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Posts Tagged ‘York PA’

Productivity.

It’s the manufacturing mantra of the corporate world.  It’s about making X number of  “widgets” an hour and reducing unplanned absences to maintain plant productivity.

Harley-Davidson’s CEO and President, Keith Wandell, told analyst during the Q4 2009 revenue results that the company intends to enhance profitability through continuous improvement in manufacturing, product development and business operations.

I would submit that H-D doesn’t have a productivity problem.  They have an absenteeism problem!  If a worker calls in sick that is considered an unplanned absent which brings down manufacturing productivity.  In fact, a company document indicates the motor company incurred some 382,000 hours of missed work time during 2009 which was worth about $13 million.  The document doesn’t state whether that number refers to the company as a whole or some other subset of operations, but we do know that one of the major considerations cited for moving the York Vehicle Operations from PA. to another state was the excessive absenteeism at the Springettsbury Township plant.

As a result of the concessions to keep the plant in York, changes in work culture and a new attendance policy was negotiated as part of the multi-year restructuring process.  A point system was created and the new policy gives an employee points or partial points for failure to appropriately report an absence in addition to the actual absence.  Now there are reports the Union (IAM) is whining about unilateral policy changes and trying to move the debate from absenteeism to policy.

Many would debate that unions cripple companies.  The debate often centers around how they are anti-technology, anti-productivity and pro-wage growth.  It’s like they live in a virtual reality world where price points, product-market pressures, and capital returns don’t matter.  The net-net is that unions are adept at demanding the highest dollar for the least amount of time worked.  And as worker costs escalate firms cut back on technology, plant investments and business process improvements.  Sound familiar?

Still don’t believe me that H-D has an absenteeism issue?  Well let’s look at the numbers.

H-D has about 9000 employees worldwide.  Taking H-D supplied numbers of 382,000 hours and divide it by the total number of employees (9000) equals 42.44 hours of unplanned absence per employee.  That’s more than one work week of absenteeism for each and every employee!  This in addition to the 15 work days of annual leave (vacation + holidays) employees typically receive in U.S. based companies.  Wow, talk about “iron-clad” benefits!  Yet, it’s actually worse because to correctly analyze the absenteeism number you need to take into account standard manufacturing practices which are based on the number of Full Time Equivalents (FTE) and available work hours a year (1928 hours) per FTE.  Calculating absence using this method means there were 198 employees (FTE) absent all year during 2009.

I don’t know if this situation is an accurate reflection of the mental state of the H-D work force or if it’s an edge case due to issues like H1N1?  However, an absenteeism rate which effects ~20% of your work force is a systemic issue and without a doubt one of the most significant factors to affect quality in an assembly line along with negatively effecting employee morale.  Let’s hope they get a handle on this issue.

Photo courtesy of Scribd.

All Rights Reserved © Northwest Harley Blog

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Meetings.  Talking.  Meetings.

We’re always being reminded that political leaders, policymakers and industry leaders are “gathering” to hash out ideas on how to get the mojo back and what the key is to unlocking innovations and jobs of the future.  We’re suppose to feel good, but from my vantage there is little visible in the way of action.

The White House has made a quiet but extensive effort to reach out to corporate executives in a series of dinners and lunches at the White House with President Barack Obama.  Attendees have largely been kept secret or at minimum very quiet… until now!

Politico.com states Keith Wandell (Harley-Davidson CEO) had dinner with Obama’s chief of staff Rahm Emanuel and other top White House officials.  Another comprehensive list is available HERE.  It’s not clear if it was at an off-site local restaurant or something more elegant in the White House.  Given the state-of-the-states, I seriously doubt the motor company will be creating any new jobs soon. In fact, the recent ratified agreement calls for a drawdown of nearly 50% of the employee’s base at the York, PA operations.  Asia or India look like expansion alternatives and I suspect it won’t be long before we hear about plants being set up there.  So, what did Mr. Wandell share w/ the White House chief of staff?  Would H-D coming to the government to offer ideas on how they can help be a startling conversation changer?  Does H-D have eyes and ears on future trends that they can grab and then be able to exploit?

I’m not sure, but do you think the U.S. is still the world’s center for innovation, or is it falling behind countries such as India and China?  Fueling the debate is a new poll on innovation published by Newsweek. One interesting finding: while 82% of Chinese citizens believe the U.S. remains a technologically innovative country, only 74% of Americans feel the same way.

At any rate,  the other industry officials who joined Mr. Wandell at the June 16, Rahm Emanuel dinner were:

Penny Pritzker, CEO, Pritzker Realty
Mark Gallogly of Centerbridge Partners
Mike Fascitelli, CEO, Vornado Realty Trust
Klaus Kleinfeld, CEO, Alcoa
Dave O’Reilly, CEO, Chevron
Richard Smith, CEO, Realogy
Mike Ullman, CEO, J.C. Penney
Keith Wandell, CEO, Harley Davidson

I’m not attacking or implying that only favor-curriers are “sitting at the presidents table” but I’m not reading a lot about how the voice of the average lower and middle class American are being heard.  As the White House National Economic Council Director Lawrence Summers has recently urged attendees at these dinners to “think about what your institution should be called on to do, not in its own interest, but in the broader national interest.”

Photo courtesy of Presidential inauguration.

All Rights Reserved © Northwest Harley Blog

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