? That’s an option that few people have.

Spear says that it is possible to discover patterns in Toyota’s practices, to make explicit what is implicit knowledge at Toyota. When Spear and Hajime Ohba, general manager of Toyota’s Supplier Support Center happened to go on some of the same factory tours in Japan in 1995, Spear paid close attention to what Mr. Ohba did. He saw that Mr. Ohba asked the same questions on every tour, and asked them of the people working as often as of the executive guiding the tour. Whenever possible, he asked to start the tour where the end product was being shipped to customers.

What was he looking for? Pathways, connections or handoffs, and what work was being performed. Mr. Ohba was looking at process and how processes combine to form systems. That’s different from saying that the only way to learn how Mr. Ohba looked at a plant is to spend years accompanying him.

As a scientist, he observed what leaders at Toyota and at other organizations did until he could see patterns and derive a theory to explain the phenomena. From that theory, he extracts a view of complex processes and systems and an explanation for why organizations can’t make them work effectively. Then he tells us of four capabilities he found in great leaders and great organizations.

The first thing he establishes in the book is the character of complex systems. Our typical experience is that some group of people will create a system that accomplishes some goal – basically, they will think it up. It’s guaranteed that things will go wrong because no matter how much study these people do, they can’t think of everything. Then they get the blame for producing a flawed process. In turn, they blame sponsors for not including everything in their specifications, or users for not following processes as they envisioned them.

Spear says, face it, there will be unanticipated problems in any system, so have a process for identifying them and responding. In the book, he shows us how Toyota, Alcoa, and the Navy Nuclear Power Propulsion Program approach that reality successfully, and how an unnamed hospital, NASA, and others ignore flaws in their systems with tragic consequences.

His other fundamental observation of most organizations is that they are divided functionally, while processes don’t respect those boundaries. (This isn’t news to lean thinkers, of course.) People in one silo don’t know much about what happens in another or how their action may create problems for them. I spoke to Steve Spear a few weeks ago, and he offered a great illustration. In one hospital he visited, the carpeting in the administrative offices was a different color from that of the clinical departments. If you crossed the boundary, you were well aware that you were in someone else’s territory.

Spear tells readers that if you want to improve processes, you have to fully appreciate that systems are complex and problems are normal. Because they span those functional silos, problems are difficult to solve unless you can bring people from different parts of the organization together and they learn good team problem solving methods.

Actions of separate departments can be integrated, but only if leaders at a level that includes them in their scope of authority don’t sit back and leave problems to someone else. They have to own them and get involved in the problem-solving process.

Four capabilities
Spear tells us that high-velocity companies like Alcoa and Toyota accept that systems are complex so problems are normal, and, because processes cross boundaries, so must problem solving. He says these high-velocity organizations have four capabilities in common, and any organization can develop them through never-ending learning.

In a way, Spear leads the reader in probing deeper levels of each capability by giving them more complex names in successive chapters. After a first encounter with Capability One, in an introductory chapter, where it is described as “Specifying design to capture existing knowledge and build in tests to reveal problems,” it is framed much more simply as Spear begins to develop his theme. The next time the reader finds Capability One, it is called, “Seeing problems as they occur.” In a later chapter, its description has evolved into “Capturing the best collective knowledge, and making problems visible.” When we get to the chapter that focuses solely on Capability One, it has become “System design and operation.”

This name changing has its positive and negative effects. It causes the reader some difficulty in recognizing the principle when it is phrased differently so often. On the other hand, it may develop that ever-deeper thinking needed to understand how organizations like Toyota continue to vault ahead of the competition.

Whatever the effect, there you are. The four capabilities (as described at their simplest in the chapter on Alcoa) are:

C1 – Seeing problems as they occur.
Noticing a problem seems like a given, but not all problems are easily seen. Some have been there so long that they seem like part of standard practice. The key is to look at processes and design them to show problems. From sophisticated instrumentation on complex equipment to mistake-proofing devices in simpler processes, mechanisms are necessary to make problems visible and surface them for attention.

C2 – Swarming and solving problems as they are seen.
No workarounds! Don’t require someone to report a problem to be solved by somebody else at another time. For one thing, critical information is lost quickly—scrap or defective parts thrown away or commingled with others, containers or remnants of materials mistakenly used in the process, lost or discarded. Swarming means that if a process crosses boundaries, problem-solvers from each area have to be ready, able, and willing to get together and share their knowledge to find a solution or countermeasure. The problem is corrected, and prevented from recurring.

C3 – Spreading new knowledge.
A process improvement in one cell or one plant can be implemented in many, if the new knowledge is shared. Does the company have frequent training programs, networking or exchange opportunities, communication among leaders across functional areas? Constant attention to learning and sharing is required. It takes more than building a little-used database of best practices. Communication about them must be active. They should be tested for improvement constantly, and those new methods fed back into the loop.

C4 – Leading by developing Capabilities 1,2 and 3.
This one’s interesting. It doesn’t mean signing off on a training program. It means having leaders at the highest levels understand the work done by the organization in enough detail to communicate with the people doing that work.

Leaders need to be teachers themselves. They need to be coaches. It might be a regular Socratic exchange as Admiral Hyman Rickover was known for, or VPs teaching frontline workers about problem-solving and engaging with them in practicing what they’ve learned. It might be the way Paul O’Neill, as CEO of Alcoa, using a focus on safety to lead to all sorts of improvements. He was known to personally explain to visitors where to find emergency exits and what to do in case of an emergency.

From theory to practice
The test of theory is whether it works consistently when applied to different situations. That’s going on through the Toyota Supplier Network (TSN) and Bluegrass Automobile Manufacturers Association (BAMA). The extended Toyota supply chain is learning about continuous improvement incorporating Spear’s model.

One such company not described in the book is DTE Energy, a gas and electric utility based in Detroit. When I spoke to four senior leaders there in September, they were quick to rattle off the phrase, “C1 to C4.” That “everyone knows what this means” assumption must have come from a constant repetition of those principles among peers and employees. When these leaders had spent a week learning about the four capabilities in classroom and shop floor training at Autoliv in Utah, they were excited enough to drop everything, to get out of their offices and into the field to institute a new approach to solving problems and improving processes. Many, many small incremental gains have been made. Sticking with the principles over the long haul will be the challenge for DTE, but executives are well aware of the risks involved in letting the process fall by the wayside.

Could the book have been improved?
What do I think could have been better in this book? I hate the title--“Chasing the Rabbit: How market leaders outdistance the competition and how great companies can catch up and win.” It doesn’t sound like Steve Spear’s voice as I hear it in the book, and I just get the feeling that some marketing person gave the book a quick look and came up with the title. It’s gimmicky.

I also wish there was an appendix with more details about Spear’s research methods and the data that led to his conclusions. The extensive endnotes are helpful and the list of references is superb. His reading has clearly been comprehensive. (I, for one, can’t wait to read more about Admiral Rickover.) I take it on faith that Spear has done his homework, given his reputation, writing, and his work with the Toyota Supplier Network and Institute for Healthcare improvement.


Conclusions?
I agree with Paul O’Neill, former CEO of Alcoa. On the back of the book, he says, in essence, that everyone aged 15 and older should read it and apply the principles everywhere. I’d add that everyone should read it at least twice, and again as their experience with improvement grows.

