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The troubles in the auto industry go much deeper than incompetance and greed in a single industry. It is representative of how American Management has run the manufacturing sector for the past 50 years. The crisis on our shop floors goes to the very heart of the adverserial relationship spawned by an eliteist mentality at our best university business schools.
Lets go back a few decades to see how men used to advance in our manufacturing industries. Very often they started as a laborer on the shop floor. First they learned how to sweep floors and do menial tasks. Then they acquired enough seniority to move up to running a machine. In time they bid on other, more complex, machines. Finally, when they completely understood a specific department, they were promoted to foreman. As foreman, they knew every job in the department, and how to solve problems in that department, because they had worked every job. Later they might advance to department manager, plant manager, or higher. But as they moved up the ladder they had a firm grasp of operations, and had earned the respect of the men working in the factory. These men knew that their boss knew as much, or more, then they knew.
Our industrial history is replete with examples of men who moved up through the ranks and became legends. An example would be Alfred P. Sloan, who started as a floor sweeper in a General Motors Plant, then rose through the ranks to become CEO of GM. There is Barney Kroger, who sold from a vendor’s cart and then founded the Kroger Company. Every employee at GM respected Sloan. They may not have liked Sloan, but they deeply respected the man for his knowledge and experience. The same was true of Barney Kroger and others. In Pittsburgh there was a steel company that made the famous “Long Tom” guns for our World War II ships. When a machine broke down and held up production, the president of the company was not above taking off his necktie, crawling into the oily, grimey machine, and showing repairmen how to fix it.
In my own family there are two examples of men who started at the bottom, and I mean the very bottom, and retired from high level management jobs. We lived in a four room tarpaper shack with no indoor plumbing in an Appalachian Coal Patch. My two brothers had to drop out of school, one from sixth grade, and one from eighth grade, to work in the coal mines to help support our family. They later got on as manual ditch diggers at South Pittsburgh Water Company. In the 40s and 50s most ditching was still manual, pick and shovel work. But fourty years later one brother, the one who dropped out in sixth grade, retired as General Manager of South Pittsburgh Water Company. He had engineers, microbiologists, and accountants that reported to him. The other brother, the one that dropped out in eighth grade, retired as Superintendent. He reported to my other brother, who reported directly to the president of the company.
Could this happen today? Are there men and women in the corporate world working their way up the ladder based on job knowledge, hard work, and experience? The answer to both questions is no. Our system has attempted to substitute classroom training and pieces of paper for knowledge and experience, and this is a root cause of our decline as a great manufacturing nation. Furthermore, people who actually do the work have been degraded because they have chosen to work rather than pursue pieces of paper. No matter their knowledge, ability, and work history, if they do not have a piece of paper they are lesser people.
This notion that people who work with their hands are lesser people who are not worthy of respect is deeply ingrained in our management system. The prescription for success is to avoid going to work, and, instead, spend tens of thousands of dollars, or hundreds of thousands, to earn a college degree, which will then qualify you to be in charge of people who actually produce the products that keep America humming, and know what they are doing.
The rise of this so called “Professional Class” after World War II doomed American manufacturing. It wasted our skill bank and put our future in the hands of men who never really worked for a living. The current generation of managers grew up during the unprecidented prosperity of the 50s, 60s, and 70s. The message they received was that only the stupid, the unmotivated, or both, went to work in factories. The future would belong to those who got college degrees, and would be in charge of the stupid ones actually doing the work.
A hierarchy of elitetism developed among this crop of future leaders. If you earned two degrees you were smarter than people who earned only one degree. If you went to a “big name” private college, you were better than those who merely went to state schools. Your bright and shining future would see you in charge of less smart men who went to lesser colleges, and who would be in charge of the really stupid people working with their hands in the factories.
While this was not a documented management policy, it was a deeply ingrained attitude throughout the corporate structure, as well as throughout society. You either went to college so you would “be somebody” or you were a loser. This meant that our manufacturing industries were men wearing suits, who were successful, managing the losers who built the products.
