Headcount reduction

Not long ago, I was involved in a reliability and improvement initiative in a big plant. As always, the improvement initiative was received with skepticism. Many other initiatives had come and gone with various results during the last 15 years. These initiatives, management declared, would be different than the previous ones.

It had now been decided that it would be a long-term reliability improvement initiative, not only a cost-cutting exercise. About eight months after the improvement efforts started, improvement champions had gotten some followers and improvements were demonstrated. In this plant, it was important to change the culture from a poor management/union relationship to a relationship based on mutual trust and agreed-upon necessary improvements.

As in most cases, the improvement work centered on better planning and scheduling performance, preventive maintenance and root cause problem elimination. Much hope of real and lasting change was based on the demography of the aging maintenance workforce and the new employees now in the apprentice program. The age distribution of the maintenance workforce showed an expected attrition of 43 percent in the next five years and 62 percent in next seven years. This presented a problem of skills retention but also a good opportunity for a cultural change, so it was obvious that the apprentice program was of vital importance for success. The apprentice training was therefore redesigned to not only include craft skills but also good understanding for results-oriented reliability and maintenance practices including maintenance prevention, preventive maintenance and effective organization of the work, multi-skills incentives, etc.

It was soon demonstrated that some of the best results were achieved by new employees who applied in practice what they had learned in the apprentice program. Many of the apprentices found it very interesting and motivating to add skills to their traditional crafts. They argued that this was good for their own job security; they understood that they were not guaranteed a job for life in this plant. Many among the older workforce thought instead that they were entitled to a job forever. While the traditional unionists among the crafts people continued to argue that the new positions as preventive maintenance inspectors was a new classification, the new employees just did the inspections because they now saw it as a normal and interesting part of their work.

Planners and maintenance coordinators had been reinstated and their roles had been clarified. The backlog that was identified to be about 12,000 jobs was soon cleaned up to a real number of 3,000, or an estimated 18 days. Total maintenance crew was 120 employees. Now planners were actually planning, and performance during shutdowns and weekly daily work improved significantly.

The vice president of manufacturing recognized the progress and understood that this would lead to significant and sustainable improvements. He also knew that it would take about one more year of demonstrating management commitment to changes before the majority of the workforce would be onboard and the improvement initiatives could be declared instituted and a success.

At this point in time, a message from corporate declared that the maintenance staff was to be cut by 15 percent within 30 days. The VP of manufacturing tried to no avail to resist this decision, arguing that it would only take 18 months and attrition would take care of the reduction.

To make a long story short, the corporate decision was explained to be shortsighted but necessary. This explanation does, of course, not make sense if the purpose of continuous improvement is to be believed. It is more to the advantage of short-sighted shareholders, but it is, of course, not good for the survival of the plant. It must be questioned if it supports the popular phrase “building shareholder value.”

The VP of manufacturing left the company and his replacement carried through the corporate directive within the given time period. Planning and scheduling, or management of maintenance, fell back to worse then before.

The very sad thing in this story is that this plant was forced to destroy its future maintenance organization. When a forced layoff takes place in a unionized environment, the latest employees – in this case, the apprentices – were laid off; the plant had to lay off its future employees. Even sadder is that only four months after the layoffs, the plant had to hire back many of the people they laid off. Many of them worked for a contractor who had contracted them to the plant after they were laid off!

Soon, this plant will start talking about a new improvement initiative and new management will wonder why it is so difficult to get people committed to improvement initiatives!