Serious recognition and practice of the four capabilities have saved lives, money, and all sorts of waste, and there’s a whole lot of improving to be done. Getting a handle on the nature of complex processes and the four capabilities of companies who consistently outperform others should be a priority for all lean champions and practitioners.

My greatest wish is that leaders in President-elect Obama’s administration find the book, invite Steve Spear to advise them, and find a way to deliver on the perennial promise of improving government.

___________
*Spear is known to many students of lean for the insightful Harvard Business Review article he wrote with Kent Bowen, “Decoding the DNA of the Toyota Production System.”

Nov 15, 2008

Dearborn dealer taps belief in Ford

(It's hard to believe it's been so long since I posted - the book about the Danny Boy Marathon is almost done!)

In Dearborn, Village Ford, a local dealership, gave away shares of Ford stock just for taking a test drive in a new 2009 Ford. General Manager Bob Wheat told the local Dearborn paper, the Press & Guide, "Showroom traffic was unbelievable last week. We had a 100 percent increase in visitors from the previous week and we had our best sales week of the month because of it. Customers like the idea of getting Ford stock.

"The best part was to hear how optimistic everyone was about the stock gaining value. Perhaps this is an indication of things to come for Ford, judging by the behavior of the people in Dearborn.

"Last week we had folks driving from 20 miles away for Ford stock," he said.

This week, Village Ford offered 100 shares of stock to everyone who buys or leases a new Ford car or truck through Nov. 19. Wheat said," Our customers asked us to expand the promnotion to give them more stock. They liked the idea of getting something that could grow in value."

Sep 18, 2008

New energy behind continuous improvement

DTE Energy, based in Detroit, seems to be experiencing a breakthrough in developing a lean culture, just in the last few months. The skeptic in you has already said, “A few months does not change a culture.” Leaders at DTE know this, and have the need for sustaining change clearly in their sights.

The company has been working to implement lean and six sigma for about 10 years now, with some notable gains, but as in many companies, it remained the domain of somebody else. The focus had drifted to cost cutting. It was about projects and tools.

Then the continuous improvement folks talked some top executives into attending a weeklong class conducted by the Toyota Supplier Network. They came back on fire, ready to emulate companies like Autoliv that were on a more people-oriented track.

The goal was to get these executives to co-teach front line employees the same way of thinking, with the support of continuous improvement facilitators. It would be a hands-on class, held at a worksite, and the execs, managers, supervisors and frontline employees would attack a few problems together. They would come up with 50 ideas - small incremental changes - in five days. Imagine what that was like. VP-level leaders having to stand in front of a class and teach lean and six sigma concepts, employees cautiously eyeing them to try to spot insincerity, continuous improvement specialists crossing their fingers hoping the strategy would work, having to come up with so many ideas.

But it worked. Imagine now what it is like to see a VP sitting next to an operations scheduler for two full days learning what the problems are and helping a team start to solve them. Having him see that waiting for computers to boot up in the morning was costing time, and responding to somebody’s idea by authorizing the setup of a wireless network. I think you’d see leaders gain respect for people and their willingness to do a good job if barriers can just be lifted. I think you’d see employees start to think that maybe these front office guys are serious. Actually, you’d see that these high-level folks who mostly started as engineers having a great time being where the action is - at the point of activity, as it’s called at DTE.

Then what? How about repeated visits and coaching from these same leaders? How about them faithfully attending report-outs? How about hearing them repeatedly acknowledge that they have much, much more improvement to make, and that sustaining these gains is no easy task?

I’ve been graciously allowed this access because I’m writing another article for AME’s “Target” magazine. That won’t appear for awhile, but in the meantime, I wanted to give Lean Reflections readers a little preview. Getting management on board is probably the single most difficult problem in a lean implementation. If others can learn from DTE’s example, they may have the solution to it.

Aug 27, 2008

Great thinking from all over

My fellow lean bloggers are doing an awesome job sharing their thinking or discoveries, so rather than adding to your backlog of reading, I'll mention some of those I recommend reading right now:

Mark Rosenthal, The Lean Thinker: Toyota Profit Slips 28% as Truck Sales Fall
Profits, not losses

Kevin Meyer, Evolving Excellence: Toyota: Pioneer of Momentum
Wharton attempts to describe one of Toyota's strengths, but can't make their message intelligible.

Joe Ely, Learning about Lean: There's Clutter, then there's Clutter
Arguments for and against arranging stuff all over your desk. My memory is geographic which is part of the reason I keep stuff kind of messy. But really, we need to discuss why I have so many projects in progress, which is inventory in itself.

Lee Fried, Daily Kaizen, Real and Transparent
A year after the usual "happy talk" meeting, this organization's leadership had changed. In a recent meeting...Individuals and teams spent time in front of their peers showing their “dirty laundry” and discussing some of the bigger problems that we still don’t know how to solve.  Leaders were no longer pretending to have all the answers and often talked about the PDCA process and learning.  There was a tension I could feel in the room that I think was healthy.  A tension created from a culture that is in transition and opposing mental models at play.  (Note  from Karen: I've been dipping into Peter Senge's Fifth Discipline lately and this is what he describes as a "learning organization.")

Pascal Van Cawenberghe, Thinking for a Change, The Business Value Game: v1.0 released
Ideas from Belgium -- Pascal and Vera Peeteres have been working on training simulations and asking for feedback. We simulate a situation where a group of salespeople sell projects to [onsite] customers  and need to decide what the development team will implement. The goal of the game is to make money by releasing features and by keeping customers happy (by releasing features).

Hal Macomber, Reforming Project Management, Latest Discussion of 8th Waste
Hal considers a recent debate over the 8th Waste and uses it to illustrate two wastes he and Greg Howell have spotlighted: Not listening and not speaking.  (Note from Karen: Aren't those the things come up in all our close relationships? It reinforces how work is really a network of relationships among people with a common goal. That's one of the themes that's emerging in the book I'm coauthoring about a world-record-breaking marathon of singing "Danny Boy." Let me know if you want our brand new sample chapter.)

Good job, guys!

Aug 14, 2008

Can a lean culture lead to peace?

Last October in Chicago I met some of the leaders from Bidco Oil of Kenya. Doc Hall later told me about some interesting aspects of Bidco's implementation of lean -- Gemba Kaizen in their parlance -- Maasaki Imai has been one of their guides.

I kept thinking of the Bidco people when Kenya erupted in violence a few months ago. I had heard that there were some problems maintaining their extraordinarily slender and customized distribution chains, and thought I'd check their website to see how they were faring. This press release caught my attention:

HOW BIDCO QUELLED TENSIONS AMONGST ITS STAFF DURING POST ELECTION VIOLENCE

Following the delayed release of the 2007 General Election results, chaos erupted in most parts of the country. There were nationwide protests and an outbreak of violence seemingly driven by ethnic and perceived political affiliation. Thanks to pro-active policies and a strong fabric of cultural diversity, combined with swift decision by the management, it was business as usual at BIDCO.

