Fremont Plant Called Huge Success : U.S. Car Workers Adapt Well to the Japanese Way
One year after the first Chevrolet Nova was rolled off the assembly line at the refurbished General Motors plant here, the joint venture between GM and Toyota Motor Co. is being hailed as a major success by labor experts and union and company officials.
“They’ve made fabulous progress in a relatively short period of time,” said David Cole, director of the University of Michigan’s Office for the Study of Automotive Transportation, who visited the Japanese-run production facility last month.
“This is a dramatic step forward in the proper utilization of human resources in an American factory,” said Don Ephlin, vice president of the United Auto Workers.
“I think they’ve done a very good job of taking an American work force and making it very effective,” said Alfred S. Warren Jr., GM’s vice president for industrial relations.
Kenichi Mizuo, coordinator of general affairs at the joint venture company--called New United Motor Manufacturing Inc. (NUMMI)--and other company officials praised the way American workers are responding to management methods adopted from the Toyota system, which calls for much more employee involvement in the organization of production than in a typical domestic factory.
“The NUMMI system meets their desire to expand their capabilities,” said Mizuo, who is on loan to New United from Toyota, where he worked in labor relations for 13 years.
Representatives of labor and management jointly “lay out the job, tools, sequence of work and time the job themselves,” said Bill Childs, the company’s general manager of human resources. “This is a total departure from the American way of making a car.”
1st Operation in U.S.
Although the plant is not without problems, the workers’ generally positive reaction to their new responsibilities is considered particularly noteworthy because this is the first time a Japanese company has operated a car manufacturing facility in the United States using veteran union workers.
Nearly 90% of the hourly employees worked at the GM plant on the same site before it closed in March, 1982. That work force had a reputation for militancy and absenteeism, so Toyota officials were reluctant to rehire many of them.
But now those same workers are producing what they and company officials say is a very high quality car, with 60% to 70% of the parts coming from Japan. In the first random test, three of 20 cars audited by GM personnel were rated “perfect,” which is unusual for any plant. The average score exceeded 140 out of a possible 145 points, according to union and management officials.
“This proves that what GM said about our people was wrong,” said George Nano, the UAW’s in-plant bargaining committee chairman, who led the fight to get Fremont workers rehired after GM and Toyota signed their joint-venture pact in February, 1983. “Our people can take care of business if they have the right incentives. GM could have done the same thing. There’s no magic.”
Brains and Bodies
The “same thing,” according to Nano, means treating workers with dignity and making use of their brains as well as their bodies.
Primarily under the management of former Toyota officials, the 3.1-million-square-foot Fremont plant is serving as a laboratory for several experiments in labor relations. Among innovations for a U.S. factory is the deep involvement of workers in quality control. They use a system called “the Five Whys” to find the roots of problems.
“The Japanese have shown great patience, and a great deal of effort goes into training and dealing with errors: the willingness not just to repair a damaged part but to stop at that point and go back and determine what caused that damage and take care of it right then and there,” GM’s Warren said. “In American industry, we tend to run and make volume. We tend to make repairs and go on, not to seek the cause of damage.”
The mutual push for quality has gone so far that UAW officials have volunteered to go to an LTV Corp. steel factory to see if they can improve the steel LTV is sending to the Fremont plant. That would be unheard of in a typical American workplace.
Quality From Suppliers
Nano and Joel Smith, the UAW international’s regional director in Fremont, lauded the company’s demand for quality from its suppliers as well as its workers. Nano noted that glass with imperfections GM had accepted in the past had been sent back to a long-term supplier. “They won’t accept things the customer couldn’t find or wouldn’t know about,” Smith said of the new plant’s officials.
Still, problems lurk under the surface. Some workers believe that the assembly line moves too fast. They say that union representatives--many of whom spent two years unemployed or bouncing from one low-paid job to another after GM shut down the Fremont facility--are unwilling to push the issue aggressively because they fear that the venture will fail and they will be out in the streets again.
“We don’t have time to inspect any more. We glance,” said Richard Aguilar, an inspector on the assembly line. “They work us like we’re robots. These people saying the plant is great haven’t worked on the assembly line.”