Unfortunately, it worked no better than the days of the Lords in their castles overseeing peasants who did all the work and served the Lords and Ladies. It nurtured a deep resentment and a distrust of those who ruled, and fostered a sense of outrage. Men who did not even understand what the machines did were the bosses of the men running the machines. They spent most of their time playing one upmanship and politics because if they stayed in one position too long, and did not advance, they would be seen as losers. Success was seen as working a series of management jobs in rapid succession, being on a job only long enough to grasp the bare fundamentals, and then being promoted to the next level. We ended up with a management structure that was not qualified to manage manufacturing plants, and a resentful work force who fought back by giving only the minimum required to avoid being fired.
It is little wonder that for years our productivity was stagnant, our competitive position in the world slid every year, and every year the quality of our products deteriorated. Maybe a Levi Strauss ad best sums it up: This Country Was Not Built By Men Wearing Suits.”
If the UAW wants a future, it has to let go of the past, and become an organization of professional, highly productive workers that companies will seek out. First lets take a look at the manufacturing sector today in the United States, and also how the UAW functioned up to this point.
U.S. manufacturing has been on a downward slide for at least 20 years. Most of these jobs will never come back. They have gone to low wage nations, and that is where they are going to stay. Membership in unions has steadily declined as well. So in the future there will be fewer opportunites in manufacturing, and most jobs will require trained, skilled workers.
But the UAW, as well as other shrinking unions, such as the steelworkers, coal miners, and others were geared to massive industries that required, mostly, grunt labor that were neither trained nor skilled. Membership in these unions, typically, required only that an employee be hired, survive the 30 day probationary period set up by the company, and then become a union member. Usually there were no educational or skill requirements. Many UAW workers had not even graduated from high school. Their job was mostly the result of luck, whereby they filled out the right application at the right company at the right time, were hired, survived the 30 day probation, and were admitted to the union.
The wages and benefits these union members received had nothing to do with what they produced. Wages and benefits were negotiated between the union and the company, and applied across the board to all members, whether they produced little or were very productive. Each worker received the same, regardless of his value to the company. This homogenized the work force, with each worker doing as little as the company would tolerate, since there was no reward for producing more or better quality. From my experience it produced a work force consisting of frustrated people who wanted to be highly productive, but were prevented from doing so, and a group of very happy, mediocre workers who could not survive if their livlihood depended on how much they produced.
The wages and benefits negotiated by the UAW were achieved by brute force. They either got what they demanded, or they went on strike and shut the company down. Eventually, the reasoning went, the company would see it their way, and agree to the demands, because if they did not they would eventually go bankrupt. They picked a “target” company out of the Big 3 to strike, knowing that the other two companies would continue to run, which provided the union with operating money for their “strike war chest.” The other two companies would also gain market share from the company that was shut down by the strike, thus putting more pressure on management to yield to the UAW demands. When the target company conceded, the UAW then went after the other two companies.
The UAW protected all their members, regardless of whether they produced or did not produce. They protected drunks, drug addicts, habitual absenteeism, and any and all violations of morality, ethics, or honesty. At Ford a UAW member attacked me with a knife. He was fired. But the UAW backed him completely and, after 4 months, he was returned to his job, with full back pay plus a factor for overtime that he would have had an opportunity to earn had he not been fired. All records of the incident were purged from his file. Another UAW member murdered his wife, and the UAW helped pay for a lawyer, and completely backed him, even though he admitted to murdering his wife. They negotiated with Ford to keep his job open, and his seniority running during the time that he was incarcerated. My biggest problem as a first line supervisor was getting sober workers that showed up for work. To fire a UAW worker, regardless of what he had done, required something akin to a Supreme Court ruling.
But that was then, and this is now. Today’s and tomorrow’s jobs will be awarded to skilled, trained people who produce. No company will be financially able to pay people who do not produce. Nor will they be able to tolerate a union protecting non producers via brute force. The laws of economics have not been repealed, and a person is only as valuable to a company as the work that he or she produces.
This new economy will take adaptation, and will not be easy. It has already happened in the coal fields. For 100 years coal miners were basically grunt laborers, shoveling coal. But a trained monkey can shovel coal. In today’s coal industry a coal miner is a highly trained, skilled computer savvy professional who has little need of a union because he can earn up to $100,000 a year and there is a shortage of skilled coal miners. His success depends entirely on his abilities and knowledge, as well as how much he produces, and companies compete for his services.
According to the Kiplinger letter, the UAW is mulling how to survive shrinking rolls, and is considering merging with another shrinking union, rumor being the shrinking United Steel Workers. But if they merge and continue to operate as they always have, they will continue to shrink as a significant part of American industry. So what do they need to do?