A committee was formed to deal with all emerging cases related to the post election violence. It comprised of staff from each department and of all ethnical and racial background. All the workers were asked to suggest practical solutions and responses that the employees should take in order to foster the strap line of “Happy Healthy Living”.

Among the measures that the employees suggested and then acted upon were that there was to be no political talk in the offices, no talking in vernacular language in the offices or at the Gembas (places of work), No scare mongering, No sending of hate messages/emails/talk/sms etc, and No hypocrisy. All these were aimed at encouraging unity in diversity amongst the staff.

BIDCO encourages openness at all levels of management by involving all employees in decision making and reorienting employees on to the organization goals. This has helped make every employee feel important and resourceful to the company. There are also clearly set out recruitment policies where the company hires staff purely on merit. At BIDCO, everything is about team work; hence employees have realized that they need each other to succeed, despite their ethnic or racial background. All this is aimed at ensuring ‘Happy Healthy Living’ amongst Bidco’s employees.

Anyone's PR department could say something like this, of course, but I'm inclined to believe it. Bidco has an unusual grasp of cultural diversity, to the point where they have a deep understanding of home laundry practices among people of various tribes in Kenya and other African countries they have markets in.

I'm sure the challenge was not as simple as the press release makes out, but in this uncertain world, it is encouraging to see what attention to a fair and cohesive team culture can accomplish.












Jul 31, 2008

Maybe we could rob Peter to pay Paul

Two items in today's news provide quite a contrast:

The first, from the Daily Executive Briefing you can get as a member of SME (really, you should join), says that we ought to spend our tax money to bail out companies that couldn't figure out things that Toyota and Honda have been doing right ---

The AP (7/31, Thomas) reports that car companies "could receive up to $6 billion in direct loans to modernize their assembly plants to build gas-electric hybrids and advanced vehicles under an agreement reached Wednesday by Senate budget leaders." Of those funds "$300 million would help research and develop advanced batteries critical to plug-in hybrid vehicles," Sen. Debbie Stabenow (D-Mich.), "who has sought the funding," said.

The Detroit News (7/30, Shepardson) added that the $6 billion "for Detroit's Big Three automakers, which have struggled to raise funds in a weak credit market," would be "in low-cost loans." According to Stabenow, "the Senate [will] consider a second stimulus package in September, which will include a portion of the $25 billion in loan guarantees over five years for auto plant retooling." Stabenow explained that "she had won an agreement from Senate Majority Leader Harry Reid to include the $900 million in funding" necessary for Congress "to back the $6 billion in loan guarantees for automakers." Senate Democrats described the "$300 million funding for advanced battery research" as "necessary 'to help resolve problems in developing long-term, cost-effective storage systems, the biggest hurdle to bringing plug-in hybrid or pure plug-in vehicles to the marketplace.'"

The Detroit Free Press (7/31, Hyde) notes that the legislation "will run into the election-year politics...and Democrats did not offer details on how they would pay for the measure. The Bush administration has said it opposes a sequel to the $168-billion stimulus program passed in February." Senate Democrats argued that "the bill would create about 200,000 jobs, including 60,000 in the auto industry through the Advanced Technology Vehicles Manufacturing Incentive Program."


The other came via Google News from Market Watch. You won't be surprised at that -


Exxon Mobil on Thursday said second-quarter net income rose 14% to $11.68 billion, or $2.22 a share from $10.26 billion, or $1.83 a share in the year-ago period.



Really, if we want to give money to automakers, why don't we make the oil companies - whose prices have killed sales of higher-profit vehicles - some temporary help? Then we can continue to waste oil on unrealistic commutes in SUVs, but we could buy some time for the Detroit Three (they're not the Big Three anymore) to rationalize their product line and figure out how to reduce costs to the point where they make some profit on prices that represent value to the customer.






Jul 30, 2008

Leadership lessons from Danny Boy

I have not posted to this blog as much as I would wish in the last couple of months, but I have what I think is a good reason. I am coauthoring a book with AJ O'Neil, owner of a coffeehouse in Ferndale, Michigan. Last March, AJ started off a whirlwind when he decided to have a 50-hour marathon of singing the song "Danny Boy" in the days up to and including St. Patrick's Day. When it came time for this thing to take place, there were stories in hundreds of newspapers around the world, interviews on public radio in four countries, coverage on CNN and a visit from Jennifer Granholm, Governor of Michigan, where she led the crowd in singing the song. The time goal was achieved, although Guinness has rejected the record because they don't have a category it fits in. So when AJ invited me to help with the book, as improbable was his promise that we'd be on Oprah promoting it, I decided to go along.

Click on the picture to see a few more...



I could see early on that Danny Boy had some lessons for lean leaders, but just hadn't teased them out of the 50 interviews and e-mails going into the book. But I might have known, AJ came up with a pretty good one to start with. It must be said that until 18 months ago, AJ had never owned or even managed a retail food business. He was a roofer. Dennis is AJ's brother, who has some cognitive disabilities, but a great many other types of intelligence. Dennis is AJ's key employee in the coffeehouse and he makes a great tuna sandwich and serves it with true caring about his customer. Here's AJ:

An outsider on one of our roofing jobs might see me loading heavy shingles on precarious peaks very high off the ground, then measuring, applying and facilitating an installation job to complete a finished product. complete with flashing, capping, and trimming to what may appear to be a lion's share of the work.

Dennis would be either assisting me by handing me shingles, one at a time until completion, or meticulously cleaning the ground and throwing out all the debris into a dumpster. He may have to root through a messy truck bed to find another hook blade, or a piece of metal or some such thing. An average bystander might think that he has the easier of the tasks on this job, that his percentage of total work load might seem much simpler.

What they would not see is the years of experience and dedication that both of us had put in, to streamline and create a system where each of us knows exactely what we are doing, and we have found the fastest, most efficient way to complete a job with the minimal amount of effort on BOTH of our parts.

What they would not see, except for the fellow roofers with whom we have taught, is that we are completing a job that would easily be a four person task; quickly, easily, and with as little exertion as possible. We will take breaks as often as we need them, whistling and singing and joking as we work, and our job will be done so well that we will get complimented and referred to by our customers. That would be the norm for us.

We have found a way to take the best of what each of us had to offer, find a common goal, and streamline that into utmost efficiency. We did not go out and define this ahead of time. We just became open to learn from each other, not to compare abilities, but to identify with what each other best brought to the given situation and , as the comedian whose name escapes me puts so well, "get 'er done!"

That is precisely how the Danny Boy Marathon evolved. A task was before us , all of us in this case. I had "sold" a job, the marathon, and that was the task that we were facing. We had, just as a roofing job, a well defined goal. In the case of the marathon, our charge was to complete fifty hours of non-stop performing of Danny Boy. We had a specific start and finish time, an array of workers and were able to do just as Dennis and I had learned to do; that is to find a way to take the best of what each of us had to offer. We knew our common goal and we streamlined that into utmost efficiency. We were open-minded to each others abilities and identified with them. We brought the best of what each of us had to the given situation and we "got 'er done!"

