May 31, 2007
Cowger, Harbour Transcript
NOTE: The following is a transcript of a podcast with Gary Cowger, Group Vice President for GM Global Manufacturing and Labor Relations and Ron Harbour, president of Harbour Consulting.
Tom Wickham (Communications Manager, Global Manufacturing and Labor Relations):
Welcome to GM Manufacturing’s podcast about the annual Harbour Report on productivity. I’m Tom Wickham, Manger of Communications for GM Global Manufacturing and Labor Relations. With me today are Gary Cowger, Group Vice-President of Global Manufacturing and Labor Relations, and Ron Harbour, President of Harbour Consulting, which is based in Michigan.
Thanks, gentlemen, for taking time out of your busy schedules and we can talk about the Harbour Report. We’ll spend about 10 to 15 minutes asking you questions much like you will in a typical interview with the media. I’d like you to be as blunt as possible about your assessments and your thoughts on the results and where we’re going in the future in terms of productively. So, Ron, you’re on the hot seat. Let’s get started.
Obviously, we wait every year for this report. The results are covered widely by the media, and we look at it as a barometer, in terms of who’s doing what in productivity. Give us a takeaway of the results from ’06.
Ron Harbour:
Well, I think one of things we saw was the continued trend that the gap and productivity that used to exist 10 to 15 years ago continues to narrow. So, what have always been considered some of the strongest competitors for years, the Toyotas and Hondas and Nissans, have less of an advantage over the GMs, Fords, and Chryslers anymore, because those companies have continued to improve, which by the way is remarkable considering in most of cases they have continued to shrink at the same time. So in the face of production loses, they have continued to make improvements in productively.
The interesting thing for us has been that most of that productively improvement has really been gated by quality improvement. So, we’re seeing significant quality improvement in the plants for everybody. And the benefit of that is that has lead to productively improvement because you have fewer people doing repair and rework and inspection and all that. So that’s been the fun thing to see for all the companies and all the plants that we’ve visited in support of the report.
Tom Wickham:
Were there any surprises in 2006? I mean, you visited was it about 40 plants?
Ron Harbour:
Right, right. Just over 40. There wasn’t a big surprise because everybody has gotten to such a competitive level that there’s not, you’re not seeing big 20% jumps from one year to the next. But it is interesting as you go from plant to plant to really understand the substance behind the improvement.
Tom Wickham:
Now, in terms of GM’s performance, just give us a quick takeaway in terms of where GM fell in the pack and how the different segments, assembly, stamping, engine, and transmission, stacked-up.
Ron Harbour:
In total, GM was the strongest of the three domestic manufacturers and right on the heels of Toyota and Honda. So that the performance is very good, and it’s balanced across assembly, stamping, engine, transmission. GM had won three of the four awards for the best plants in each of those four areas, which is pretty significant. We’ve never had anybody that won three out of four. So, that’s a good thing.
But I think it’s deeper than that. Because for any company that has multiple operations, you could win those awards, but what’s probably more significant is to look at the total, because what you want to see is does that permeate through the whole organization. And I think if we look at any of the top lists, GM had many of the top positions, not just the number one. So, the improvement was pretty balanced across the facilities. That’s a good thing.
Tom Wickham:
We’re going to come back and talk a little bit more about some of the enablers that helped GM make those improvements. But, Gary, I’d like to get your read on how you feel about this? Obviously three out of four segment winners. The main award is significant, but it does go a lot deeper as Ron said. Can you share some of your thoughts?
Gary Cowger:
Yeah, well first of all, we’re very pleased with the results this year. I mean, productively gains are key to the turnaround of the company, obviously. And as Ron just said, productively and quality go hand in hand. We have been saying that for many years now, and I think it just continually proves itself out.
But this has been a long journey. You don’t implement the Global Manufacturing System and the processes and the profound knowledge down at the floor level overnight. We have been doing this with Ron’s company and Ron for a long time. And I think that the gratifying thing is if you just go back to 1998, we’ve closed the productively gap with Toyota by 83%. And if you’re just looking assembly, we’ve closed that gap by 99%. So those are really profound, long term changes that we’ll just keep pursuing because as the fundamentals get better, you can just keep, as Ron said, you can just keep growing on that.
But clearly, obviously, we’re pleased to win three of the four segments that Ron gives our awards for. That’s very gratifying for the team in North America. And I think as you’ll see, as Ron really expands globally, you’re going to start to see the same kind of performance for us in every region.
Tom Wickham:
Ron, productively, obviously this is not something that people in the general public and consumers pay much attention to. They go to a dealership, they look at a product, and they say I like the style; I like the performance, the fuel efficiency. But really, why is productively so important? I mean, at the end of the day, why is it so important? Why do we pay so much attention to it?
