GM Powertrain Essay

Joe Hinrichs, a recent Harvard Business school graduate, was hired in February 1996 to run the General Motors’s the Fredericksburg Torque Converter Clutch (TCC) manufacturing plant. At 29 years old, Hinrichs was GM’s youngest plant manager. Hinrichs was inheriting a poor performing plant that continually underachieved, losing money year after year. Improvements were desperately needed to increase the efficiency of the manufacturing process and reduce operating costs. GM had considered shutting down the plant; however, when a new bonding process, using carbon fiber, for the TCC was approved in 1995, GM instead invested thirty million dollars into the Fredericksburg plant to incorporate the new process. From the beginning, Hinrichs faced a difficult situation. The previous plant manager committed the plant to ambitious budgetary goals. Hinrichs was also tasked with preparing the plant to use the new TCC manufacturing process and attaining QS-9000 certification. If that weren’t enough, Hinrichs still had day to day emergencies to handle; the latest being the 1500-ton press breaking down, an important machine in the production process. Despite his situation, Hinrichs met the challenges head on, impressing both GM management and plant staff. Workforce Management Hinrichs knew that in order to be successful, he needed to rally the plant staff around him, gaining their trust and respect. Being an outsider at a small town plant and also being so young, Hinrichs knew accomplishing this would be a huge challenge. During the first month on the job he started to show that he could be the capable leader this plant needed. Hinrichs had just received word that a UAW strike at two Dayton area plants would shut down all of GM’s automatic transmission production plants, leaving him without customers. The standard procedure was to lay off the plant workers until the strike was over, instead Hinrichs used the lay off as an opportunity to show his workforce that he would take care of them. As an alternative to laying them off, he worked with the staff to get as many people as possible to take vacation during the time or mandatory training. The remainder worked on some of the improvements he wanted to make. Not only did this improve his relationship with the plant workers, it also gave him a way to start bring efficiency improvements to the plant. Historically, the Fredericksburg plant saw little gains from efficiency improvements. While not stated in the case, this was most likely due to the highly-skilled staff’s resisting change, preferring the comfort of their undocumented processes that they had been using for decades. Hinrichs knew that he wouldn’t be successful unless he could ease them into the changes and frame the changes in a way the staff would see as beneficial. In addition, Hinrichs had to overcome the fact that improvements meant less overtime, a disincentive for the staff. First, Hinrichs used the guise of necessary process changes to produce the new TCCs in order to bring in process improvements without upsetting the workers. By framing the changes as improvements to get the plant prepared for producing the new high tech part, the staff would be more open to changes. Second, Hinrichs eased the workers into change by first meeting with the union weeks before the changes were implemented in order to get their feedback and buy-in as well as time to come to terms with the changes. Third, Hinrichs spread change throughout the facility, so that no area would experience too much change all at once, giving the staff more time to adjust. Finally, Hinrichs kept the workers very involved in the installation of new cells, encouraging them to examine them and provide him with feedback. This approach got some of the more senior workers to take a closer look and get excited about the changes, some actually applying to work in the new cells. Hinrichs realized that he had to give the workers new incentives to overcome the disincentive of a lack of overtime. He knew that if he could reconfigure the plant away from assembly lines and into individual work stations, workers would be able to take more ownership of their work, producing better quality parts and be self-motivated by being able to measure their individual output, increasing job satisfaction. The new cells turned out to be a hit. Workers were excited about having more control over their output and being part of the new process. Hinrichs’s active management of change within the factory and focus on worker satisfaction and buy-in resulted in a lot of small victories that he used to win over the workforce’s trust and respect. In the process, Hinrichs transformed the plant from one that was resistant to change to one that embraced and was excited for change. Process Improvements One of the biggest needs for improvement was the assembly process. Although several changes were made throughout the years, quality and efficiency still fell below expectations. Hinrichs implemented the newly developed assembly which consists of two separate work stations that allowed operators in the adjacent stations to share the expensive balancer machine. These assembly cells were much more efficient as workers were no longer forced to wait for another person or machine in the process. Each cell was built like the other with quick turn set-up which created flexibility in the process while also reducing tooling inventory by almost a half. Now cells could be activated to meet demand for different models. Likewise, each cell was designed to handle 1 to 3 operators to accommodate changes in volume. For increased quality, engineers designed machines that would use the information documented in the PFMEA to check and reject any faulty units at any stage in the assembly process. This increased yields by ten times that of the original inspection method which was performed once at the end of assembly. These changes to the assembly process not only reduced down time, allow for dynamic line balancing and scalability, it also created a sense of worker empowerment. Each worker now controlled their own output therefore giving them a better understanding of their contribution towards the plant’s production goals. This was an extremely successful improvement that Hinrichs could now work off of. The new bonding machines installed for the new process also fell in line with increasing efficiency and operational costs. These new machines would now only required one worker instead of two. These machines also signaled when a problem occurred saving ample amount of time and wasted material. Employee job satisfaction increased as well with the new machines. Even older senior employees who currently hold desired jobs in the plant were applying for the bonder positions. Even if this change was a necessity forced on by the process change, it was overly successful and beyond their expectation. Workforce efficiency was another area that needed to be improved. The installation of the QS 9000 system helped do just that. It helped maintain high standards of quality and reliability as well as continuous improvement and cost reduction. This stringent process was basically absent from this plant. Documenting your process and continually monitoring it through a quality system gives one the ability to understand and uncover inefficiencies in the manufacturing process. For example, Hinrichs noticed, in particular, the Heat treat area did not utilize its workers effectively. There were employees that loaded and unloaded the ovens while three separate inspectors waited until parts came out of heat treat. There was significant idle time for all of the employees in the process. By teaching the operators the techniques needed to inspect their own parts, their idle time is significantly reduced while completely freeing three employees to serve higher demand processes within the plant. This change in job responsibilities is a good example of utilizing resources to increase throughput not just activating a resource just to keep it working. 1500-ton Press Analysis Hinrichs’s current challenge is how to deal with the broken 1500 ton press. This press is the only one in the plant. The press is the first step in the process and also the bottleneck. If this machine is down, the whole system is down. There are three options Hinrichs has considered: (Appendix A presents the information in data form needed to make a decision. ) Given the information in Appendix A and carefully analyzing it, we have decided to move forward with Option 1 while continuing ideas to more effectively implement the new Die into the process if purchased. By choosing option 1, the plant would be able to continue operating without loss of throughput or added unit cost due to outsourcing. To reduce system breakdown, a preventative maintenance procedure would be enacted. Currently, the relationship between Hinrichs and the union is good and furthermore, by repairing the press with existing parts, the plant cannot afford to eliminate a union job if option 2 were selected. Hinrichs also needs to be aware of his spending for the year as well as delivering a known return on his investments. Neither option 2 or 3 will allow Hinrichs the ability to show any return on investment this fiscal year. Option 2 seemed to be an expensive route to take just to add some reliability with little reduction in costs. While Option 3 sounds appealing, the new die is still unreliable and could have a significant impact to unit costs if additional outsourcing were needed while bringing it up to speed. Hinrich should continue to work on the new die offline and only incorporate it once the technical challenges have been overcome.