Needless to say, we whistled, hummed and sang along the way! I hear so many comments at how well organized our event was. Truth is, we only had these principals to go on. This had never been done before, by us or anyone else. Anything can get accomplished if you have ethic and principle to guide you. Work is so much a part of a persons life that I would hope that what Danny Boy teaches us all is that work does not have to be bad, awful, drudgery. We all will go through these periods, to be sure, but it does not have to be the norm!

While it sounds like it ran like clockwork, its organization was almost completely improvised. AJ didn't write any job descriptions or org charts. He just talked about the goal endlessly to anyone who would listen and they began to believe it could be done -- if they just gave what they had. So a video engineer came in and set up the stage, the sound system, the video recording system and the flow path for the performers. Where the plan for flow didn't quite work, a choir director quickly tried out and found a better way. People who had run open mics before organized themselves into a battalion of hosts to keep things running, even overnight. People who had never even thought of it before in their lives wrote and sent out press releases.

It went on and on...which is what the book is about. So AJ just sent me the paragraphs above, and I have to get to work on the project that's become a joy to my heart and a perfect way to spend many hours of interviewing, writing.and editing.

Jul 16, 2008

Engineering and art intersect

For you geeks (I say that in a good way - I married one and gave birth to another) who love 3D simulation, fancy data gathering, and technology you probably already know about Velodyne Lidar that lets you do things like:

Applications
Autonomous vehicle navigation (commercial and military)
Automotive safety systems, adaptive cruise control, lane following
3-D mapping
Surveying - mobile, as-built
Robotics
Research
Autonomous agricultural vehicles
Movie set rendering
Mining vehicles, profile monitoring
Tunnel surveys
Security - building perimeter monitoring

Well, it's penetrated art and the making of music videos. Take a look at this



Be sure to view this video about the making of the video.


Info about the video on Stereogum


Also here's a discussion of the technology

If nothing else, you can at least talk about Radiohead to your kids or younger associates and see if they think you are any cooler than you were.

Must be a lean application in here somewhere - maybe you can think of one and tell us about it.

Jul 12, 2008

Why it's hard to change

In order to be effective, truth must penetrate like an arrow - and that is likely to hurt. Wei Wu Wei

Jul 4, 2008

The retail gemba

People who know me know that I take shopping seriously, so naturally I want to read about it. At the risk of making this blog a book recommendation site, I have to share a story from "Why We Buy: The science of shopping" by Paco Underhill. His consulting firm, Envirosell, is based on the premise that you can take the anthropological view of marketing - watch what people do when they are shopping, then use that knowledge to make it easier for them to buy your stuff.

The lean view of that is that shopping and buying are part of a process. The purchase is the product of the process. So you have to go into the store and watch what happens. Underhill's observers spend hours watching and making notes, videotaping, and studying all the factors of the shopper's gemba.

Here's a fun story:

A company had a new line of microwave popcorn meant to appeal to kids and advertised it heavily on the TV shows kids watched. Food companies select positions in grocery stories and pay rent for shelf space, and the company assumed the parent would buy the popcorn when the kids started asking for it. So they put it on a shelf at a height convenient for the parent to pick it up. The product was flopping.

A gemba video showed one reason why. A little boy was making "repeated flying leaps at the shelf where the popcorn was kept, trying to knock one to the floor. He finally got it down, but when he took it to mom, she said no. Dejectedly, he put it back on the shelf -- not where it had been, but down at his own eye level. And sure enough, the next kid who came by saw it, grabbed it and tossed it into his Dad's cart, where it remained."

Obviously, a bunch of folks in a conference room make poorer decisions about how a process will work than if they go where the work is done and learn something first. The other lesson you already know -- a lot marketing people have watched the gemba and know exactly how to get your kids to make you buy stuff that's not on your list.

Jun 24, 2008

Mississippi welcomes Toyota with education


This morning in the
Northeast Mississippi Daily Journal, the editor wrote Mississippi is supporting Toyota's new plant there by investing in education and research:

Gov. Haley Barbour, University of Mississippi Chancellor Robert Khayat and Toyota officials on Monday unveiled designs for the chief higher education component of the state's investment in the Toyota Motor Manufacturing Mississippi project - a $22 million Center for Manufacturing Excellence at Ole Miss in Oxford.

It will link the School of Business and the School of Engineering...

The engineering school will offer a new bachelor's degree in mechanical engineering with an emphasis in manufacturing. The School of Business Administration and the School of Accountancy will offer a minor in engineering, with emphases on lean manufacturing and production. Mississippi's community colleges offer lean manufacturing training and programs as part of their work force curriculums.

The editor sees one big omen of success because a Toyota executive in residence is part of the plan.

The article goes on to attempt to describe the philosophy and benefits of lean, which we don't need to examine, because just getting the term, "lean manufacturing" in print in a positive context is a help.

Money is to come from other sources as well...

Private sources, it is notable, also have come forward with support. The Robert M. Hearin Foundation will give $750,000 for a manufacturing internship program to link the university, the center and state manufacturers. The Mississippi Power Foundation has pledged $500,000 toward the center.

The editor's final sentence shows that at least someone on Northeast Mississippi sees why the center is good for manufacturing in the area, and why manufacturing is good for Mississippi...

The center's development creates the potential to more strongly link a wide range of manufacturers in Northeast Mississippi and statewide with the forces and efficiencies dominating the worldwide market.

Appeared originally in the Northeast Mississippi Daily Journal, 6/24/2008, section B , page 3

Jun 11, 2008

Metrics for Little League Baseball

Mike and I were talking to my brother-in-law Bob the other day, and got on the subject of our nephew, Bobby, age 11, and his Little League baseball team. Bob said that the team isn’t winning a lot of games, but the kids were having fun. He had asked Bobby what he liked best about playing baseball and he said, “Shaking hands with the kids on the other team after the game.”

Do you want a kid like this working at your company? Of course you do, if you want people to work in teams. Is Bobby just a really nice kid? Well, he is, but something must be going on with this team to make good sportsmanship more important than beating the other teams. So I asked about the team’s coach.

Turns out he’s helping all the kids develop confidence, mutual support and respect for people. He’s not all over the kids to play well or yelling at them about mistakes. He gets it that kids’ sports are about having fun.

There was one kid who, like a lot of us at age 11 or 12, was just not athletically talented. He couldn’t catch, he wasn’t all that good at throwing, and his batting wasn’t so good either. After a couple of games, he dropped out. A coach fixated on winning would have counted his lucky stars, because the game would be played by more competitive kids.

But this coach called the mom and encouraged the boy to come back, that it didn’t matter if he wasn’t the best player, that the team wanted him to play again. The boy rejoined the team. Bob said that at the games now, when this kid was up to bat, his teammates encouraged him and when he made a mistake, supported him anyway. This isn’t going to improve their won-loss record, but it will make them more team-oriented people.

In your shop or office, of course, you wouldn’t want to just accept a lot of mistakes but we’d hope you wouldn’t just blame the person. You can’t change the process much in baseball, but you can change it in your operation. You might see what help you could provide the person – there’s the story of the kid who just needed glasses so he could see the ball, for example. There might be a more appropriate job. When I was in junior high, I got to be on the field hockey and basketball teams by taking the manager job. I could keep score and bring oranges for the players at half-time, even though playing was out of the question. There might be extra training and practice. Maybe the kid never played the game before and will do much better next year.