Ron Harbour:
For that very reason. Because I can’t give the performance, I can’t give you the style, I can’t give you the features if I waste the money on poor productively. In other words, you’re right, the customer could care less. They don’t know what it is. It’s not part of their purchase decision. But if you have poor productively and as a result of it there is a cost penalty, you know, you’re paying extra people or whatever, and that’s money that you then can’t put back into the product to make the components better, to make the instrument panel look richer, to give you better ride and handling without those dollars. And that’s really what’s ailed the domestic side of the industry. Because money was being thrown away on things that didn’t provide any value to the customer so it prevented the automaker from either doing vehicles more frequently or making them at a higher level of perceived quality or components, offering components that a competitor could that they couldn’t. All of those things that were difficult to do if money was being thrown away there. That’s why it’s important.
Tom Wickham:
This segues into an important question for you, Gary, and I’m sure you and I have talked about this many times, there’s a myth out there that persists in the media and in the general public about unions, and it’s about, you know, the contributions they make to productivity, and you have seen first hand what the unions, the leaders and the employees of our facilities have done to support that.
Gary Cowger:
I certainly have. I would say that we could not have made the gains that we’ve made over the last 10 to 15 years had it not been for the leadership at both the international level going back to Dick Shoemaker in the UAW, Cal Rapson today, Buzz Hargrove with the CAW, or Jim Clark of the IUE, without those guys absolutely being on board and being supportive and encouraging the local leadership in every plant that these improvements must and should be made. Because as we said earlier, the productively and quality go hand in hand. You know, people, customers don’t buy manufacturing systems; customers buy great cars and trucks. And what Ron just said is absolutely true. So we have to provide the value, the flexibility, and the enabling system so that our engineers can design and use the money on developing these great cars and trucks so that we can in fact increase market share. So this is a team sport and it gets done at a local level by jointing participating with our unions.
Tom Wickham:
Okay, that’s all well and good, and some people say, you know fine, but let’s drill down on that a little bit more. GMS is another thing a lot of people outside the company doesn’t understand. That really is a true enabler and that’s involving the workers, isn’t it?
Gary Cowger:
Yeah. GMS is of course our manufacturing system that we have now implemented absolutely identically around the world. But the true form of GMS is to enable the operator because the whole purpose of it is to make sure that every man and woman making our cars around the globe can do the job right, the first time and every time. And when they can’t, that there’s a system there to ask for help. That’s where the joint involvement is so important.
And I think all of our unions around the globe have endorsed the fact that we need these kind of enablers to make sure that our people can and do the job right every day. I mean, this is difficult, this is a difficult task. And I think as you see the implementation, and Ron I know this year has gone to plants in at least three of our regions, and one of the comments Ron made to me is no matter plant I walk into now in GM, I notice the same implementation of the production system right down to the operator level.
Tom Wickham:
So, Ron, do you feel like you can step in and do a line job or be a supervisor?
Ron Harbour:
Could I? Sure I could, yeah. I still have my UAW card from my college days. It would probably be easier today than it was back then.
Tom Wickham:
I think it’s really important what Gary was just talking about, and you’ve seen this first hand, as an outsider, as a respected third party, you’ve been able to witness the evolution of GMS and our production process. I’d like your thoughts on that. I mean, what do you see as sort of the positives and maybe some of the opportunities we have?
Ron Harbour:
Yeah, I mean, we’ve been very privileged. I feel real lucky because I’ve had a chance to see plants all over the world, not only GM plants, but other plants. So, it’s been interesting to watch the transition not only around the world, but from company to company. So, in that regard, has a big elephant-like company like GM come a long way? Certainly. Is there still a lot more to do? You bet. You know, this company has learned that although it has existed around the world for decades and decades, it never really operated like a global company. And so what we’re seeing now are some pretty strong strategies in that direction to actually be a global company and leverage GM’s economies of scale and size around the world. The more that’s done, the more dividends it will pay. There’s no doubt. So we’ve seen that and I think we’ll continue to see that.
Tom Wickham:
As we come to a conclusion here, I’m going to ask each of you a tough question that sort of looks ahead at some of the challenges we’re facing. And Gary, you’re one of the principle participants in the GM turnaround and transformation. You see things from high up in the company and help organize a lot of the activities that are driving the company towards success. At this point, looking at the positives from the Harbour Report, what are the prospects for General Motors?
