In the search for alternatives to Taylorism and the Fordist

Comment "Volvoism" at the End of the Road? AKESANDBERG n the search for alternatives to Taylorism and the Fordist assembly line, the model derived fr...
0 downloads 0 Views 564KB Size
Comment

"Volvoism" at the End of the Road? AKESANDBERG n the search for alternatives to Taylorism and the Fordist assembly line, the model derived from Japanese practices - "lean production" or "Toyotism"! - has attracted considerable attention. However, Toyotism is not such a radical departure from Taylorist principles as is sometimes maintained. It reduces worker autonomy on the job because of its short cycle tasks and involves employees themselves in the ongoing rationalization of their own work through continuous assessment of individual performance. It may thus be regarded as a sophisticated version of Taylorism. Moreover, its superior productivity is also related to design-forassembly and its reliance on long-term relations with subcontractors, and here, too, there are important drawbacks. With its networks for production and development work, the subcontractor system is efficient, but low costs also reflect the poor wages and inferior job security and working conditions that prevail in the lower tiers of the subcontractor pyramid. Those interested in an alternative to Toyotism have often looked to Sweden where unions and companies began to explore alternatives to the Fordist production line as early as the 1970s. In particular, Volvo's Kalmar and Uddevalla plants have become world-wide symbols of the possibility of combining high productivity and rewarding work. Thus Alain Lipietz takes the name for the Swedish alternative to Toyotism (the "Kalmarian compromise") from Volvo's first innovative car plant.t The Uddevalla plant, built fifteen years

I

Studies in Political Economy 45, Fall 1994

170

Studies in Political Economy

later, represented an even more dramatic break with Taylorism. In Uddevalla, the assembly line was replaced by qualified, autonomous group work for assembly, and hierarchy was minimized. The plant had a centrally-located materials shop, six product workshops and two inspection shops. The materials were kitted for individual cars and transported by means of automatically-guided vehicles (AGVs) to the teams. Each product shop had eight teams of about nine workers each and each team independently assembled complete cars. The division of labour in the teams was usually such that each worker built a quarter of a car, which yielded a work cycle time of about two hours. There were no supervisors. Instead there were rotating team representatives who formed the key links to other teams and the product shop manager.I Involvement in all aspects of work made the whole production process visible to the workers. Like their counterparts at Toyota, workers became engaged in a continuous effort to improve production, and work intensity was high. Unlike workers in the Toyota system, however, they enjoyed considerable autonomy and relatively long work cycles. They also remained part of the Swedish collective bargaining system, which, together with the welfare state, works to counteract the kind of dualism characteristic of the Japanese system.t Volvo's decision in November 1992 to close its innovative Kalmar and Uddevalla plants seems to indicate that Toyotism has emerged as the successor to Taylorism. Yet a closer look at the Kalmar and Uddevalla plants suggests that such a conclusion would be premature. The situation is still contradictory and open. The features of post-Fordism remain unclear. This article explores the forces behind Volvo's decision to close these two innovative plants. It begins with a critical assessment of the stated reasons behind Volvo's decision and moves on to an analysis of the actual forces that shaped it. A critical reading of management's calculations may not save the plants, but a well-grounded record may preserve the ideas and concepts for more insightful companies and for union activists in Sweden and other countries. The concept of a productivity that depends on increasing

171

Sandberg/"Volvoism"