So think about Little League today. What’s their key performance indicator? Yeah, the score is the first thing that comes to mind. But how about counting the smiles and sincerity on the faces of the kids when they shake hands with the kids on the winning team at the end of the game that they lost? Fun and learning is what the ultimate goal for kids’ sports should be. I think Bobby’s on a winning team, no matter how many runs they score.

Jun 8, 2008

Help re-format my blog

I just "upgraded" the format to my blog in blogger. Usually I can figure out what's going on in a Google product, but a few things here have me baffled:

How can I get rid of the underlining on post titles?

How can I use an RSS icon in the right-hand column to update you on new posts instead of Blogarithm? There's an atom subscribe option at the bottom of the page, but who'd see that?

Looks like it discards Site meter to make you use Google analytics. I suppose I can live with that.

Otherwise, I love some new Google things: Customizing my iGoogle home page, Google Doc online collaboration, Picasa, Notebook (much easier than bookmarks). Calendar is OK. The "Task" gadget I found was crummy.

Google encourages innovation by having a job where you just travel the world and do whatever you want so you can produce really new things. And it buys companies with interesting applications and brings them under the Google umbrella. When you're in beta, you know you're in beta. Some things don't work as well in Firefox as they do in Explorer. Known bugs are listed, and your opinion is asked about features. You feel part of a community of really smart people.

Try a new Google thing today, just to nudge some new ideas. Look at the top left of your iGoogle page and pick something. Go ahead and use iGoogle. One thing... they make you think you have to set up a gmail account first, but you don't.

Jun 7, 2008

Top 100 mistake-proofing devices

Here's my nomination for one of the best poka-yoke devices ever - the tethered gas cap. I heard a tapping as I drove up Inkster road today after filling my tank at the Mobil station (don't ask - at least I have a little Volvo). Aaah...must have forgotten to close the filler tube. Yes, and I didn't have to drive back to the station to get it. Without the cap being tethered, I wouldn't have even have heard the tapping. I'd just be slopping gasoline all over the place. Thank you, unrecognized engineer!

May 22, 2008

Lean, Reliable and Lubed

Hello from Nashville! Today was the last day of Noria's Lean, Reliable and Lubed conference here in Tennessee. Nearly all of the 1,500 people who were here are on their way home now, but Mike and I are at the start of a road trip. So here's a quick report.

Brett O'Kelley of Noria was kind enough to arrange for me to attend as a member of the press (representing AME's Target magazine), and I met Paul Arnold, editor of Noria's impressive magazine, Reliable Plant, as well as several other knowledgeable (and young) people.

Noria is an interesting group. Starting out as consultants in the machinery lubrication business, they branched out into education, and extended their range of subject matter to maintenance - or ensuring equipment reliability - in general. In the last few years, they have taken the interesting step into lean manufacturing. Thus the conference brought together three different but related groups of folks. The exhibition reflected Noria's roots - suppliers of various and sundry oils and fluids, devices for filtering and treating them, and services for making it all work right. Execution of all aspects of the event was flawless, right down to Brett's presenting some of the conference center's door monitor ladies with the flower arrangements that had decorated the registration desk when all was being disassembled. Nice touch - respect for people.

I was happy to see some familiar names on the lean speakers roster: Ross Robson, Richard Schonberger, Michel Baudin being some of the better known. It was a special treat to see some newer names added to the agenda - Mike "Got Boondoggle" Wroblewski from Batesville Casket Company, and Mike Thelen from Hub City (you might have noticed Mike Thelin's posts on the NWLEAN forum). I've been impressed by the two Mikes for a long time, and it was cool to actually meet them in person. They both gave engaging presentations. Be sure to ask Mike Wroblewski to explain "Think Milk." Ross Robson was very generous with his time and thoughts in several conversation with the two Mikes and me.

On the reliability management track was an acquaintance from a number of years ago -- Terry Wireman, who has written numerous books on TPM, reliability and other facets of making equipment available when you want it, and working the way you want it to. Back in my SME days Terry worked with our video producers on some educational products and we distributed a couple of his books, so it was great to renew the acquaintance. And in the fluids management world, it was nice to be able to hang out with Paul Hampton and his associate, Jim (forgive me for forgetting your last name), from Industrial Fluid Systems in Warren, Michigan. Paul and I are both officers of SME Chapter One in Detroit.

My main reason for wanting to go to this event is that I don't hear a whole heck of a lot from people in the mainstream lean space about maintenance and reliability. It's one of the fundamentals that must be in place if flow and flexibility are to be achieved, but in most companies, maintenance people are taken for granted. Somebody wants to save some money and it looks like you could cut a few guys from the maintenance crew, stop training them, limit the tools and technologies they have access to. Or worse, get the technologies and get rid of the people. It was the kind of gathering where you could hear about a lot of stupid things some well-known companies are in the habit of doing. And some of the smart things the smart companies are doing.

On the other end of the spectrum, the straight-ahead lube and maintenance guys and gals haven't had the opportunities to learn what lean is and can do. At least here, they could walk three rooms down the aisle and sit down with the lean crowd and start separating fact from fiction. We need more ways to break down the functional silos on our manufacturing floor by sharing some education and ideas. Kudos to Noria for making it happen. Not without risk.

A couple of keynotes were very revealing. We've heard about how Bridgestone/Firestone and Boeing, among others, are doing with lean manufacturing. But the stories of how they are integrating all that with maintenance and reliability have been under the radar. I've got a nice collection of business cars and face-to-face encounters so I can try to bring those stories to the surface for the general lean community. When I brought up the idea to Target editors, Doc Hall responded that we hadn't done much on reliability lately, so I'm encouraged that AME is ready to make it visible again. Now all I've got to do is the research, interviews and writing. Eventually it all comes down to the work.

May 17, 2008

The gemba of poverty

I’m reading a book, “Out of Poverty” by Paul Polak, that I have to write about before I even finish. If you only read the first chapter, your understanding of how to help people in extreme poverty will change forever. The book is “Out of Poverty” by Paul Polak, and he talks about people who live on less than $1 a day.

Most are in remote places – Nepal, India, Zambia, for example -- with no access to markets or jobs. They scratch out a living on farms of less than an acre, and go hungry when monsoon or drought destroys their crops.

Most people's first reaction when we learn of disaster or poverty is to want to send money or food. That’s the opposite of what Polak proposes. I don’t know anything about Ron Paul except that he said that such help taxes poor people in America to give money to rich bureaucrats in poor countries. Think about it.

Jeffery Sachs has been preaching that we need to look at these remote areas of poverty and help farmers increase productivity of their farms, as does Polak. But the approach of such thinkers has always been to give those farmers improved hybrid seeds and fertilizer, or to fund the digging of wells, and such like.

Polak has spent decades at the gemba of world poverty and has talked to poor families and walked their plots of land with them, listening to their understanding of their own problems. Large wells, more expensive seeds and fertilizer end up helping larger farmers, not those most in need of help. “Water lords” who own the land where wells have been dug will sell water to desperate small farmers at exorbitant prices.

