Case 8.2 Change at General Motors-Holden

Patrick Dawson

Our illustrative case examines the introduction of cellular work arrangements at General Motors' (GM) hardware fabrication plant located at GM's Elizabeth complex in South Australia. The plant was built in the late 1950s and, by the early 1980s, operating with old and ill-maintained machinery, a trend of poor performance, heated industrial relations and low employee morale had taken hold. Senior management seriously considered - in line with operations in other parts of the world - closing the plant and outsourcing small component manufacture to local suppliers. As it turned out, they decided to recruit a new manager making it clear that the plant would close unless significant improvements were achieved in production, not least of which should involve reductions in the high costs of scrap, rework and inventory. In this climate of uncertainty and threat, the newly appointed production manager set about implementing a five-year programme of change involving unions, employees and outside collaborators.

The Plant Manager

The Plant Manager (henceforth referred to as PM) quickly gained the attention of all employees through highlighting the possibility of plant closure and stressing his commitment to improving the work environment and performance of the plant. Under these contextual conditions (the threat of job loss and unemployment) trade union officials and their representatives were willing to listen to the options open to them in revitalizing the plant and maintaining commercial viability. PM indicated that he would operate an open-door policy; if there was an industrial relations problem he would like to hear about it immediately and he would work with employees and their representatives in trying to find solutions that were acceptable to all parties. Although he encouraged individuals and groups to air their views and grievances, he also ensured that he presented an image of a strong leader who would not suffer fools and who was willing and able to make the hard decisions. He was also quick to identify critical players from the union side.

In seeking to gain greater union support where previous relations had been sour and adversarial, PM identified a number of areas where fairly minor changes could bring about substantial gains. One of these centred on a programme of cleaning the work environment and repainting battleship grey machines in bright primary colours. Prior to these changes the plant was a very dark and grey place with strong industrial smells and greasy floors. The high visibility of the extensive cleanup of the plant, in which floors were swept, aisles cleared and machines painted, was important in gaining the general backing from employees and in generating a greater belief in the ability of their local management team to get things done. Employee attitudes towards PM improved and a climate of hope for the future was being nourished and developed by these initial programmes of change (not unlike Lewin's notion of unfreezing). The importance of these changes was also stressed in an interview with two official representatives of the Vehicle Builders Union (VBU), who strongly commended the changes at the plant and contrasted the working conditions with other plants in the GM complex at Elizabeth. An apparently simple innovation (painting machinery and tidying the workplace) can have a fundamental impact on employee attitudes and trade union positioning. The significance of the symbolic action of PM is clearly highlighted by this case. For example, in a move to further strengthen the link with the union, PM provided a room for union representatives where employees could meet to discuss burning issues or concerns. This condition contrasted sharply with the vehicle assembly plant where tensions between management and unions were noticeably evident, and was an important factor that led to a more open and collaborative arrangement between union representatives and the local management team in the fabrication plant.

During these early stages, PM repeatedly made it clear to employees and their representatives that they were under scrutiny by senior management and that all jobs were on the line. He quickly built on his early achievements to restate that some hard decisions would have to be made and that employees would have to make some sacrifices in supporting change. In many ways, PM was building a platform from which a more substantive change programme could be launched. He was also building alliances and gaining the cooperation of key individuals and groups, and displacing others who might serve to impede his objectives and career agenda. A central concern of PM was the image presented of himself and the plant both to significant others within GM and to external agencies. This was to be the last major change programme that he would manage prior to retirement, and from a personal viewpoint, it was the one that he wanted to be remembered for. In building a 'committed' group PM recruited those who would be players on his team. Again, he was quick in identifying those who might block his personal aims to gain promotion and to retire on the back of a successful change programme. As he recounts:

The first five years were associated with people, getting the trust of the shop stewards, tending to weed out the people who were knockers, blockers, just either move those people to one side or get rid of them. And in the majority of the cases we were successful in doing that without any hassles whatsoever. The fact of the matter was, there was an early retirement programme going on and so we allowed some of the people to be pensioned off or retired with dignity.