human potential rather than working against it, may live on, adapted as it is to worker and customer demands for quality.s Volvo's Story Between 1989 and 1992, sales of large cars diminished by more than 30 percent and Volvo, like other car producers, was faced with a problem of excess capacity. It thus may be tempting to assume that Volvo management chose to shed capacity by closing Kalmar and Uddevalla as these were its least productive plants. Such an assumption would be unwarranted. According to the management of Volvo Cars itself, by the autumn of 1992 Kalmar and Uddevalla were on a par with the conventional Torslanda factory in Goteborg (Gothenburg) in both assembly time and quality performance. All three Swedish plants were expected to have reached the performance level of the Volvo plant in Gent, Belgium by 1993 and to stand among the world leaders by 1997. In the Goteborg plant, assembly time was 42 hours per car, while in Uddevalla the lowest figure was 32.8 work hours, to which 6 hours of white collar work should be added. While this is still far from the Japanese rate, it is indicative of Uddevalla's potential that several workers were able to assemble whole cars in less than twenty hours and one worker even managed to build a whole car in just over ten hours. The quality of Uddevalla's output was higher than that of Goteborg whether measured by number of defects per car (six for Uddevalla versus seven for Goteborg), or as ranked in J.D. Powers customer satisfaction survey.v By the autumn of 1992, Uddevalla's total lead time, from individual customer order to delivery, was down to four weeks and a reduction to two weeks had been planned for the first half of 1993. An important factor here is Uddevalla's parallel production system. The latter effectively eliminates-the balancing problems - that is, the difficulty of arranging tasks along the line in such a way that all work stations complete tasks in the same amount of time and no worker is left idle, waiting for someone else to finish - that plague Fordist assembly lines. Model changes also required less time and entailed lower equipment and training costs than the Goteborg plant in large part because of Uddevalla's "low tech" 172

Studies in Political Economy

solutions? and the high competence of its workers. Both innovations make it easier for workers to master new tasks. Of course, Volvo did provide figures that seemed to justify its decision to close Uddevalla and Kalmar. Its estimates purported to show that the concentration of production in the Goteborg plant would yield a saving of 350 million Swedish crowns (approximately $63.5 million Canadian dollars) per annum. Approximately 100 million Swedish crowns represents a mere book-keeping transaction: the investment in Uddevalla is depreciated all at once. But the remaining 250 million Swedish crowns do not, as we shall see, correspond to real savings. Three assumptions underlie Volvos calculations regarding the potential savings, all of which can be challenged. 1. Transport Costs: Volvos "savings" include the cost of transporting car bodies from Goteborg to Kalmar and Uddevalla (which neither produce nor paint the bodies themselves), and the cost of transporting finished cars back to Goteborg, where centralized pre-delivery inspection takes place. The latter cost should not, however, be included since pre-delivery inspection could easily be decentralized, allowing Kalmar and Uddevalla to deliver directly to market. In addition, there are clear indications that total transport costs for components are higher in Goteborg than for Uddevalla. Were these costs added to the equation, Goteborg's advantage would be further deflated. 2. Management and Administrative Costs Volvo argues that it could save 30 million crowns by eliminating the white collar work force employed at the Uddevalla and Kalmar plants. This assumes that planned increases in production volume at Goteborg will not be matched by increases in the latter's white collar work force. This would require savings in administrative costs per unit that could be made independently of the Uddevalla and Kalmar closures. Moreover, Uddevalla had an extremely small administrative staff with only two levels of hierarchy above the assembly teams in marked contrast to the bureaucracy built up around the Goteborg plant over the years. 3. Cancellation of planned investments The calculations anticipate an investment of 15 million crowns, planned for 173

Sandbergl"Volvoism"

Uddevalla in 1998 but added into the costs for 1992. This is another example of creative book-keeping, that appears to put Uddevalla at a disadvantage. The Uddevalla plant could have operated for another five years without the planned investment. In addition, the real costs of running facilities at several locations are written-off only if the closed plants can be sold or leased. This is likely to prove rather difficult in Kalmar and Uddevalla which are located in more peripheral regions. Goteborg, however, is one of Sweden's largest cities and a major industrial centre. Thus Volvo's calculations seem to substantially overestimate the cost-savings associated with the concentration of Swedish production in Goteborg. Participants from the Uddevalla plant in Volvo's study of capacity problems estimated that the closures may result in cost reductions of as little as 50 million crowns - a sum too low to justify the decision. More importantly, the calculations do not include a comparison with the gains to be made by pursuing other options. If factories had really to be closed down, an obvious alternative would have been to direct the changes to the more conventional assembly plants in Goteborg or in Gent. That Gent was not selected is understandable given its proximity to major European markets and the substantial investment in new body and paint plants made in the late 1980s. A cut-back in assembly work at the Goteborg plant could, however, have been implemented. For instance, Volvocould have decided to rebuild one of the Goteborg lines and then have closed the second if the market outlook did not improve. The closure of one of the Goteborg lines would have yielded reductions in component transport costs and administrative costs could have been substantially reduced by decentralization. If a more balanced approach to the cost side of the equation substantially reduces the Goteborg plant's advantages relative to its innovative sister plants, the latter virtually disappear once the revenue side is added. Thus, for instance, Volvo has failed to take into account the likelihood of a return to high employment and with this, the labour shortages, high turnover rates etc. that induced it to enter into the Kalmar and Uddevalla experiences in the first place. In 174