What Polak has learned is the simplicity of the lean approach, though he probably doesn’t know a word of the lean lingo. He’s listened to thousands of people explain what is keeping them poor. Yes, there are ways to bring new ideas, but they have to fit what the local family needs, and be something the local farmer can do himself or invest very small sums in.

Polak respects these people as the ingenious and thrifty entrepreneurs that they really are. He learned from a farmer that he could irrigate a profitable vegetable field if he could utilize a very small source of water he had access to. He and the farmer came up with the idea of drip irrigation. What you’d have if you took your garden hose, punched little holes in it along its length and laid it next to your row of tomato plants. No large pumps. No sprayers losing significant moisture to evaporation before any water gets to the ground. No large well. No big expense. An investment, yes, but a small one.

Later Polak learned to his chagrin that drip irrigation had been used in Israel for a long time. But their systems were too costly. So he started going to university engineering departments and small inventors and asking for creative ideas. And found them. The challenge was always to come up with a method of irrigation, moving crops to distant markets, pumping water from small wells, and so on. But the idea wasn’t to give these things to those in need. It was to keep designing and trying until you had something that could be manufactured at a profit to meet a price point poor people could afford. Does that sound like determining value to the customer and working out the means of manufacturing to achieve costs that allow profitability? Does it sound like right-sized equipment?

Sometimes the new invention fails the customer it is intended for. The inventor learns at the gemba of the farmer’s field what the problem is, then goes back and improves the product.

The other requirement is that systems be scalable. As the poor farmer accumulates a small fund of savings, he or she is more than willing to invest in his business. So if he can afford only to irrigate a quarter of an acre at first, he can afford to irrigate another quarter acre a couple of years after first achieving profitability. And scalable in the sense that the tools or equipment can be manufactured locally, and it’s something can be produced around the world in the millions.

Why does Polak expect the manufacturer of the new product to profit? Because that creates work and prosperity for local people too. These are products that initially take minimal skill and minimum materials. Building little donkey carts, for example, if food can be produced but not transported to markets, by giving local people simple designs, attainable manufacturing skills and easy-to-find materials.

Polak has a “don’t bother” rule, if his local customers and distant inventors and engineers can’t come up with a product that can help thousands. It it’s not viable in a large market, local entrepreneurs will have no reason to go into production and he can’t justify the time of expensive design teams with the know-how to do invent new products. Then local entrepreneurs won’t have the wherewithal to produce their own new products either.

It still boils down to money, but very small sums of money. How do the formerly dollar-a-day people use their greater income? For new investment, but also for clothes and school fees so their children can be educate, or medicine when someone is sick, or a cellphone that can connect a isolated people with the rest of the world. It’s not too different from the method Mohammed Yunus developed for microlending. The two approaches can be used together. And guess what - there's an organization, not related to Polak's International Development Enterprises, called Engineers Without Borders.

That should be enough for you to get the basic picture. It’s a book everybody should read. You should read it. Soon.

Out of Poverty by Paul Polak

Apr 26, 2008

Quality pays

Mike Spector, The Wall Street Journal (as published in the online edition of the Atlanta Journal-Constitution, wrote a few days ago about Ford's surprising improvements in financial performance. One detail jumped out at me: "...quality ratings of Ford vehicles spiked. That chopped $1 billion off Ford's warranty costs last year."

That's billion with a "B." In manufacturing, we often view quality - as we should - as an end in itself. Just doing it right, with the right processes and human systems, to meet our customer's expectations. But, obviously, there's a big payoff for getting it right. If you're trying to promote change that improves quality, don't forget to dig out warranty costs as a persuader for doubters.

Apr 24, 2008

New hotel sits empty for eight years

In New Castle, Delaware, there stands a hotel, intended to be a Radisson, built in 2000, that has never been used. It’s empty. You can’t find many bigger examples of waste than that.

The site is in a wetlands area, so there are specific requirements about the amount of land a building can use. In addition, most building codes require parking for a specific number of people based on the expected occupancy of the building. The capacity of the hotel will affect the acreage to be covered with asphalt.

All went well until the building was finished and the county noticed that it was two floors higher than what had been approved. Was it intentional, or a blunder made by both the county and the builders? Some say there are construction companies in Northern Delaware related to crime families. But maybe the county employees who saw and approved the plan were negligent. Or the developer had a miscommunication with its architects and engineers. All these claims have been made.

The county was outraged at the overbuilding. They refused to grant a certificate of occupancy. They said the builders could tear down the top two floors, or – get this – fill them with foam.

After eight years of legal wrangling and $1.6 million in attorney fees, buying and selling of the building, the original developers won $7.5 million from the county in court. It was a jury trial. Not hard to get juries to side against the government.

The new owners, who bought the hotel in 2003 for $11.2 million to add lodging for the horse racing track they operate, have found problems with the electrical system, fire sprinklers and temperature controls, fire escape stairs and fire doors. Hmmm… did they order enough stuff for the two extra floors on the hotel? Eight years of vacancy is a recipe for deterioration too.

Funny story. But think about the amount of copper, aluminum and steel sitting there for all this time. The polymers in the carpets, d├ęcor and plastic components – that will probably be scrapped – were produced from petroleum products. Labor was wasted in the construction, but also in manufacturing all the bathroom fixtures, doors and windows, and elevators. And fire control systems. And attorneys’ fees.

And it was a plain and simple human system at the root. Intentional or not, the lack of common understanding of the product and process produced a monster.

Apr 20, 2008

Farley's move from Toyota looks good to Ford dealers

First, understand that my husband Mike took a Ford early retirement buyout and our pension and healthcare insurance benefits depend on the future of the company. However good Fancy Feast is, I don't want to be eating cat food because all my money went to buy medication. After all these buyouts, there are a lot of us out here who will be up s**t creek -- and too old to do much about it -- if Ford can't turn around.

So I've got personal reasons for watching what happens under Alan Mulally, and now Jim Farley, the marketing guy hired away from Toyota. Obviously, no matter how much money you save through lean, you've got to sell cars. They have to be appealing enough to get customers interested. I've been bored to death by our choices of Ford products to buy -- Ford employees can't drive competitors' cars to work and expect to do well. We don't get the great deals you might think we do - the employee discount on the smaller cars we favor are meager, because the profit margins are so slim.

Today's New York Times ("A Star at Toyota, a Believer at Ford") profiled Farley as he led a four-day summit of dealers and top executives and it's more than reassuring. I'm starting to feel some hope. Since Bill Ford hired Mulally, I've been waiting to see what kinds of people he'd bring in to breathe new life into the company. (I've got a Google news alert with the words "mulally hire" so I can hear when there was news on that front.)

Dealers have a right to be skeptical and angry. Product that won't sell. Inventory forced on them. A 1970s ordering process that requires all sorts of workarounds. Tepid ad campaigns. Lookalike vehicles.

The dealers hammered the execs. But at the end of the conference, Farley stood before 1,400 of them, and said, "The work here is simply more important than the work I was doing at Toyota." And the article tells why he'd say that. He got a standing ovation.

