Thursday, February 19, 2009

Lessons from Romeo.

The pay system at Romeo was also designed in a different way from the traditional "pay for the job and seniority" system. Machining and assembly technicians were paid based on an Ability Rate Progression System which was unique in the Ford/UAW system. Rate adjustments were based on completion of core training and task certification demonstrating that employees had progressed to higher levels of capability. All employees were required to rotate assignments in order to reach the top of their progression schedule. This also assured that they continued to remain proficient in using the certified skills they were being paid for.

The new structure was also used in support areas, such as Quality and Systems Services, Central Maintenance, Employee Relations, Material and Production Services and Finance. Staffing in each of these areas was considerably less than it would have been in a traditional engine plant. In Quality and Services, there were no checkers or inspectors. Instead, the Quality Services function worked with outside suppliers to assure their production processes conformed to Romeo Quality (RQP) standards. For example, central Maintenance was responsible primarily for construction, equipment installation and maintaining plant utility services. The primary purpose of each of the support groups was to assist rather than control how the production teams performed their jobs.


The results of these efforts have been dramatic, particularly in area of quality to the customer. In terms of TGW or “things gone wrong," the quality of the Romeo engine represented a 75% improvement over those produced in previous launches, according to new vehicle customer surveys.

Romeo today sits on 268 acres and the plant, after several expansions, now totals 2.2 million square feet. Last year, the plant produced 682,000 engines, an average of 3,000 per day, and it has produced nearly seven million engines since production began in 1990.

It continues to employ more than 1,300 men and women. After 300 layoffs last August, Ford announced in December '08 it would create additional shifts at the Romeo Plant, despite widely reported financial troubles facing the automaker. The new shifts followed from the company’s decision to increase production of one of its major products.

Romeo has been recognized by the American Society for Training and Development as having the best team training program in North America. The plant also won the prestigious Shingo Award for Excellence in Manufacturing in 2002.

Today, almost 20-years after startup, the Romeo organization continues to build the highest quality engines in the world. However, these proven ideas have been slow to be adopted by the company's seven other engine plants, let alone in other divisions. In part, this comes from the inherently competitive nature of the hierarchical corporate system where managers are pitted against each other for recognition and promotion. This encourages them to find fault with each other and to deny the validity of superior methods and practices. The culture says, in effect, "If you look good, then I look bad." As a result, there's little shared learning and the rate of innovation slows down.

Some bad news: George Pfeil, the startup plant manager, who put pressure on the division management to change these practices was eventually fired "for being disruptive." When he left, he started a picture framing business in Detroit. So much for rewarding innovation and capturing learning!

Some good news: the plant has continued to function at record levels and the design has been kept substantially unchanged because even though some higher-level executives don't like it, it works so well they're afraid to mess with it.

All industries that continue to stick with the old management models will eventually suffer the fate that the auto industry is currently experiencing. And this will happen sooner rather than later.

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