Studies in Political Economy

the late 1980s, turnover in the Goteborg plant was as high as 30 percent, making efficient operation difficult. Even if Sweden does not return to the almost negligible unemployment that characterized that period, in a country where high employment is combined with measures to promote flexible external labour markets, it will be difficult to put Toyotist practices to work. Changes in the product market also weigh in on the side of Uddevalla. Demand is rising for flexibility, quality and a steady stream of new models. Conventional plants like Goteborg build cars according to a plan based on sales projections for different models. If the cars in inventory do not fully correspond to customer demand, stocks grow - at the high price of 100 crowns a day. With overproduction at the levels experienced in 1993, a finished car waits in stock for an average of ten weeks and at a cost of approximately 7,000 crowns (approximately $1,270 Canadian). Kalmar and Uddevalla, however, have the kind of flexibility that Goteborg and other conventional plants lack. In Uddevalla in particular, it is easy to adjust production volumes by opening or closing a "mini-plant." Such quantitative flexibility is surpassed only by Uddevalla's unique qualitative flexibility which allows it to respond to individual customer demand at short notice. By the time the decision to close Uddevalla was announced, 70 percent of the cars were being built "to order." The Uddevalla plant is, in fact, the embodiment of "flexible specialization" or "diversified quality production" in which economies of scale and scope are combined. Such customer-oriented, made-to-order cars can command a higher price - as much as several thousand crowns. In addition, environmental considerations, including work environment, are a factor that enters increasingly into consumer choice as General Motors advertisements for its new Saturn car suggest. Here, too, Kalmar and Uddevalla offered unique advantages over Goteborg and even over the Saturn plant. In both, Volvo produced the remarkable combination of rewarding and productive work. In Uddevalla, Volvo broke with line production and developed real team-based production. In addition, Volvo had made a lot of progress in terms of gender equality in the workplace by providing 175

Sandberg/"Volvoism"

the material conditions for integrating women into non-traditional manufacturing jobs. It is no accident that 40 percent of shopfloor workers at Uddevalla are women. Work positions and equipment were developed precisely for their ability to be used by both men and women. These and other issues were raised by researchers in leading Swedish dailiesf but Volvo never seriously tried to answer their critics. They simply reproduced the figures provided in their original press statements - figures that had already been shown to be incorrect. Their silence in the face of these challenges suggests that the companys calculations were produced to justify a decision that was taken on other grounds. Organizational Politics and Warring Ideas Volvo's decision can be understood from a sociological perspective that makes it possible to begin to grasp the role of internal politics and dominant ideas. One explanation of the decision looks to the "battle of ideas" between traditionalists and innovators that is going on inside the company. Over the years Volvo group management and, in particular, its Managing Director, Pehr G. Gyllenhammar, have supported Uddevalla and Kalmar but have not wholeheartedly embraced these plants as the embryo for future Volvo car assembly. Uddevalla and Kalmar were innovative islands in what remained a relatively traditional company. As early as 1989 the Swedish journal Ny Teknik cited one group manager who argued that the Uddevalla experiment was intimately related to Sweden's tight labour market.? If Volvo were to shift production to the Baltic states or Southeast Asia, it would revert to Taylorism. Uddevalla was regarded by many as an experiment that could be abandoned in tougher times. There is a certain geographic dimension to the battle of ideas. Thus the innovators have concentrated in Uddevalla, Kalmar and Volvo's engine, bus and truck divisions in different parts of Sweden. The traditionalists have remained strong in Goteborg at the management level and, to some extent, in the Volvo union organizations where the Goteborg contingent enjoys a numerical advantage. to Goteborg also enjoys the symbolic advantage of being the company's birth176