I won't even try to list all the things Farley has said and done. The article does it better. At heart, he's a Ford guy. A grandfather who worked at the Ford Rouge River plant in Dearborn, and later became a Ford dealer. His first car was a classic 1966 black Mustang that he immediately drove from California to Detroit - that's what Detroiters do, drive cross-country. I need to know whether he spent a lot of time taking his car apart on his driveway, if I'm going to see him as a Detroit kind of guy. He'd need to know what it's like to have grease under his fingernails.

I'm cautious, but may be starting to be a believer that Farley is a believer in Ford, as well as experienced in understanding problems and finding solutions through people and product. A lot depends on him. He's at the end of the company that makes it or breaks it - next to the customer. Watch closely.

Apr 18, 2008

Toyota subsidiary cuts jobs in Long Beach

Yuri Kageyama of the Associated Press reported early this morning that Toyota will stop building Hino trucks at its TABC Inc., plant in Long Beach, Calif. Production will be be moved to Hino's other U.S. plant in West Virginia by July, according to a statement by Hino spokesman Hidenobu Tezuka.

That plant will continue to make parts for Toyota. Hino's annual production capacity in North America will be reduced to 4,500 trucks a year from 9,500. Hino's North American sales for the last fiscal year dropped 19 percent to about 6,600 trucks from 8,200 trucks the previous year, according to the AP story. The drop is blamed on high fuel prices and a slow economy. Hino is 50.11 percent owned by Toyota.

Toyota watchers looking for the company to make a misstep that violates its much-studied principles will ask, “What about the workers?” Kristopher Hanson, Long Beach Press-Telegram writer, says the company is offering buyouts to employees with 10 or more years of experience, with as many as 100 accepted. The reports also don’t say how many jobs are being cut, and whether there are enough contingency workers to make up the difference. Will full-time associates be let go, and how will the company help them?

Hanson reports that Louie Diaz, a TABC employee and vice president of Teamsters Local 848TABC workers said they were given a deadline of today to consider the buyout offer, (Hanson doesn’t say when employees were told about it) but that deadline may be extended. The Teamsters represent more than 500 workers at the site.

"It's an unfortunate situation where the company is taking good jobs from Long Beach and sending them off to facilities all over the place in other states," Diaz told Hanson. "We're very concerned."

As noted, the plant doesn’t have all its eggs in the Hino basket. The plant will continue to make other parts, so some workers will stay.

Elsewhere, Harley-Davidson announced it is cutting 370 unionized and 360 nonproduction workers from the payroll. Sales of the bikes are down in the U.S. and, although they are growing overseas, prospects don’t look promising. Some have speculated that Harley is limiting production to maintain its scarcity factor in marketing. Though Harley is among the best in lean production, it evidently likes long lead times between itself and its dealers’ order dates. Hey – it maintains the mystique that attracts buyers, so it’s a legitimate business strategy. Won’t make the workers, mostly in York, Pa., any happier, though.

Apr 16, 2008

Auto production shifts to and from Mexico

It was interesting to hear yesterday that Chrysler and Nissan are working together on some new vehicles. It was not surprising to hear that Chrysler will manufacture a pickup truck for Nissan in Mexico, and that the Nissan product for Chrysler will be made in Asia. But it may have been a rebuke to doomsayers to hear that current production in Saltillo, MX, will be moved to a plant outside St. Louis.

In addition, Chrysler and new partner Getrag will build an innovative fuel-efficient dual wet clutch (whatever that is) at a plant going up near Tipton, IN, that will employ 1,400 people. In Kokomo last month, workers at Chrysler’s casting plant learned that they will make transmission cases for the new transmission, and engine blocks for a new six-cylinder engine Chrysler will be introducing. Chrysler spokesman Ed Saenz said the company won't hire more workers to deal with the extra work, which says a lot for productivity gains there. The Kokomo Casting Plant employs 760 people, who are probably sleeping a little better after hearing the news. The new work for Kokomo casting and the Tipton plant are part of a $3 billion investment in powertrain upgrades by Chrysler in North America.

Chrysler would never make these moves based on labor costs alone. It has to be that executives are seeing the effects of excellent plants and total system cost that makes manufacturing in the U.S. a good deal.

Yet good manufacturing results may not be the only reason for the move to Missouri. Gov. Matt Blunt said in a statement that "…it shows that the pro-jobs, pro-growth changes we have implemented are helping employers and entrepreneurs succeed in Missouri." Let’s hope the state didn’t just buy the jobs.

And it’s an ill wind that blows nobody good. A factor in production decisions is the soft dollar. Ontario is getting anxious about jobs moving to the U.S. Catherine Madden, an analyst who tracks auto manufacturing for Global Insight, says, "…advantages have gone away with the U.S. dollar weakening so much." She said GM, Ford Motor Co. and Chrysler LLC may threaten to move assembly work from Canada to the United States in upcoming contract talks with the Canadian Auto Workers union.

Not all the automotive employment news is rosy, however. Striking workers at American Axle have raised the ire of Richard Dauch, once regarded as a friend of labor. Dauch made $10 million in 2007, but he wants the same two-tier wage concessions as companies like Dana have gotten that would pay new workers about $14 an hour. He’s been a holdout in current union negotiations, despite the fact that he’s idling his customers’ plants by starving them of parts.

Dauch has punished unions before by shifting production out of the country. An earlier conflict between Dauch and the UAW, says an article this week in Crain’s Detroit Business, hurt the Buffalo Gear, Axle & Linkage plant in Buffalo, N.Y. Workers there were slated to build axles for the next-generation 2009 Chevrolet Camaro muscle car. But after the union local declined to agree to contract concessions, Buffalo employees were told in September 2006 that Camaro axles would be built elsewhere. A little more than a year later, American Axle idled its Buffalo plant.

According to Crain’s, the UAW suspects the work will go to Mexico. That would mean the axles would travel 2,000 miles to the Camaro plant in Oshawa, Ontario. The trip from Buffalo would have been 120 miles, and the parts would cross two international borders instead of one.

In lean terms, that adds up to the wastes of time, flexibility, and resources. With longer distance and lead time, production plans need to be frozen sooner (not really a factor if other parts have the same lead time, however). Fuel for trucks and trains is costing more and more which has to add to the final cost of the parts to GM, burning it creates CO2 and particulate emissions and depletes finite stocks of oil. But as most readers know, hourly wages - no longer a dominating cost of production - distracts executives from considering total system cost of a product.

Apr 14, 2008

China's low wage future

There was an article on NPR this morning about China's "one child" law. As you know, that has been in place for decades and limits most parents from having more than one child. Now, two only-child parents can have two children. (There may be some exceptions for farm families, if I recall correctly.) When it comes to consumption of scarce resources, this has seemed to some as a good thing.

Demographers in China are now warning of some looming crises. One is a high proportion of older people who will have to be supported by a much smaller base of young people. Not so different from our baby-boomer crisis, except that we allow immigration and have a long history of mechanization and automation.

Another is that the birth rate for boys is much higher than that for girls. That is due to the cultural preference for boys in China, and the ready availability of abortion. Think it's hard to find a girlfriend here? Male Chinese engineers may have yet another reason to stay on after their education in other countries.

The third really has economists in China worried. Too small a labor force for low-wage manufacturing jobs, which will go to India or Bangladesh. It's no secret that lean and automation are increasingly important in the China of the future. But it sounds less likely that your job will go there. Better pick another place to worry about.