Similarly, some labor analysts say the UAW’s increased role in quality control has diminished its ability to aggressively represent workers on the shop floor.
Defend and Be Responsible?
“I don’t think it’s possible to be responsible for defending workers and also responsible for productivity and absenteeism,” said Steve Diamond, a labor educator at the University of California, Berkeley, Institute of Industrial Relations.
But Ephlin said the union can shoulder both responsibilities simultaneously. “Our first role must be representing the people, protecting their contractual rights. But at the same time we must represent the total work force by making the plant a success, a viable and competitive one,” he said.
“The quality of the product we put out is part of our job security,” Ephlin stressed.
Smith acknowledged the concerns about line speed and said it probably would be crucial to the question of whether harmonious labor relations are maintained. Production started quite slowly at the plant but has gradually increased, to nearly 10,000 units a month. The current goal is to roll one car off the line every 54 seconds, a fast rate.
Full Production in 1986
The plant is likely to reach full production--about 20,000 cars a month--in the second quarter of 1986, using considerably fewer workers than a typical U.S. auto plant would for a similar volume of cars. However, Jesse Wingard, the plant’s production manager, said, jobs will be continually restructured to make them easier and more efficient, using a Japanese system called Kaizen.
UAW committeeman Eddie Valdez said some workers are finding it difficult to adjust to the new production system. “The line is going faster,” he said. “People are working harder. . . . The new people are afraid to speak out, to stop the line when they should. I think this fear will disappear as people become familiar with the system and they’re there longer.”
Still, some union officials feel it’s too early to predict what will happen when full production commences. “I can foresee more problems on the production side, not having enough people to do the work,” Smith said. But he was optimistic about the ability of the UAW and management to resolve difficulties as they arise. “If you make an argument with management about an issue and the foundation of our argument is that it affects the quality of the product, they listen quite well.
“The problems can be solved if we try to do it through the framework as we wrote it.”
Pact’s Features Outlined
Smith was referring to the innovative contract between the UAW and New United, a far cry from a traditional UAW labor agreement. Among the features of the three-year agreement signed in June:
- Workers are given the right to stop the production line without fear of discipline if they believe they are unable to do high-quality work safely. This provision gives the union a role in determining the pace of work, but the contract does not set minimum staffing levels.
- New United is obliged before laying off any hourly employee to reduce the salaries of officers and management staff and to restore to the bargaining unit any work that has been contracted out. This is unprecedented in the U.S. auto industry, as is New United’s agreement “that it will not lay off employees unless compelled to do by severe economic conditions that threaten the long-term financial viability of the company.”
- In return, the union surrendered 80 job classifications, traditionally considered by the union a mechanism to guarantee job security but considered by management an encumbrance to operating flexibility. At New United, all production workers are in one job classification, and skilled trades workers are divided into only three categories.
- The union receives access to confidential corporate data, including annual objectives and plans for technological change that will affect hourly employees.
- New United workers got a wage-and-benefit package similar to one that UAW workers got after a brief strike at General Motors in September, 1984. Starting rate is $11.29 an hour, with base salary going to $13.28 after 18 months, 5% higher than the average for other GM plants. Top hourly wage for a skilled worker is $15.95 an hour. Workers will get cost-of-living adjustments, lump-sum payments of 2.5% of salary the second year of the contract and 2.7% in the third year, and--in another industry first--a paid half-hour lunch break if they stay in the plant.
- The company will pay about two dozen union members to serve as “coordinators” in the plant, assigned to work groups to assist in solving potential and actual problems.
- A program has been established for worker involvement in decision-making. This includes union participation in meetings to determine if there are mitigating circumstances that should be considered before an employee is fired for disciplinary reasons.
How It’s Mitigating
Officials of New United and UAW presented a graphic example of how this process has been used already. One day in September, a supervisor in the stamping plant where sheet metal parts are fabricated discovered that an employee had been cheating on his time card. He called human resources manager Childs and demanded that the man be fired immediately.