Gaining union support for change

PM recognized the need for a network of support that ranged from employees and their union representatives, through to supervisors and managers as well as the senior management team (not unlike Kotter's guiding coalition). Once a climate for change had been achieved, PM set about implementing a pilot programme of new work cells to test the effects of change on employees. Interviews with employees in the initial cells proved favourable. Under these early arrangements the teams were self-supervising and were able to make daily decisions on the way work was organized and tasks allocated. After setting up an experimental cell that demonstrated the benefits of cellular manufacture, PM turned his attention to the need to sell this idea to others. As he explained:

From the union point of view, it wasn't much good talking to the union until we talked to management. After that we talked to our staff and basically informed them of what we were looking at and why we were looking at it. Similarly with the union people, mainly the VBU [Vehicle Builders Union], because the VBU were the people who would be the most effective group. Then we went to the other shop stewards involved as we went further down the track, but they were involved much later. We spoke to them as a team, our management team with the union people. There were times when we had discussions on the shopfloor, there were times when I spoke to the union people on my own, especially when we were talking to the union executive further down the track, but there was a general principle that it was a team effort convincing our union people. They would not be disadvantaged by it, the company would be advantaged and we would be multi-skilling the workforce. We had the opportunity we saw to increase financially the take-home pay of our people and they would share in the improvements that we made.

In approaching the VBU, there were some concerns over the implications for jobs. PM claimed that he had to guarantee to the union that there would be no job losses to members. The union also wanted full consultation throughout the change programme and consequently a lot of time was spent briefing the shop stewards and talking to employees in small groups. In terms of trade union involvement in cell design, this has largely been in terms of shop stewards. From the plant manager perspective, all senior shop stewards were involved in discussions with plant management on plant restructuring and the setting up of cells. However, in the view of the VBU, there was one particular senior shop steward who got heavily involved with management and made most of the decisions without actually consulting the other shop stewards. A close relationship was formed between PM and this particular shop steward and a major problem (from the union perspective) was that the information on these decisions was not getting relayed to the union officials. As a result, there was a change in leadership and closer scrutiny was made of the plant by the VBU. As a whole, full-time union officials have tended to leave the process alone and to monitor for any major industrial concerns or problems. As one union official recounted:

We told shop stewards in the early stages when PM and myself were servicing the place, just to keep an eye on it and let us know if there's any industrial matters being talked about. Anybody trying to screw the union and so on and none of that ever happened. So it was just mostly concerned about quality and working together and making people happier in the jobs they were doing and so on. So I've never had any problems at all with it and still don't have problems.

The demise of forklift drivers

Forklift drivers were concerned about job loss and were vehemently against the changes taking place. Their positions were reduced from 15 to 4 over a matter of months and yet the grievances of this group were not acted upon by their union representatives:

Some of the old timers there, especially the production workers and forklift drivers, say: 'shit this is not going to work, how can you go from here to get materials to there and there without forklift drivers'. I think maybe they're talking because they know their future isn't going to be around, because at the moment you have 15 forklift drivers. So they're kind of looking more at their future jobs than anything else and they're probably thinking about trying to bloody have a negative attitude towards it.

This quotation from a union official illustrates how casualties of change were not only expected but also accepted. An almost utilitarian philosophy predominated with limited action for the minority in support of better conditions for the majority. In the context of plant one, relations between employees and management were comparatively good and the account of management (in promoting PM as the champion of change) although not endorsed, was not openly disputed. Provided the changes were viewed as being beneficial, then the union's position was to maintain a hands-off approach and yet also to ensure that shop stewards maintained their loyalty to the union and were not absorbed into the more conservative ideology of management and, in particular, PM.

On a number of occasions and throughout a range of interviews, union officials and their representatives pointed out that PM was one of the most conservative managers within the GM complex. For some, this raised a contradiction whereby this more traditional conservative manager was seen to be better at relating to employees than many of the younger, 'trendy' managers. Although recognition was given to the organizing, communicative and delegating skills of PM, from the union perspective, the notion of PM being the champion of change was seen to overstate his role in the process. There were a lot of stakeholders involved, either in actively supporting the process or in not seeking to block what was viewed as a beneficial and important change. The VBU, through evaluating change and speaking to employees on the shopfloor, decided not to put any barriers in the way of the process. Their articulated view was that given the economic threat to the survival of the plant there would be a lot of support for any change initiative that sought to save jobs and make the plant a commercially viable entity.

