KANSAS CITY, Mo. – They bicker over money. They fret about the kids. They finish each other's sentences.
Together, they run the Harley-Davidson motorcycle factory here, though Karl Eberle is the plant manager, while Richard “Stick” Doyle and Tony Wilson run the local chapters of the United Steelworkers and International Association of Machinists and Aerospace Workers, respectively.
NUCCIO DiNUZZO / Chicago Tribune
In Menomonee Falls, Wis., Harley-Davidson employee Earl Townes worked on an engine. Instead of laying people off or outsourcing jobs, Harley has embraced its workers as partners.
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“It's as close to your marriage as you'd ever want to get,” Eberle said recently, prompting a wry chuckle from the other two. “It'd be a lot easier a lot of days just to say the hell with it.”
At a time when Delphi Corp. and the United Auto Workers are threatening a war that could prove apocalyptic for both of them, Harley and its unions are hard at work demonstrating that American manufacturing doesn't have to implode just because workers get paid less in China or India.
Instead of laying people off or outsourcing jobs, Harley has embraced its workers as partners. And rather than fighting for every last “work rule” or job classification, the unions have accepted a major role in controlling their own destiny.
Harley's system, which has contributed to 20 consecutive years of record sales and earnings, has yet to be tested by a major, prolonged downturn. Organizational experts agree that few other companies could adopt it wholesale.
But in the mid-1980s, Harley-Davidson was in worse shape than General Motors or Ford Motor are today. And the company's acceleration away from the abyss over the past two decades offers many lessons – and hope – for any kind of company beset by growing competition from without and management stagnation from within.
What it boils down to, said Jim Ziemer, Harley's CEO, is a lot of hard work and commitment, something that tests the patience of many companies pressured by Wall Street.
“You have to build trust, and it takes time – we're talking about years,” Ziemer explained. “Sometimes it's easier to pick up the phone and call somebody in Mexico.”
In some ways, Harley's labor-management detente is really nothing new. It depends on the sort of factory teams and worker empowerment programs that have become commonplace in American manufacturing.
Countless companies – including the embattled automakers – have tried to institute the principles pioneered by Japan's Toyota Motor Corp. But many of those efforts have foundered on the shoals of bureaucracy, mutual recalcitrance and fear of anything new.
“These institutions have wonderful immune systems when it comes to massive change efforts,” said Edward Lawler, director of the University of Southern California's Center for Effective Organizations.
What is new is a growing recognition that getting the most out of U.S. labor – union or otherwise – requires more than just team-building and empowerment programs. It calls for a new way of thinking about management and work – one that emphasizes mutual trust instead of command and control.
Harley has discovered that allowing unions true participation in all aspects of running a plant provides a powerful lubricant for reducing costs, boosting productivity and ultimately giving customers more of what they want. Hiring good people and making full use of their ingenuity and intellect is the true promise of the “knowledge economy,” management experts agree.
“We expect more than just your hands,” said Harold Scott, Harley's head of human resources. “You gotta have people who want to contribute and then train them to do it.”
On a windblown afternoon in Kansas City, Eberle, Doyle and Wilson gathered in the glass-walled office suite they share on the second floor of Harley's factory, and tried to explain how their unique arrangement works. The fact that management and labor share quarters is unusual enough, but these three also share responsibility for budgets, capital spending, and most other aspects of running the plant.
Built from scratch and opened in 1998 to manufacture the company's smaller Sportster model, the Kansas City factory is a maze of articulated robots and noisy metal-bending machines. One measure of its success over the past decade is that the corporate office has given it four additional lines. Employment has exploded from a little more than 50 original employees to around 1,000 today.
Doyle drew a series of interlocking circles to explain Harley's structure. The partnership concept, he said, is a radical break from the ideas of Frederick W. Taylor, whose thinking helped shape mass production from Henry Ford onward.
“He was the one who started the Taylorism paradigm,” Doyle explained. “High-volume production. I don't want my workers to think. I just want them to do what I tell them to do and do it now.”
Harley's insight in the late 1980s was that unthinking workers threatened to undo the spectacular comeback the company had pulled off several years earlier.
Then-Harley CEO Rich Teerlink wondered how the company could keep its edge in the absence of an external crisis.
“There wasn't the same zeal in doing things that there was when they were about to die,” said consultant Lee Ozley, a close Teerlink adviser. “Management and labor were reverting to traditional behaviors.”