Gary Cowger:
Well, I’m encouraged as we’ve said, but we still have a lot of work to do. There are still a lot of areas in the company where we need to continue to improve our flexibility. We need to continue to improve our productivity. And we absolutely have to close the gap to every competitor in the world. There simply is no room to be less efficient, less productive than any of our competitors globally, because at the end of the day, that’s what a manufacturing system has to provide. It has to provide the flexibility to allow our product development folks to get the right product in the market at the right price at the right time. And so, do we have work to do on that? Yes. But do we have the tools in place to continue to get that job done? I feel very encouraged about it, but we still have work to do.
Tom Wickham:
That’s true. Ron, again as the observer from outside, I mean, if you had any advice, if you were to look over at Gary and give him any advice or to give advice to the people in the plants and the offices at GM, what would it be?
Ron Harbour:
When I step back and look at GM overall, I mean, GM’s biggest problem continues to be, or biggest challenge continues to be to change the perceptions about GM. So that’s going to take not only continuing to develop better cars and trucks, but convincing people that they are different and better, not only from a styling standpoint, but function, quality, and all that. And unfortunately, as we all know, perception lags reality. So even where there’s been improvement made, we still live in a country where if I go to the East and West Coast I don’t see enough GM vehicles. So GM has to win that one over. I don’t know the solution to that, but obviously, you know, there’s been more and more introduced, and as you go to the auto shows, GM has won more and more awards and so forth. So, can that translate into more sales? Hopefully, that’s what GM needs to have. So, that’s the revenue side of the equation.
So, at the same time, you can’t facilitate that transformation without being lean and productive and high quality on the manufacturing side. So that part of the equation, which is what we’re talking about today, there’s significant progress being made. So, can you take that and then transform it into everything that needs to be done to convince the customer that this is a different company? That’s the big challenge.
Tom Wickham:
Well, gentlemen, I want to thank you for your time. Is there anything else that you would like to add at this point, any thoughts? You know, obviously, Gary, the next challenge is going to be to go out there and get the troops all pumped and ready to take on ’07 productivity issues.
Gary Cowger:
Well, I think, clearly this is a validation point; because it is easy to go out and tell everyone good job, but we still has to continue down this path of continuous improvement. So, the message will be one great job last year, now we got to get going and make even more improvements this year, because we cannot be satisfied. Let me be clear about that: We cannot be satisfied until we completely close the competitive gap with all of our competitions.
Tom Wickham:
And Ron, closing thought.
Ron Harbour:
Well, I think with any company in order to operate effectively – when you look at the plants and the plants that run the best, it’s one that has not only designs that attract customers, but they’re designs that are buildable with a high level of quality and efficiency in the plant. So, it starts there. The next level is developing the processes in a manufacturing plant that will allow that product then to be built very competitively. And then lastly having a manufacturing plant that can execute all that.
So, GM will continue to take advantages of opportunities on the design side, the engineering side, and the plant side. And that other aspect of that that will be a big focus this summer will be the labor side of it. Because as GM’s made all of those improvements, now it’s kind of highlighted and isolated some of the remaining issues on the labor side. So, in some respect, at the local level there’s been a lot of progress made in coming up with agreements that are much more competitive, but there’s more to do on that, both on the local and the national level, this summer the way I see it. Because we have the opportunity to visit certainly GM plants, Ford, Chrysler, Toyota, Honda, Nissan, and everybody around the world. Right now there are labor agreements that exist that still result in uncompetitiveness. So, I my mind there can’t be anything in the labor agreement that puts the company in an uncompetitive situation. To me those kinds of provisions are indefensible in this environment. Because right now if I have an agreement that Toyota doesn’t have that puts me in a competitive disadvantage, and if that costs me X dollars per vehicle, again that’s money that I can’t put back into making the vehicle better for the customer.
So, it’s going to be a very challenging discussion this summer as to how that all goes and what the impact on GM is. But the big picture is we’ve got to do it for the livelihood of GM and all the people in plants, as Ford will have to do and as Chrysler will have to do.
Tom Wickham:
Gary, Ron makes some very strong points and, you know, as you talked before about labor and management working together, I think this is the best way to close out this podcast. This is really a joint initiative, this is a joint cause.
Gary Cowger:
As I said earlier, I think we have worked effectively to get the progress that we’ve made today. We need to continue that as we go forward. Clearly, you know, I believe our people understand what needs to be done. They realize that the competitive landscape has certainly changed, and certainly change here in North America and specifically in the United States. So, you know, I am confident that we will continue to work both at a local level and a national level to continue to close this gap. Because as I said, at the end of the day we have to be as competitive as everyone else, foreign and domestic, so that we can provide these great cars and trucks. That is what the business is really all about.
Tom Wickham:
Well, gentlemen, thank you for your time again. This was great information, a lot of insight, good results for GM, but obviously a lot of challenges that we face going forward into the years to come. I look forward to talking with you again next year. Thank you very much.