Building external collaborative support

On the basis of their initial experiments, PM and his local management team were convinced that restructuring the plant under group technology principles could be justified in the pay-off from reduced material handling costs alone. However, they required external expert assistance to help them design a workable set of cells. In their search for and assessment of options, they identified an American company who possessed the necessary expertise, but at a cost of over $1 million, it was an option that they knew would not be supported by senior management. As it turned out, one of the local management team members was friendly with an employee of the newly formed Division of Manufacturing Technology (DMT) within the Commonwealth Scientific and Industrial Research Organization (CSIRO). This group (with operations in Adelaide and Melbourne) were highly qualified but needed to establish themselves within the industrial arena in which they intended to work. The hardware fabrication plant at General Motors provided them with just such an opportunity, and they, therefore, agreed to use the project as a loss-leader, working at only a third of the normal commercial rates. Both parties had a considerable amount to gain from the success of the industrial collaboration and developed a network of mutual support which lasted beyond the timescale of the project.

The proposal put forward by DMT and accepted by GM advocated that the industrial collaboration be undertaken in three phases. The first phase was to comprise an analysis of current manufacturing operations (three months) in order to identify opportunities for cost reduction and to specify (and possibly establish) a demonstration-manufacturing cell as a test bed for further development. Three or more CSIRO employees and two full-time GM staff members would work together in the collection and analysis of data, and the installation of the proposed demonstration cell. In the second phase, the lessons learned and the concepts developed over the first few months would be further refined and expanded to formulate a completely revised manufacturing system for the entire plant. The third phase would occur over 12 months and involve the design, relocation, procurement and commissioning of all the required hardware for implementing the new methods of work organization.

As it turned out, both the timeframes and the phased approach to industrial collaboration and organizational change were continually redefined through ongoing processes of consultation and negotiation between the two major parties. For example, one of the major changes from the original proposal rested on the need to produce quantifiable results that could be used by PM to justify the continuance of the change programme. As a result, a demonstration cell was implemented in parallel with the development of cell-build software for the complete plant layout. Originally, DMT had intended to formulate a full design before any shop floor implementation; in practice, time constraints placed pressure on PM to show real gains for funding purposes, putting pressure on the DMT team to produce workable pieces of the system. The demonstration cell was scheduled on ten-day runs and could have 70 individual assemblies. During this time, continual improvements were made in response to problems identified by the operators. There were regular meetings between plant management and DMT staff to tackle issues as and when they arose.

Based on a series of positive results from the demonstration cell, local management submitted a proposal to senior management requesting the necessary financial support for the change programme. This proposal was rejected, with one senior manager suggesting that what was needed was not the rearrangement of old equipment but the purchasing of new machinery. At this stage, the support of DMT proved critical to these negotiations. In comprising a team of qualified experts (e.g., PM had worked his way up through the ranks with little formal education whilst the team at DMT had a range of postgraduate qualifications, MScs and PhDs), they were able to substantiate the benefits of change and present a coherently argued case for investment. PM mobilised all the support he could muster and submitted an amended proposal to senior management. He persisted in arguing the case for funding. Through a series of presentations supported by DMT, they eventually convinced the directors of the feasibility of manufacturing cells. Although the support case proved difficult and the funding obstacle came close to causing a premature end to the change project, orchestrating others to fight the cause and persisting in the face of rejection were critical political elements in achieving desired outcomes.

Implementing cellular work arrangements

In their collaboration with CSIRO, the redesign of the plant into cellular arrangements involved a large number of collaborative group discussions. Working within an agreed set of design constraints, the CSIRO presented the first cut of plant cellularisation and requested their guidance on how the cells should be re-arranged to consider the shopfloor's detailed workings. Plant personnel were then required to closely examine current manufacturing operations in the light of the proposed design. Once they had made amendments to the design, it was returned to the CSIRO, presenting another blueprint. This cycle of events continued for nearly 12 months, and several significant changes occurred (see Figure 8.6 for a picture of the plant during the early phases of change). For example, this was when a separation was made between the smaller specialised cells (such as handbrake assembly, rocker covers and so forth) and the more giant multipurpose cells. The decision to create specialised cells arose from an emerging consensus that high volume output required a small number of parts requiring a small number of machines. The final plan centred on seven multi-assembly cells and seven cells dedicated to single assemblies.