Childs said an investigation would have to be conducted first. In the old days, Childs explained, the man would have been fired immediately. Then the union most likely would have filed a grievance, and it might have taken two years to resolve the case.
Instead, the accused employee was temporarily suspended and interviewed jointly by a representative of union and management. “In the past both sides played with the facts in grievance hearings,” Childs said. “Now we’re operating from the same set of facts.”
After the investigation, it was determined that there were “mitigating circumstances”--some misunderstandings about time card procedures in the stamping plant. The employee was reprimanded and demoted, but not fired.
Childs said everyone was satisfied with the result.
Union Role Different
UAW committeeman Valdez said the role of union officials working in the plant is considerably different from what it was when GM ran the plant. “Before my relationship with management was of a confrontational nature,” he said of his 13 years as a committeeman in the old factory.
“Now, my duties are to try to make the thing work, working hand in hand with management,” Valdez said. “But the union principles aren’t lost: If someone is treated unfairly, the grievance will be addressed.”
So far, there haven’t been a lot of formal grievances filed. At present, New United has a malleable work force, a group ready to try new things and take on new responsibilities. Many workers are responsive because they like the challenge, but many are responsive because they see no alternative.
Like most of the workers here, Vonnie Alejo is just happy to have a steady job again. A 10-year veteran at GM before the 1982 closure, she migrated from one low-wage job to another. She had to give up her apartment and return to living with her parents.
The Toll at Fremont
Others fared worse: At least eight people who lost their jobs committed suicide, others died of alcoholism, child abuse in affected families increased, and families were split apart as some workers had to leave the area to take jobs at auto plants in the Midwest. At one point, the old plant employed 7,000 workers. But there will only be 2,500 hourly jobs in the new plant, meaning that many of the former workers will never get their jobs back there.
Alejo started working at New United on July 29. She is now making $11.95 an hour as a receiving inspector, a job that requires her to examine blueprints and occasionally tell suppliers that their goods are unacceptable, something she wouldn’t have dreamed of doing in the past.
Two weeks ago, she was able to get her own apartment for the first time in three years. “I barely got on my feet, starting to feel alive again. I hope the cars sell so we can keep our jobs.”
Thus far, the four-door subcompacts are selling fairly well, according to GM officials, even though the backlogs are higher than GM would like. A normal backlog is a 60- to 65-day supply of cars. The current backlog of Novas would last 105 days, said Ed Lechtzin of Chevrolet public relations in Detroit.
28,000 of Them Sold
He said the backlog is high because Chevrolet only started selling the car in the Midwest in June and in California and other Western states in September. About 28,000 of the Nova subcompacts had been sold through November, Lechtzin said, and about 26,000 are available at dealers throughout the country.
He said a survey of 1,800 buyers showed high ratings for the car. It has a base price of $7,435, about $300 more than the Toyota Corolla, which it closely resembles; with all the options it can cost up to $10,345.
Television commercials promoting the car tout “The Best of Both Worlds,” a reference to the bicultural manufacturing process used in Fremont. Some of the ads in California, where Japanese cars have taken a good chunk of the market, also use the slogan, “Imported from America.”
“If the quality is right and the price is right, we can’t lose,” said Tom Klipstine, New United’s manager of public and community relations. Klipstine, who worked for GM for 12 years before coming here last year, acknowledged that a critical element in keeping quality high will be maintaining the good labor relations that have prevailed here so far.
Year or 2 From Decision
“We’re a year or two away from saying it really works,” he said while sipping tea in the cafeteria used by all New United employees, including Tatsuro Toyoda, the company’s president.
Asked for the key to the company’s success so far, he said: “There’s no big secret here. It’s just in how you treat people.”
That’s a big lesson for GM, said Cole of the University of Michigan. “The plant is having a dramatic impact on General Motors’ thinking,” he said.
“It’s a state-of-the-art plant, but it’s not crammed with robots,” Cole noted, adding that high productivity is being achieved even though the plant is not at the forefront of new technology. “This is Toyota. This is very much Toyota. It suggests that there is a tremendous reward in effective management.”