Studies in Political Economy

place. With Volvo's decision to enter into an alliance with Renault, the geographic field on which the battle was waged became international.I! The alliance with Renault, forged in the late 1980s, is likely to have strengthened the hands of the traditionalists within the Volvo organization. Although Renault is probably more innovative than Volvo in design and marketing and in the development of its subcontractor system - two areas where Toyota has shown the way - it has also adopted modified versions of the Toyota system in the area of work organization, such as short job cycles, kaizen techniques for securing continuous improvement and Japanese style group work in which the team is subordinated to detailed managerial control. A consultant's report for the French government, which enjoys ownership rights within Renault, was very critical of the Kalmar and Uddevalla plants, claiming that their "production model has reached its limits and has no place in today's competitive context."12 More broadly, having just implemented Toyotist reforms, the Renault management may have found Uddevalla's organization, based on highly qualified teams which were relatively independent of direct managerial intervention, incomprehensible. Moreover, to tum its back on Toyotism in favour ofthe Uddevalla model - a model actually preferred by the French auto unions - would have meant yet another enormous investment in training and in organizational renewal in general, something which Renault was probably not interested in doing. And Renault, after a successful year, was in a strong enough position to force the then less profitable Volvo to adopt its preferred model as the two companies worked to create a common production network. Ironically, in the battle of ideas the Swedish unions appear to have sided with the traditionalists. True, one could read about the protests of the workplace unions from the Kalmar and Uddevalla plants in the local newspaper, but the Volvo group union organizations in Goteborg and the national unions remained silent. Such silence is very surprising given the pioneering role which the Metalworkers union has played in adding "good work" and "solidarlstic work policy" to the LO unions' primary objectives. Moreover, given Volvo's fail177 ------

----------------------

Sandberg/"Volvoism"

ure to defend their cost calculations after criticism appeared publicly in 1993, one might have expected the group unions to reconsider their acceptance of Volvo's decision; But they did not even lend symbolic support to the struggle against the closures. Thus, when the Kalmar plant was closed in the spring of 1994, both management and unions followed the same script. When the Volvo shareholders met in Goteborg two days after the last car rolled out of Uddevalla, what grabbed the headlines was not the debate about Volvo's choice of future production concepts but Gyllenhammar's high salary and his elegant new brown hat! The battle of ideas was nevertheless carried into the media by the Uddevalla union locals and by a few Swedish and international researchers, with a few articles appearing in the national press. What this experience suggests is the need for strong work life research, independent of management and the immediate pressures of union politics. University departments of business administration and industrial organization are often closely connected to managerial interests and ideologies. The few critical researchers in the field depend upon trade union acceptance. A sine qua non for research in the public interest is researcher access to workplaces, guaranteed by law or in collective agreements at the national level.13 After Uddevalla? The Uddevalla plant was the crowning achievement of years of Scandinavian experiments in work organization.H Its details were hammered out by innovative management representatives, production engineers, trade unionists, and researchers in industrial technology and work organization from the Chalmers Institute of Technology in Goteborg and the University of Goteborg, It was seen as the expression of a new "Swedish model," one centred on the workplace but supported by expertise and collective agreements at the national level. The beautifully designed plant in Uddevalla could have become a symbol for the new century, a renewal of work life and industrial relations as important as the earlier Saltsjobaden accord between labour and capital. Does the closure of Uddevalla and Kalmar mean

178

Studies in Political Economy

the end of this alternative to Taylorism, especially in the latter's most advanced form, Toyotism? Volvo management lacked the stamina required to enable Uddevalla and Kalmar to survive the current hunt for cost reductions. But, as Robert Boyer reminds us, the most innovative entrepreneurs in the French car industry faced similar problems in the thirties when conditions for a Fordist breakthrough had yet to be created.U It may well tum out that Uddevalla and Kalmar were victims of their very pioneering status, while followers may be able to benefit from more favourable institutional arrangements. Certainly, the search for alternatives to Fordism and to Toyotism continues. In Sweden, Asea Brown Boveri (ABB), the Swedish-Swiss electrical equipment multinational, seems to have taken the lead over from Volvo. Its comprehensive program for organizational renewal includes an integrated view of work and industrial relations that is challenging the traditional division between white and blue collar workers, a division institutionalized in the Swedish union movement)6 In Germany, the Mercedes plant in Rastatt and its plans for rebuilding older plants have been inspired by Uddevalla. In Japan itself, the Toyotist model of work organization is subject to increasing criticism from trade unionists and others for its heavy work loads and excessive hours, as well as for its ecological and trade practices.!? Protests against bad working and living conditions and difficulties in recruiting workers, despite rising unemployment, are new trends in Japan that have had an impact on Toyota itself. The latter has located its newest plant on the southern island of Kyushu where recruitment to auto industry jobs is easier than in central Japan. The assembly line in the Kyushu plant is divided into eleven parts separated by buffers. Work environment and ergonomics represent a significant improvement over older plants. Although this large auto producer is thus improving the work environment, short job cycles remain the dominant practice. In the medium run, however, the Uddevalla model seems to hold some attraction for the smaller producers. Thus several Japanese subcontractors are now developing and can produce their own bodies and assemble 179

Sandberg/"Volvoism"

complete cars in short series oriented to smaller segments of the market. In the longer run, with growing worker demand for job quality, the Uddevalla model may inspire a "post-Toyotist" production concept for volume producers, with automation of heavy and simple tasks and human-centred group work for the remainder. Lean production does not represent the "end of history" in the field of industrial organization. Under conditions that may be created, humane and productive alternatives could well find a place in the demanding labour and product markets of the future. Notes The primary research for this article was done through interviews with managers and auto workers as well as the three union locals in Uddevalla and interviews with a couple of staff in Goteborg, in 1993 and 1994. I was also supported by colleagues at the Swedish Center for Working Life, the Royal Institute of Technology in Stockholm and the University of Goteborg. In particular I would like to thank John Andersson, Christian Berggren, Albert Danielsson, Kajsa Ellegard, Arne H. Eriksson, Gunnar Gelin, Lennart Nilsson, Casten von Otter and Birger Viklund. Taro Miyamoto and Takeshi Shinoda, visitors from Ritsumeikan University in Japan made helpful comments while visiting at the Center and I received valuable suggestions when I presented a draft version at Chuo University in Tokyo and Ritsumeikan University in Kyoto. Rianne Mahon helped in editing the English text. I am currently editing a volume on Volvo and the Uddevalla experience seen from an international perspective. 1.

2. 3.

The term "lean production" comes from James P. Womack, Daniel T. Jones and Daniel Roos, The Machine That Changed the World (Macmillan, New York: 1990). The latter are eager to spread the lessons of lean production. "Toyotism" is another term for describing the Japanese production system. It is more often used by critics like Knuth Dohse, Ulrich JUrgens and Tomas Maisch, who agree with the basic stance of this article - i.e. that Toyotism represents not a break from, but a more advanced form of, Taylorism. See "From 'Fordism'to 'Toyotaism'? The Social Organization of the Labor Process in the Japanese Automobile Industry," Politics and Society 14/2 (1985). See also John Price, "Lean Production at Suzuki and Toyota: A Historical Perspective," in this issue. Alain Lipietz, Towards a New Economic Order: Postfordism, Ecology and Democracy (Oxford: 1992), p. 66. The technical and organizational principles behind the Uddevalla plant are described by K. Ellegard, Dan Jonsson, Tomas Engstrom, Mats I. Johansson, Lars Medbo and Bertil Johansson in "Reflective pro-

180

Studies in Political Economy

4.