Unlike other manufacturing leaders, who were beginning to flee overseas or to “right-to-work” states in the South, Teerlink decided the way to inspire better performance was not by running from unions, but by engaging them. He believed America's best companies were “effective, efficient and humane.” But it was also likely that Harley's flag-waving customers wouldn't put up with a lot of outsourcing.
In “More Than a Motorcycle,” their book about this period, Teerlink and Ozley explained that while top-down decision-making was absolutely necessary to stave off the crisis, eventually “leaders have to stop taking answers to their people and instead take questions to their people.” They have to “give up on some of the most treasured prerogatives of management. ... Instead of demanding compliance, leaders have to earn, and call upon, commitment.”
Doing this, of course, would run counter to a century of labor-management animosity. So Teerlink went straight to the international unions and convinced their leadership that working together was in everyone's interest. Harley and its unions formed a partnership framework for the entire company and allowed each plant to adopt as much or as little as they could stomach. The idea was to start slowly and progress toward a partnership ideal.
Kansas City, however, was different.
Because booming demand meant the company needed more manufacturing capacity, it decided to build a new $85 million plant from scratch and install a partnership system whole cloth. Teerlink chose Eberle, the even-keeled head of Harley's plant in Tomahawk, Wis., to represent the company. The unions chose Doyle and Wilson's predecessors to join him. For help, they turned to a consultant named Debra Boggan, who had run a plant in North Carolina for Nortel Networks Corp. in the late 1980s. There, she had discovered why so many exercises in team-building ultimately fail.
Teams, she said, were fine but didn't drive results on their own. The key was setting up certain “non-negotiable” processes to define the context of decision-making and to provide scorecards to keep track of performance. Within this scaffold, accountability and decisions should be pushed deeply into the organization. The structure is what makes trust possible.
“People like to know what's expected of them,” Boggan said. “If it's too nebulous, they'll start to do their own thing and sometimes their own thing is to do nothing.”
The interlocking circles on Doyle's white board describe the structure Eberle and his union colleagues came up with. The most basic element is what Harley calls natural work groups, or NWGs. Each one has from five to around 15 workers who rotate between jobs on a specific area of the floor. No one works a job for more than two hours at a stretch. This alleviates boredom and avoids ergonomic problems. It also increases flexibility, since workers can fill in for each other if someone is sick or on vacation.
Teams like this have become increasingly common in U.S. industry. But what's missing in Kansas City are salaried supervisors telling each group what to do. Instead, group members manage themselves by assuming various supervisory tasks, including staffing the line each day, planning vacations, assuring quality and monitoring safety. The company provides extensive training in the specific skills so that employees aren't asked to do something they're not equipped to do.
With production targets set by the plant leadership, the groups organize their own output and take responsibility for solving their own problems. Their performance scorecard is one of those “non-negotiable processes.” But how they meet those goals is their own business.
When Harley gave Kansas City responsibility for building Dyna motorcycles, for example, the employees assigned to the new line arranged the machines and equipment as they saw fit. In another instance, when a work group complained that gas tanks coming out of the paint shop had too many nicks, workers in the paint area diagnosed and fixed the problem without management input.
“You feel that sense of pride whenever you do that,” said C.R. Carter, then a member of the paint shop crew but now a plant auditor.
For discipline, work groups rely on both pride and peer pressure. Everybody, no matter how reluctant, has to participate in the governance system, and employees feel a keen responsibility to do the right thing.
If problems crop up that the group can't solve, they can ask for help. They also receive regular coaching to make sure this unusual arrangement sticks. If they fall behind, creating problems for the rest of the plant, a temporary supervisor will be assigned to coach and mentor the group until things get back up to speed. But this is rare.
There is only one layer of management between Eberle and the shop floor. Most decisions are collaborative.
Employees get a bonus each year if they meet the company's aggressive goals for cost-per-motorcycle.
Eberle is quick with an example why cooperation pays dividends. Recently, a machine broke down on the line used to weld frames. That meant the plant had six hours to fix the problem before it began to slow production throughout the plant.
Without prompting, the groups involved got together, fixed the machine and pulled in workers from the next shift early to catch up. Typically, schedules allow for running machines at 80 to 90 percent of optimum capacity so workers don't get burned out.
“But you can make them hum if you want to,” Eberle said. “These teams are very good about that when the chips are down.”