Working in liaison with production, areas were cleared, floors were painted, and presses were moved. To minimise disruption, the relocation of the larger presses (up to 350 tons in capacity) was mainly done over the weekends and during the Christmas shutdown. Whilst these changes generated some aggravation between shopfloor operators and the tradespeople responsible for the equipment relocation programme; this presented a challenge used to stimulate enthusiasm among the change agents. Within the 12 months allowed, all the more extensive equipment was moved to its new location. In general, the shopfloor response to these changes was positive. Working conditions improved, noise levels were reduced, back injuries declined significantly, and employees could learn new skills and rotate between jobs within the work cells. The strong support by union officials and shop stewards turned out to be instrumental in allaying the fears of shopfloor personnel and in supporting a positive vision of the consequences of adopting cellular manufacture. However, many of these evaluations did not reflect a commitment to the principles of this new form of work organisation but to the recognition of the benefits associated with further improvements in the conditions of work (in terms of refurbished machinery, painted floors, easy die transfers and noise reductions), and in a decrease in the number of supervisory personnel and directive supervisory practices. Moreover, the plant was also breaking new ground in redesigning work processes to reduce physical injuries (mainly back strains) and counter the 'physical-strength' arguments against women's employment as die-setters. The increased variety in the work that enabled involvement in the entire work process (machining material from blank to finished components) was positively appraised by most operators. However, there were also casualties to change; for example, some employees did not want to learn new skills and wished to maintain the status quo:

We'd have to say a few things from an opposing point of view that we said would work, and they didn't work. When we developed the cell, the cell philosophy told us that unless you can do all of the things the cell requires, you are not suitable, and that was what we fully intended, to have everybody trained to be able to do their die-setting. Now we find that not everybody can do it, and not everybody wants to do it ... It frightened the hell out of some. They didn't want to do it, and they'd never tried. All they wanted to do was to be a press operator. It's surprising. My opinion has always been that people must be sick and tired of just standing there pushing the button, but that's what many people like to do.

In tackling these issues, not all cell members are required to learn a new set of skills. Management has revised its initial intentions, and the work cell leaders are now expected to accommodate both machine-oriented workers and those who prefer the new teamwork approach. In consequence, the character of the work cell, in being composed of a group of people working together as a team, has been modified by shopfloor employees during the period of initial operation. Whilst the first operational cells comprised enthusiastic employees keen to adopt the new teamwork arrangements, the remaining cells have been staffed by many who were never fully supportive of the changes. Accommodating their needs poses an ongoing problem for leading hands, who must coordinate and manage this potentially disruptive setup.

Aftermath

In the case examined here, the whole process has taken approximately ten years, from the initial stages of becoming aware of the possibility of restructuring work in the cellular form to the final cut-over. It has been challenging to identify the beginning of the end of this significant change programme. Within the 'life' of the programme, the physical restructuring of the plant has been accomplished. Still, the length of the project illustrates the amount of additional time and effort required to initiate change, gain employee, trade union and senior management support, develop a competent team and implement the difference within a tight financial budget.

Gaining employee commitment to change was a key feature of PM's strategy. Central to this was the five-year plan set about improving the work environment, encouraging employee participation in production, and improving the industrial relations climate. These objectives were a critical contextual factor that enabled management to gain employee acceptance and involvement in the change programme. Moreover, this change in employee attitudes, and the creation of a more collaborative as opposed to a negative pattern of industrial relations, did not happen overnight but required a long-term commitment to a management approach based on consultative decision-making and cooperative implementation. The latter was significant in demonstrating the value placed on employee participation in problem-solving. By creating an environment where employee involvement was the norm, many of the usual barriers associated with significant change programmes were dispelled. External support was also critical to gaining senior management support for the proposed change.

Questions

1. Compare and contrast Kotter's eight-step and Lewin's three-step model for understanding the changes that took place at GM.
2. Does the PM establish a guiding coalition (Kotter, 1996), or is it more about building and maintaining a network of relations through effective communication and political astuteness?
3. Identify and discuss casualties of change, and assess whether the change could have been managed more effectively.
4. Are there any general lessons that can be learnt from this case study on workplace change?