The need to become professional organizations that police their own ranks. They need to have entrance requirements. Members need to have qualifications to belong. They need to prove that they are productive, skilled workers with a strong work ethic. Management should not have to put up with workers who drink, workers who have attendance problems, or workers who do not produce. The union should take care of these kinds of problems.
If they changed to this kind of an organization, then companies would compete to hire UAW workers and the decline in membershipship would be over.The UAW needs to adjust to a world where a worker is compensated for what he produces, and not how much brute union force he has backing him up. Like it or not, that is the world that we now live in, and that is not likely to change in our lifetime.
Is Ford trying to convince potential buyers that their quality is good, or are they trying to convince themselves? Lets take a look at how Ford achieved quality that “cannot be beaten by Honda or Toyota.”
Before we do that, lets look at how Ford came to be known as “Fix Or Repair Daily.” Ford is probably the most notorious of the Big Three for defective quality. They had massive quality recalls, including cars that blew up on rear end impact (Pintos) and paid survivors hefty sums of money to keep quiet (Wall Street Journal). They had the largest recall in automotive history because of defective transmissions that killed over 200 and injured 1400. Only action by President Reagan saved Ford from bankruptcy on this massive recall (23,000,000 defective Fords). More recently they had defective ignition switches that caused Fords to catch fire, and many of those law suits are still in the courts, including a lady in Texas who watched her son and his girl friend get burned alive in a Lincoln. That case will be heard next March.
So how did Ford achieve “quality that cannot be beat by Honda or Toyota?” They didn’t. What they did do was try for 35 years to improve their image by advertising. If you hear or see something enough times, you will believe it. When they realized that the company might not survive because of decades of building shoddy cars, they made an effort to improve quality. Lets take a look at that.
First, they paid Toyota consultants to advise them on how to improve quality. But when the Toyota people looked at the Ford production system, they concluded that quality could not be improved, nor could productivity, unless Ford completely overhauled the way they did business. Then Ford hired Dr. W. Edwards Deming. Dr. Deming was a mathemetician who became known as “the father of quality.” He worked with Toyota, GE, IBM, and other corporate giants to advise them on how to improve, and maintain, a high level of quality. But Dr. Deming was unable to work with Ford.
He stated that Ford top management was the worst that he had ever seen. They were distrustful, conniving, and made up of competing cliques that fought each other. In one rancorous meeting, at Ford headquarters, it almost came to blows. Every suggestion made by Dr. Deming was opposed by one or another of the management cliques, fearing changes that would reduce their power in the organization. Dr. Deming visited various Ford plants, where he found embedded hostility, distrust, and a virtual war between management and the UAW. In frustration Dr. Deming gathered up his stuff and walked out, stating that the Ford system was a relic of the past that could not and would not change.
So how has Ford achieved quality that “cannot be beat by Honda or Toyota.” They hired Allan Mulally. Mr. Mulally immediately realized that if Ford did not change, immediately and drastically, it would not survive. He started to make changes, from the top down. He forced the company to build better quality. And, finally, after years and years, Ford has matched the quality of the imports. This is good, and I hope that it continues. But being an ex Ford supervisor, I have my doubts.
The economy will improve, and so will Ford sales. And then, if the past is repeated, Ford will go right back to its “get the numbers” mentality. Their high quality rating will slip back down below Toyota and Honda. I have seen this movie before. During the terrible 1974-75 recession, when I was a supervisor at the Sharonville Transmission Plant, Ford cracked down hard on quality. For about a year and a half we produced top quality transmissions. But then sales went crazy, and Ford could not keep up with demand, so they ditched all their quality rules and made whatever transmissions they had to make to reach production quotas. That is when Ford made the deadly transmissions that killed and injured, and received the largest recall in automotive history.
I hope that I am wrong. But I don’t think so. Ford sales are headed up, because of customers stolen from GM and Chrysler, both of which are headed for the ash bin of auto history. The data shows that Ford did not succeed in pulling many customers from Toyota and Honda. My best guess is that when economic recovery takes hold, and sales skyrocket, Ford will be like an alcoholic that falls off the wagong, and will go back to producing the same junk that gave birth to the slogan Ford = F ix O r R epair D aily.