Understanding Lean at Whirlpool

A few days before Christmas I received a long email with the subject of "Help me to understand."  It was from a worker a Whirlpool's Evansville factory, who was among 500 people laid off earlier in the month.  To avoid causing him any further grief, I'll just call him "Bob."

The human side of Bob's email tugged at me, as only five years ago I had to lay off 183 people, including myself.  It was on September 10th, 2001, and the events of the next morning put things in perspective again.  Thanks to lean we had quadrupled productivity in under a year, but because we had done such a poor job of promoting our success, our operations were being absorbed into far less efficient operations at corporate headquarters.  I vowed to never let that happen again.

Coincidentally we wrote about Whirlpool's Evansville operation just last August, comparing their announcement of impending layoffs to a same-day announcement of Sealy building a new domestic plant.  We found the difference between a couple statements in their press releases very telling:

Whirlpool: "The company will continue to have committee explore lean manufacturing an efficiency practices."

Sealy: "The company will employ lean manufacturing techniques in the design and operation of the plant."

The difference is what we called the "Nike factor"... some companies think of lean as some foreign concept that has to be studied and analyzed by committees with plans and buy-in from all groups to achieve synergy and consensus and other meaningless buzz words.  Some companies just do it.

Bob's first email to me described several situations that unfortunately make perfect sense when you think about the statement in their August press release:

• "Management is consumed with operating like Toyota.  I heard it everyday for more than a two years."
• "Management was not willing to make the necessary changes in conjunction with their employees."
• "Meetings, meetings, meetings all day long.  All that really gets accomplished is a re-hash of the previous meeting."
• "Waste is abundant.  They talk about it being a problem but every year it seemed to multiply."

Yes, that sounds like a lot of talking, committees, and meetings with no action.  Just like the press release implied. 

There is nothing wrong with obsessing about Toyota.  You can learn a lot and become very effective with such an obsession, and the learning is even easier since Toyota's Princeton facility is only 27 miles away.  Toyota is famous for helping out other companies, and even their competitors.  But apparently some critical components of lean were lost in translation: respect for people, planning, and action.  Implementing a form of hoshin kanri would have created a simple plan for the lean transformation, which would have been very visible for all to review.  Some basic kaizen training would have led to "meetings" that had immediate and dramatic effect on waste.   

Whirlpool's rationale for the layoff is that demand for top-mount freezers has been shifting to side-by-side models, which aren't made at Evansville.  However, at the same time Whirlpool is adding over a thousand new jobs existing factories in Clyde and Mason, Indiana, as well as Amana, Iowa.  But those jobs need to be netted against almost a thousand jobs soon to be lost at the Fort Smith, Arkansas plant due to the rapid expansion of the Ramos Arizpe plant in Mexico. 

So let me get this straight... tens of thousands of years of manufacturing knowledge are being disposed of in Evansville and Fort Smith, huge hiring and training costs in Clyde, Mason, and Amana to bring workers up to a few weeks of manufacturing knowledge, it's "too expensive to retool" the Evansville plant but easy to swallow a hundred million bucks of severance charges (not to mention what the taxpayers shoulder).  A few bucks an hour savings in Mexico is worth a much longer multinational supply chain that requires more oversight, longer transportation of thousands of heavy objects a day, far more training expenditure to handle a foreign language in an area notorious for extremely high turnover, and the resulting quality problems from such a lack of long-term manufacturing knowledge. 

That is some wacky accounting.  Actually it is traditional accounting, and it makes sense to a traditional accountant.  But not from a real-world perspective, does it?  Experienced employee knowledge and creativity doesn't show up on the balance sheet.  A severance charge is easier to sell to short-term shareholders than a long-term investment.  Turnover costs are always underestimated.  A pair of hands with a day's experience is worth the same (if not more... they "cost" less) than a pair of hands doing the job for ten years.   Some companies are realizing that this is bizarre and not the real world, which is why lean accounting is starting to take root.

After a couple emails back and forth, I had hoped that Bob wouldn't be soured on the potential of lean manufacturing itself.  He wrote back "No, I have not let what is currently going on at Whirlpool change any thoughts that I have on lean manufacturing.  If anything, it has made me feel even stronger about the concept as a whole."

Best holiday wishes to you and yours, Bob, as well as to your Whirlpool coworkers who have suffered through this pathetic situation.  I hope the new year brings a good job with a company that truly understands excellence, and you have one nearby at Toyota's Princeton facility.

Comments

[Kyle McCarthy]

Has anyone figured out how to value "experience" or to put it on the balance sheet? I thought I once read of one company that "capitalized" all training costs, which thereby forced an expense if that employee "went away." Both via layoff and turnover/attrition. It forced the company to work to reduce turnover and not downsize without considerable review. But I don't know who the company was or how specifically how they did it.

[WM]

Kevin,

I found your article very interesting and right on the money. I grew up in Evansville and worked for an auto supplier there for five years. This past August I decided to switch jobs in order to further my career implementing and learning the Lean philosophies. My neighbor in Evansville works for Whirlpool and mentioned that they “do Lean” and offered to look into a position for me. I said no politely because Whirlpool has been notorious for a yo-yo effect on the workforce over the years. As I asked him probing questions, my suspicions were validated.

He has no understanding of Lean so he didn’t like it because it was all about meetings and discussing things and never taking any action. This goes right with what “Bob” had written to you. Also, he said that division that designs the high-end refrigerators don’t worry too much about reliability and just add as many features as possible. The divisions thought was that people who buy these extremely high-end refrigerators don’t do much cooking so there isn’t much food so if it breaks down and they have a service call, no big deal. The second part of the thought was that anybody who can afford these refrigerators can afford the service call and the money for a service call is no big deal. This was from a design engineer from Whirlpool in Evansville. My jaw just about hit the floor. I have been learning and implementing Lean for 5 years now and I couldn’t believe my ears.

I feel for “Bob” and his family. The worse part was that layoffs were supposed to be in Oct. or Nov., I believe, but they held them off until the Holidays.

Whirlpool in Evansville has a very long way to go. I thought you would like the additional information.