Developing ‘foundational manufacturing’
Fiat Chrysler’s turnaround is built on a world-class manufacturing base.
The rise and fall of Chrysler included both operational and economic failures and, finally, its absorption by chronically troubled Fiat. What has emerged from that unlikely alliance, said Byron Green of what is now Fiat Chrysler Automobiles (FCA), is at last a commitment to a manufacturing system that focuses less on technology and more on the worker behind that technology.
Green, the vice president and head of U.S. and Canadian Vehicle Assembly for FCA,told the American Manufacturing Summit in Schaumburg, Ill., on Feb. 29 that the full adoption of a World Class Manufacturing (WCM) philosophy has helped improve not just productivity and profit, but employee engagement as well.
"Developing an operating philosophy focused on continuous improvement is what makes the best manufacturing companies successful," Green said. "Our businesses and our people must be ready to meet whatever challenges they face-not just to survive, but to thrive.
"In the past, Fiat and Chrysler both tried various production-management systems,and Green said they fell by the wayside due to a lack of full commitment from management. Fiat began with WCM in 2006, and when Fiat took over Chrysler following the 2008 economic collapse, Chrysler began implementing the program as well.
A game changer
"World Class Manufacturing has been a game changer," Green said. "The economic crisis made it perfectly clear that we had to change the way we competed. WCM has been key in efforts to eliminate waste, which depend heavily on employee involvement. WCM played a key role in our turnaround.
"Some of FCA's improvements are obvious—profitability, for example. In January 2016, FCA U.S. reported that sales increased 7% over 2014, resulting in FCA's best sales year in nine years. The company also increased its profit sharing to employees in 2015; by 45% to the company's 40,000 union employees.
One metric Green cited was Kaizen events, which are process-improvement efforts to address individual production issues. In 2010, FCA conducted about 50,000 Kaizen events across its nearly 30 U.S. plants; in 2015, there were nearly 300,000 Kaizen events.
"The emphasis on the technical aspects of improvement programs totally miss the culture change necessary," Green said. "Enhancing pride of workers and dignity of our workers—that's what WCM does for us.
"Fiat CEO Sergio Marchionne offered a simple statement to his employees: "Waste is unethical." Green said that simple statement has wider implications for manufacturing. "Waste is broadly defined: accidents are waste, breakdowns are waste, excess inventory is waste.
"He even defined waste in an area most companies see as an imperative. "Training can be waste," Green said. "You have to train the right people at the right time with a supported business case, rather than just conducting a mass training where you hope knowledge is retained.
"To address and combat waste, Green discussed FCA's Operational Transformation Process to attack areas of significant waste. "It focuses on technical issues, but also on a fundamental shift on how to use people and develop their talents," Green said."It requires a psychological contract between management and hourly workers,based on trust."
Gaining that trust is also part of the process, and it can be the most challenging of all,especially to long-time employees who have survived the ups and downs of Chrysler's roller coaster. Green said the most successful manufacturing systems are"infused totally in the culture of your organization. When you have respect for your people, you've got to engage them fully in the process. The best manufacturers have cultures so deep, it's foundational."
FCA's change may be foundational, but it is not finished. "We're seven years in, and we're not close to the end," Green added.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey