The traditional big three - GM, Ford and DaimlerChrysler are suffering market share and financial losses at the hands of their global competitors. This follows many years of adversarial relationships with suppliers and labor. Has this approach helped or hurt their prospects? And could the same thing happen to your organization or industry?

Based on our experience working with both traditional domestic assembly and component operations and their tier one and tier two suppliers on the one hand, and companies who have been successful supplying global competitors on the other, we have discovered that the competitive advantage runs much deeper than wages and pension costs.

The misguided supervisor and a tale of two company cultures

“They are so lucky to have a non-unionized workforce… they can fire anyone they want, whenever they want!” This statement was made by a frustrated front line supervisor in a traditional Big Three assembly plant. He and other supervisors were frustrated because they felt that their hands were tied in dealing with difficult employees who appeared to be untouchable.

Less than a half-hour drive away, the President of the non-unionized tier one supplier to Honda and Toyota laughed at the complete misconception by his domestic automotive counterparts. “We wouldn’t be union free for long if we went around firing people regularly,” he explained. Growing steadily along side his Asian customers, he was eyeing further expansion. To maintain constructive and positive employee relations, he has continuously invested in developing his supervisors and group leaders. The depth and consistency of his leadership team helped him maintain a family atmosphere despite the fact that he could no longer know each associate personally.

Lean and mean has undesirable consequences

In the quest to reduce costs and improve productivity, the Big Three have put unrelenting pressure on their supply chain to reduce prices. Many Tier One suppliers have viewed their customer relationships as increasingly hostile. “Just when you think you are giving them what they require they turn around and say it isn’t good enough,” said the plant manager of a tier one stamping company about his domestic customer. “With Honda, it took a lot more effort to establish the business relationship and they were very demanding of us in the qualification process, but now that we have earned their business they work with us to ensure mutual success.”

There are still many opportunities to get lean by eliminating waste from business and manufacturing processes. And there are opportunities to reduce costs by working together between customer and supplier.

Being ‘mean’ however, does little to increase competitiveness for either the customer or the supplier. Mean implies a lack of caring and leads to weaker relationships. Having high expectations of performance can yield strong results without the need for adversarial relationships.

Instead of labor vs. management – why not work together for success?

There is little doubt that organized labor has played an important role in eliminating the injustice that existed in many workplaces of the past. To remain relevant and enhance the livelihood of their members, unions must look for opportunities to help the employers of their members achieve greater success or they will watch their membership dwindle away. Pointing fingers, fighting against needed change, protecting members who work the system to protect their incompetence and viewing company success and employee success as mutually exclusive will cause high paying jobs to evaporate.

At the same time, companies must fix the absence of leadership that has taken root in their organizations. Supervisors and managers need to celebrate success instead of looking for and punishing mistakes. Autocratic leadership must be replaced by constructive leadership from the boardroom to the front line.

Changing the Mindset

The new model for success in the automotive industry is seeking mutual wins for the customer, shareholders, suppliers and workers. Success for one over another will not be sustainable. Establishing this new culture requires strong leadership.

If your company would benefit from a culture change, consider touching base with us to see how we can help you.

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