5.

6. 7.

8.

9. 10.

11. 12. 13.

14.

15.

181

duction in the final assembly of motor vehicles," International Journal of Operations and Production Management 1217-8 (1992). See also Kajsa Elleglrd, Tomas Engstrom and Lennart Nilsson, Reforming Industrial Work - principles and realities (Arbetsmiljofonden, 1992) It should, however, be noted that Swedish employers have enjoyed some success in their campaign to decentralize the bargaining process, and that welfare rights in Sweden are being diminished. Among others, the following have presented an eloquent case for the spread of new production concepts along the lines explored in plants like Uddevalla and Kalmar: Horst Kern and Michael Schumann, Das Ende der Arbeitsteilung? (Munich: 1985). In the latter, Kalmar was ranked higher than both. The J.D. Powers survey is often quoted in the auto industry. Uddevalla needed lower investment in tools and equipment than did Goteborg, For instance, longer work cycles reduce the number of jigs needed as one operator finishes the whole task, whereas in more conventional plants every task is divided among several workers, each of whom needs a jig. Another aspect of the low tech solution (one related to the social aim of gender equality in the labour market) was the effort to adapt hand tools for the needs of women workers. The debate brought together Swedish and international researchers in the field. In addition to the author, the following contributed with individual commentaries: Peter Cressey, Karel Williams and Colin Haslam. In April 1993, the leading Swedish daily, Dagens Nyheter, carried an open letter signed by the author, Peter Ullmark, Elsie Charron, Kajsa Ellegard, Jesper Steen, Michel Freyssenet, Bob Hancke, Ulrich JUrgens, Rianne Mahon and Karel Williams. Article by Maria Hammaren, Ny Teknlk Spring 1989. Blue collar workers in the auto industry are represented by the Swedish Metalworkers Union, an affiliate of LO, the blue collar workers trade union central. The majority of clerical and technical employees are represented by SIF, an affiliate of the largest white collar union central, the TCO and the rest by CF, the engineers union within the smaller association of professional unions, SACO. In large firms like Volvo the unions have developed organizations (group-level councils) to bring together their locals in various divisions of the company. The Volvo-Renault alliance lasted until the fall of 1993 and thus was in force when the decision to close Kalmar and Uddevalla was made. SRI International, "Volvo Cars. Audit industriel et commercial," (Paris, 1992: mimeo). In Sweden, many labour market and workplace issues are regulated not by law but by collective agreements at the national level. Even when laws are in place, they normally provide only the framework within which the labour market parties themselves work out the details. Scandinavian and especially Swedish developments in work organization and industrial relations are discussed in our book, Ake Sandberg, Jesper Steen, Gunnar Broms, Arne Grip, Lars Sundstrom and Peter Ullmark, Technological Change and Co-determination in Sweden (Philadelphia: Temple University Press, 1992). Robert Boyer, "Is a new socio-technical system emerging?" (paper prepared for Structural Change and Labor Market Policy, a conference

Sandbergl"Volvoism"

16.

17.

sponsored by the Swedish Center for Working Life, Saltsjobaden, June 1988), p. 28 in particular. See R. Mahon, "Wage Earner and/or Co-Worker? Contested Identities" in W. Clement and R. Mahon (eds.), Swedish Social Democracy: A Model in Transition (Toronto: Canadian Scholars Press, 1994) for more on this. See also her articles on post-Fordism in Economic and Industrial Democracy 8/1 (1987); and solidaristic work policy in EID 1213 (1991), both of which have been reprinted in Swedish Social Democracy. . See for example The Confederation of Japanese Automobile Workers (JAW), The Japanese Automobile Industry in the Future: Toward Coexistence with the World, Consumers and Employees (February 1992).

182

Suggest Documents