Apr 11, 2008

Increasing the supply of engineers and technicians

There's a big barrier to students who'd like to become engineers and it hampers the country's ability to keep up with the demand for engineers and technicians. It makes me think about a conversation I heard between my son and his cousin. Brian said he dropped out of school, where he was majoring in electrical engineering, when he couldn't make it through calculus. He now drives a route for Cintas and likes his job. (If you want to find a huge job market with high growth, it's for truck drivers. Think about it.) My son had also failed calculus. He didn't drop out of school, but did have a hiatus, where I forced him to retake calculus at the local community college and he managed to pass. He diverted his path to scientific writing, but parlayed a high-school program in Pascal programming into his current job in IT.

The nub of the problem was this -- Brian said, "Nobody told me how hard calculus was going to be." Chris said, "Nobody said how incredibly boring calculus was going to be." There you saw the loss of two potential manufacturing engineers.

Another thing nobody told Chris and Brian is that there are engineering-related career paths for those who can't get over the calculus hump. (Well, Chris's mom managed to interest him in the Michigan Tech program that combined the sci-tech writing with an associate's degree in mechanical technology.) Brian's dad was on a path from machine operator to plant manager, but they didn't really know about college alternatives to engineering.

I have a couple of proposals. One is that educators and employers think about how critical calculus is to working as an engineer. On the job, all the math is contained within CAD and CAM, finite element analysis and so on. Could there be an engineering degree that didn't require it? Business schools don't require it like they did when I was in school - I got an A in calculus, by the way, without having any mathematical vision of what was going on in the formulas. I was just good at memorizing.

I have a nagging problem with diluting the requirements, especially when I'm guessing that engineering schools in India and China are doing a better job teaching math. Or are they just washing out the same proportion of people from a much bigger population of beginning engineering candidates? Calculus trains the mind, if the student gets it, and the analytical thinking it requires must certainly sharpen one's ability to tackle problems. Could we do without it? At the same time, let's beef up our courses in statistics and teach its relevance to problem-solving. If taught right, applications of statistics like statistical process control are accessible to everyone from manager to machine operator.

If consensus is that no engineer can do without calculus, let's make a different change in the process that would increase production of engineering people. Employers should get across to schools that they should look at students who choose not to surmount the calculus obstacle and make certain that they are aware of other technical bachelors degree programs like technologist degrees and associates' technician degrees. Combining the technician AS and another BS like business or even writing as Michigan Tech does would go far to supply our manufacturers with smart non-mathematicians to strengthen our technical workforce. They don't present the alternative at that critical discouraging point in a student's education. Sorry Chris, but you wouldn't have made that choice if your mom didn't pore over the MTU course catalog and say, "Hm, that's interesting." You just thought it was your own idea. That's why engineering educators have to do the job. At the age of 18 or 19, the last person you want to listen to is your mom. Especially when she's forcing you to retake calculus as a condition of living at home in the summer.

And you manufacturing managers? Have you taken a good look at your employees who didn't go to college and identify those who'd be good candidates for technical associates' or bachelor's degrees? Are the only ones taking that path being forced to use all the hours they should be spending time with their families, or just refreshing their minds so they can help you solve problems, to pursue their educations? What about letting them take classes on company time? What about bringing the teachers to your plant to cut down on students' travel time to school? You could make this happen? Yes, I hear the old argument - "They'll take the education we've paid for and go somewhere else." Well, do you hesitate to hire a person whose current employer paid for their schooling? I don't think so.

The total system of giving talented people engineering and technical knowledge is not working. Dr. Deming probably said something about that. In fact, Dr. Myron Tribus, one of Deming's associates, did write a thought-provoking paper on the subject of education. But words floating through the air or living on paper or some server somewhere are not going to build the workforce we need. Employers and educators need to do a better job of informing students (and their parents) of the attractive opportunities for those who find calculus overwhelmingly difficult - or incredibly boring.

Apr 6, 2008

Parking system "improvement"

Yesterday Mike and I went to see Othello at the Chicago Shakespeare Theater in Navy Pier, which we do three times every year. That gives us time to have made comparisons over time.

Before you get impressed by my intellectual choice of entertainment, let me confess that I almost always snooze through a good part of the first act of a Shakespeare play. We saw a more experimental play the night before in which a character very similar to John Kerry talked about theater’s great ability to induce sleep. So I’m not alone in the gauche experience. Mike’s a very alert and knowledgeable Shakespeare fan, so I try to not feel too bad about the waste of ticket money on someone who can’t quite get into it.

Parking at Navy Pier on a Saturday is a challenge. Shakespeare Theater subscribers are guaranteed parking, so as you drive up to the guys waving you away from the parking entrance, you just shout “Shakespeare,” and they let you through. It’s the secret password.

We won’t even talk about the fact that we were routed to a different garage door from the usual and never saw our Shakespeare garage location, as we wound up and up past full parking aisles as curtain time drew even closer.

Personally, I hate Navy Pier. Mostly carnival, it attracts crowds that fill the high empty spaces above with echoing sounds of chaos. My nerves don’t do well under those conditions. The theater is a complete contrast – it’s rather like a place where you’d see a play.

After one’s entertainment, whether carnival of Shakespeare, leaving a big parking lot always takes some time because of the lines before the cashiers. Someone pondered the problem at Navy Pier and came up with an excruciatingly poor “improvement.” Some company made a lot of money for installing it, and the inconvenience in total system cost must be huge, if anyone measured it.

How does it work? First, you take a ticket when you enter the garage. Same as anywhere else. Then signs everywhere tell you to take the ticket with you because you’re going to have to pay inside before you leave. Of course, lots of people never notice the signs and leave their tickets in their cars. What happens if they don’t comply and they become a defect? Do they have to stay forever?

If you did notice the signs, you take your ticket and promptly stop thinking about the process. As you leave, you may become aware of the fact that long lines of people are standing in front of automated kiosks clustered by the doors to the parking lot. Approximately half the machines are not working. The other half have confusing instructions that take perplexed users longer to use than the designers estimated. Is it a benefit to have a long line of people clustered in front of the exits to the parking lots instead of a long line of cars at the exits from the parking lots to the street? Not for the customer.

As I waited in the kiosk line, irritably, I sent Mike off to see if there were any shorter ones. Sure enough, he came back and reported that if we walked about a quarter mile, there was a machine nobody knew about. It probably didn’t take any less time, but at least we were in motion.

So we passed the big obstacle and found our car. Now we might have expected leaving to be simple, except nothing ever is. When we get up to the exit, we see that the line of cars is about as long as it ever was. Also, you can pay by credit card right there, which I had done inside, so why didn’t I get that information before? There wasn’t a need to stop at the kiosk after all. And as we approach the end of the process, where we insert our paid-up card, we see that there is a parking attendant there. She is pushing a button to let each car through, because the card reader is malfunctioning. So much for saving on personnel costs.

So where was the big benefit, either to Navy Pier or to the customer? You go figure it out. For myself, I’ve got to stop expecting people to have actually thought through systems, because it makes me crazy when they haven’t.

Copyright @ 2005-2014 by Karen Wilhelm