Jim Malesckowski remembers the call of two weeks ago as if he just put down the telephone receiver. “I just read your analysis and I want you to get down to Mexico right away,” Jack Ripon, his boss and chief executive officer, had blurted in his ear. “You know we can’t make the plant in Oconomo work anymore—the costs are just too high. So go down there, check out what our operational costs would be if we move, and report back to me in a week. ” At that moment, Jim felt as if a shiv had been stuck in his side, just below the rib cage.
As president of the Wisconsin Specialty Products Division of Lamprey, Inc. , he knew quite well the challenge of dealing with high-cost labor in a third-generation, unionized U. S. manufacturing plant. And although he had done the analysis that led to his boss’s kneejerk response, the call still stunned him. There were 520 people who made a living at Lamprey’s Oconomo facility, and if it closed, most of them wouldn’t have a journeyman’s prayer of finding another job in the town of 9,000 people.
Instead of the $16-per-hour average wage paid at the Oconomo plant, the wages paid to the Mexican workers—who lived in a town without sanitation and with an unbelievably toxic effluent from industrial pollution—would amount to about $1. 60 an hour on average. That’s a savings of nearly $15 million a year for Lamprey, to be offset in part by increased costs for training, transportation, and other matters. After two days of talking with Mexican government representatives and managers of other companies in the town, Jim had enough information to develop a set of comparative figures of production and shipping costs.
On the way home, he started to outline the report, knowing full well that unless some miracle occurred, he would be ushering in a blizzard of pink slips for people he had come to appreciate. The plant in Oconomo had been in operation since 1921, making special apparel for persons suffering injuries and other medical conditions. Jim had often talked with employees who would recount stories about their fathers or grandfathers working in the same Lamprey company plant—the last of the original manufacturing operations in town.
But friendship aside, competitors had already edged past Lamprey in terms of price and were dangerously close to overtaking it in product quality. Although both Jim and the plant manager had tried to convince the union to accept lower wages, union leaders resisted. In fact, on one occasion when Jim and the plant manager tried to discuss a cell manufacturing approach, which would cross-train employees to perform up to three different jobs, local union leaders could barely restrain their anger.
Yet probing beyond the fray, Jim sensed the fear that lurked under the union reps’ gruff exterior. He sensed their vulnerability, but could not break through the reactionary bark that protected it. A week has passed and Jim just submitted his report to his boss. Although he didn’t specifically bring up the point, it was apparent that Lamprey could put its investment dollars in a bank and receive a better return than what its Oconomo operation is currently producing. Tomorrow, he’ll discuss the report with the CEO.
Jim doesn’t want to be responsible for the plant’s dismantling, an act he personally believes would be wrong as long as there’s a chance its costs can be lowered. “But Ripon’s right,” he said to himself. “The costs are too high, the union’s unwilling to cooperate, and the company needs to make a better return on its investment if it’s to continue at all. It sounds right but feels wrong. What should I do? ” 1| P a g e QUESTIONS 1. What forces for change are evident at the Oconomo plant? The greatest force that drives Lamprey for change is that it’s operating at a high cost in its Oconomo plant and it’s giving out losses.
The CEO had read the report submitted by Jim Malesckowski and had immediately pushed for closing down the plant and possible transfer to Mexico. Production costs at the plant were already spiralling out of control. As a result, the plant was losing its competitiveness. But while the top management is pushing for the closure of the plant, resistance from the union for the past improvements that Jim ushered to implement is the restraining force that makes him hesitant to execute the change.
2. What is the primary type of change needed—changing “things” or changing the “people and culture? Can the Wisconsin plant be saved by changing things alone, by changing people and culture, or must both be changed? Explain your answer. The primary type of change needed was changing the people and culture. Closing down the plant would lead to serious sociological consequences at Oconomo, leaving 520 people jobless in a town with no other job opportunities to look for. Yet it was conceivable that the plant could be saved if the union leaders would stop resisting change. Therefore, the mindset of the union leaders had to be changed.
Some of the changes being considered, such as lower wages and cell manufacturing, would enhance the competitiveness of the company. Yet these changes were not feasible with resistance from the union. Therefore, the existing mindset had to be the first thing to change. 3. What do you think is the major underlying cause of the union leaders’ resistance to change? If you were Jim Malesckowski, what implementation tactics would you use to try to convince union members to change to save the Wisconsin plant?
To prevent the planned closure, Jim will have to devise some means to retain the operations by introducing measures to cut costs and improving the efficiency of the workers (e. g. reviving the cell manufacturing idea), leading to results both beneficial to the company and its employees (win-win solution). The union leaders were nervous about losing their jobs (previous idea of cell manufacturing would result to reduction of workers). As a result, they resisted the change that they felt would compromise their job security.
In this situation, the following effective implementation tactics are essential in the change management process: a. Communication and Education As mentioned above, Jim will have to devise a win-win solution for both the company and its employees. By doing so, Jim will have to lay the solid information about the change down to the last detail for all the union leaders to see the whole plan. Additionally, Jim will have to speak right to the union leaders’ hearts to get past through their rough reactions by touching their feelings and aligning the facts with their emotions.
The leaders are much more likely to think otherwise if they have understand the rational reasons behind the change and see the big picture. One thing that Jim could use to his advantage is his friendship with the employees which could give him the leverage to persuade and influence them. b. Participation Jim and the union leaders will jointly participate in drawing the comprehensive roadmap leading to the change. Along the way, both sides will have to determine the potential problems and reconcile the differences in the perceptions of change among the participants.
Some highlights of the roadmap will be: c. Identification of workers with high performance ratings and assessment of skills Training and development programs for high-performing workers Social responsibility programs for displaced workers (e. g. livelihood programs) Sustainability programs Negotation As mentioned above, union leaders are resisting because of their fear that the change would compromise their job security, as well as their members. In order to assure them, Jim will have to bargain to win their acceptance and approval for the planned change (e. . rewards program, benefits program, livelihood programs). d. Top Management Support Jim will have to enlist the support of the top management by making themselves visible in major activities connected to the change. Communication from the top management down to the level of the workers is also an essential key to boost the confidence of the workers to embrace the change whole-heartedly. Top management support such as resources allocation would greatly help also in fast-tracking the implementation, as well as sustaining the change.
