One of the benefits of having workers and management on the same page is that innovation is more likely to occur in this model (basically the Toyota Way.) If we are actually going to experience a resurgence in manufacturing, as so many are today claiming, we will have to find a way to transform our firms into learning organizations that value the input of line workers and who create an opportunity for them to contribute productively with shop engineers and even with supervising managers.
A fascinating article in the Atlantic, "The Insourcing Boom," published earlier this month, features an incredible story about GE moving the production of water heaters in the U.S. from China. It's an inspiring story and hopefully a model for innovations to follow (
The Atlantic):
So much has changed that GE executives came to believe the GeoSpring
could be made profitably at Appliance Park without increasing the price
of the water heater. “First we said, ‘Let’s just bring it back here and
build the exact same thing,’ ” says Kevin Nolan, the vice president of
technology for GE Appliances.
But a problem soon became apparent. GE hadn’t made a water heater in
the United States in decades. In all the recent years the company had
been tucking water heaters into American garages and basements, it had
lost track of how to actually make them.
The GeoSpring in particular, Nolan says, has “a lot of copper tubing in
the top.” Assembly-line workers “have to route the tubes, and they have
to braze them—weld them—to seal the joints. How that tubing is designed
really affects how hard or easy it is to solder the joints. And how
hard or easy it is to do the soldering affects the quality, of course.
And the quality of those welds is literally the quality of the hot-water
heater.” Although the GeoSpring had been conceived, designed, marketed,
and managed from Louisville, it was made in China, and, Nolan says, “We
really had zero communications into the assembly line there.”
To get ready to make the GeoSpring at Appliance Park, in January 2010
GE set up a space on the factory floor of Building 2 to design the new
assembly line. No products had been manufactured in Building 2 since
1998. An old GE range assembly line still stood there; after a feud with
union workers, that line had been shut down so abruptly that the
GeoSpring team found finished oven doors still hanging from conveyors
30 feet overhead. The GeoSpring project had a more collegial tone. The
“big room” had design engineers assigned to it, but also manufacturing
engineers, line workers, staff from marketing and sales—no
management-labor friction, just a group of people with different
perspectives, tackling a crucial problem.
“We got the water heater into the room, and the first thing [the group]
said to us was ‘This is just a mess,’ ” Nolan recalls. Not the product,
but the design. “In terms of manufacturability, it was terrible.”
The GeoSpring suffered from an advanced-technology version of “IKEA
Syndrome.” It was so hard to assemble that no one in the big room
wanted to make it. Instead they redesigned it. The team eliminated 1 out
of every 5 parts. It cut the cost of the materials by 25 percent. It
eliminated the tangle of tubing that couldn’t be easily welded. By
considering the workers who would have to put the water heater
together—in fact, by having those workers right at the table, looking at
the design as it was drawn—the team cut the work hours necessary to
assemble the water heater from 10 hours in China to two hours in
Louisville.
In the end, says Nolan, not one part was the same.
So a funny thing happened to the GeoSpring on the way from the cheap
Chinese factory to the expensive Kentucky factory: The material cost
went down. The labor required to make it went down. The quality went up.
Even the energy efficiency went up.
GE wasn’t just able to hold the retail sticker to the “China price.” It
beat that price by nearly 20 percent. The China-made GeoSpring retailed
for $1,599. The Louisville-made GeoSpring retails for $1,299.
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