Case Study Essay
Motivation at New United Motor Manufacturing, Inc (NUMMI)
By Gary Convis
Origins of NUMMI. The Fremont plant of General Motors opened in 1965, and after experiencing nearly decades of labour-management conflict, closed in 1982. At the time of its closing, over 6000 workers lost their jobs and nearly an equal number of grievances remained unresolved.
Soon after the closing, two forces set in motion events that would lead to a reopening of the plant with very different management philosophies and practices. GM needed to build a compact car for its product line to compete with the popularity of smaller imports, and management wanted to study the production methods of Japanese auto makers. Toyota needed to manufacture automobiles closer to its major offshore markets and wondered how well its highly efficient Toyota Production System would transfer to American workers and suppliers.
What emerged from these two independent management motives was an agreement to form a 50/50 joint venture to build both GM and Toyota vehicles in the Fremont plants. A separate corporate entity was formed, New United Manufacturing, Inc (NUMMI – pronounce “new me”), and the plant was reopened in 1984 with a decidedly different approach to management.
The UAW Labor Contract. For starters, the new management team negotiated with the United Auto Workers (UAW) union a unique contract. While former plant employees would be given first chance at the new jobs, former seniority rights were abandoned. Management focused on a new ideology that targeted building the highest quality vehicles at the lowest possible costs. Workers would be involved in deciding work standards, job allocations and layout, training, job rotation, and other work elements.
The dozens of former specialised job classifications were abandoned. Only two classifications are used at NUMMI for hourly workers – skilled trade and nonskilled. Within each classification workers are piad the same hourly rate with only a modest difference between the two classifications. A small 60 cents per hour premium is paid to team leaders who guide the planning and work of four to five people. Even professional people recruited to the firm, such as engineers, occupy their first several weeks on the job working on the line. This helps inculcate in them an appreciation for the tedious and stressful pressures workers face on the line.
A no-strike, no-layoff agreement was part of the contract, a form of job security. Gary Convius, NUMMI’s senior vice president until he was promoted to head up North American operations in 2000, believes the contract provision “buys the hearts of people.” Flexibility prevails instead of the confrontational enforcement of rules.
Management Philosophy and System. When Convis was recruited into his original position as general manager of the plant, he was advised by a Toyota executive, “Manage as if you had no power.” The advice was to forget the command-and-control legacy of Detroit and strive instead of treat people dignity, to seek consensus in making decisions that directly affect people at work.
The NUMMI system emphasises human relations, empowerment, and shared responsibility. To emphasise management’s philosophy of mutual trust and respect, several key practices form the cornerstones of management-worker relations:
There are no time clocks, only self-report time sheets.
An Andon system gives every line employee the right and responsibility to
shut down his or her section of the production line to resolve any quality or
operating problems.
