US Industry Picks Up on Worker Participation Idea
AFTER LTV Steel laid off Thomas Allen in the mid-1980s, it offered him a strange new job. He would have to work wherever the company needed him. His skills, rather than seniority, would determine his pay. And, oh yes, management expected him to help make decisions.
``It was a job. That was the main thing,'' recalls Mr. Allen, who took the post. But ``when I saw what was really going on, I liked the new system a whole lot better.''
The L-S Electro-Galvanizing Company here, an LTV joint venture with Sumitomo Metal Industries of Japan, is one example of how American workers and managers are moving onto the frontier of labor relations. In the 1970s and '80s, foreign companies regularly beat United States manufacturers by stressing quality through teamwork, worker participation, and other cooperative techniques. Now, US companies are battling back.
``American companies have seen the light on the shop floor,'' says James Lincoln, coauthor of a book on the new work systems called ``Culture, Control and Commitment.'' ``I don't think we have quite caught up.''
``This is the future,'' adds Richard Florida, a management professor at Carnegie-Mellon University in Pittsburgh, who is also writing a book on the subject. ``The new systems are coming. They will win. They are winning.''
The key, he says, is to put the people on the factory floor in charge of innovation and continuous improvement.
In LTV's case, some of the push to innovate came from Japan. In the mid-'80s, automakers started demanding corrosion-resistant steel. So LTV decided to set up a new electro-galvanizing unit. Electro-galvanizing was a new process that coated steel with rust-resistant zinc. LTV had had positive results from early worker-involvement experiments. It negotiated with the United Steel Workers union to set up a full-blown program.
``We knew if we wanted a different result, we had to try to do things differently,'' says Frank Altimore, the unit's executive vice president.
The results are striking.
Instead of a thick labor contract that spells out rules, union and management have negotiated a 25-page document that defines goals. Worker-manager teams resolve disputes and set performance criteria. Worker teams interview and select the company's new hires and figure out how to schedule themselves. Instead of hundreds of job classifications, the new unit has only four.
``You don't mind what you do because every day is different,'' says Mike Andexler, a process technician. ``You always learn something new.''
``I really like this place,'' adds Dale Hudson, another process technician. ``I don't know how LTV stayed in business as long as it did'' with the traditional system.
Such new concepts are increasingly common at US companies, particularly larger ones. Some of these worker-involvement programs work. Some don't. After surveying more than 1,000 metal-working and machinery companies, two scholars at Carnegie-Mellon concluded that such programs don't, by themselves, guarantee any improvements.
Even LTV officials concede they don't really know if the new system works because they have no traditional electro-galvanizing plant to compare it with. But they are so encouraged by the results that they are introducing a similar system in a unit that will open this spring in Columbus, Ohio.
But not everything is rosy at the electro-galvanizing unit.
Reaching a consensus slows down decisionmaking, says Quent Skrabec, manager of quality control. The company hasn't done a good job of defining what skills are needed at the top end of the pay scale, adds Mr. Altimore.
The local union president was so fed up with management's sluggishness in dealing with one issue that he filed a grievance - only the second grievance in more than five years of operation.
The company is under pressure right now because orders have declined from the auto companies that buy all its steel. The plant is only running at 65 percent capacity. It has eliminated overtime and dropped an outside contractor in order to avoid layoffs. Of the 45 union workers originally hired by the unit, only six have resigned - a low turnover after more than five years of operations.
Workers and managers say they've grown more anxious about their jobs but are working hard to improve things. At a recent company meeting, workers submitted three pages worth of money-saving ideas.
Indeed, LTV has stuck with its program despite shutting down two-thirds of its steelmaking capacity and reorganizing under bankruptcy.
The concept is so powerful that Cole Tremain, LTV Steel's vice president of industrial relations, is certain the unit will survive. In fact, US manufacturers may take the concept far beyond their European and Japanese competitors.
``Entrepreneurship is much more part of our culture than what you will find in Japan or in Europe,'' Mr. Tremain says. ``My sense is that the nature of our culture takes all these same ingredients and impels us to make a more powerful model.''