April 8, 2019 / 11:01 AM / 2 months ago

RPT-INSIGHT-Sweet seats and candy canes: Inside Fiat Chrysler's Toledo turnaround

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    By Nick Carey and Ben Klayman
    TOLEDO, Ohio, April 8 (Reuters) - Lots of workplaces have a
hot seat. At the Jeep assembly plant in Toledo, Ohio, there is a
"sweet seat."
    In the production line where Jeep Wrangler sport utility
vehicles are made at the rate of about one a minute, a panel
must be screwed into the bottom of the vehicle. It used to be
back-breaking work for two union members to carry the panel and
screw it on as the vehicle moved down the line. 
    Occasionally, they would miss screws.
    Now two workers sit comfortably on adjacent chairs that
follow the vehicle. Lasers point out where the screws go,
reducing errors. 
    What is remarkable about the so-called "sweet seat" at Fiat
Chrysler Automobiles NV's           Toledo plant is that like
many other innovations here, it originated with United Auto
Workers union members on the factory floor. 
    Production workers here create proposals to simplify tasks
that are "too heavy or too hard," said millwright Greg Harman,
who is on a team of 10 UAW workers that implements those ideas.
A handful of automakers have adopted aspects of a similar
system, pioneered by Japan's Toyota Motor Corp         . 
    The uncommon level of union collaboration with Fiat Chrysler
(FCA) management in Toledo offers a road map for union
negotiations this summer with Detroit's Big 3: FCA, General
Motors Co        and Ford Motor Co      .     
    According to officials at the automakers, their key focus in
this year's contract talks will be on productivity and
profitability in the face of an anticipated downturn in vehicle
sales and non-unionized competition from the likes of Toyota,
Nissan Motor Co Ltd          and Volkswagen AG            .
    That clashes with union demands to maintain healthcare
benefits and boost job security, and comes on the heels of GM's
warning that it could shutter a car factory in Lordstown, Ohio,
along with three other UAW-represented plants. GM'S move drew
harsh criticism from President Donald Trump, and prompted the
UAW's new president to bulk up the strike fund - serving notice
the union is not afraid of a fight over jobs.             
    At a time when national UAW membership fell 8 percent in
2018 after rising for nine consecutive years, and has failed to
organize a single U.S. assembly plant owned by a European or
Asian automaker, FCA's Toledo plant has more than tripled its
workforce to 5,700 workers since 2009. For a graphic, click tmsnrt.rs/2I4S0wa
    The biggest reason: Americans' love with the Wrangler and
other high-margin SUVs.
    The Wrangler became so hot that FCA started running the
plant virtually round the clock. So UAW Local 12, which
represents workers at the Toledo plant, pushed for a flexible
system under which workers could choose to work between four and
seven days per week - a first for any FCA plant. 
    Temporary workers fill in the gaps, and Local 12 sought more
protections for those workers, including providing a clear path
to full-time employment status.
    "Our members went way, way, way beyond the call of duty to
provide what the company's needs were," said Mark Epley, the
plant's union chairman. "It's a competitive market out there and
we know that any plant can be taken away at any time."
    Thanks largely to its success at FCA, UAW Local 12 has hit a
40-year high in membership through organizing workers at many
other companies in the area, including a Dana Inc         plant
where workers make Wrangler axles.

    SANTA ON THE ASSEMBLY LINE   
    Success at Toledo took years to build. A decade ago, when
the former Chrysler Corp was going through its government-funded
bankruptcy, Toledo had a reputation as the automaker's worst-run
plant. 
    As Italian automaker Fiat S.p.A took control of the
Chrysler, then-Chief Executive Sergio Marchionne turned to Fiat
executive Mauro Pino with a challenge: which legacy U.S.
Chrysler plant should they use as a proving ground for what Fiat
called "World Class Manufacturing," a version of Toyota's lean
production strategy but adapted to the Italian automaker's
culture?
    Pino chose Toledo with the idea of turning the worst
performing plant into the best. He had two years to prove he
could turn the plant around, he told Reuters in an interview
outside Cleveland, where he now runs an Eaton Corp        
aircraft parts plant.
    Pino found a workforce of around 1,700 people, demoralized
by Chrysler's bankruptcy. The plant produced just over 140,000
vehicles in 2009.         
    He began working to win the workers' trust. He dressed as
Santa Claus before Christmas 2010 and handed out candy canes to
workers on the line, greeting each by name, workers at the plant
recall. 
    Pino also pushed for more productivity but did so by asking
workers how they would redesign their own cumbersome jobs.
    "Usually you need to convince people to change, but when
they saw what we were doing they started coming to us," he said.
    "The new system gave everyone a voice," said Cheryl Reash, a
36-year worker at the plant. 
    Tracy Seymour, also at the plant nearly 36 years, said the
team of 10 millwrights - a team started by Pino - came up with a
system for parts kits that eliminated the need for vast amounts
of inventory on the line. That made it possible for workers to
build 10 different engine types without having to bend over,
lift heavy objects or walk off the line in search of parts.
    "I wouldn't run without their equipment," Seymour said. "It
would be impossible."
        
    RUNNING HOT
    Over time, workers and managers at Toledo worked to unplug
bottlenecks up and down the assembly line.     
    "Why we succeed and exceed is that union and management came
together," Seymour said.
    Soaring customer demand for sport utility vehicles also
helped the Toledo plant. As workers cranked out around 500,000
Wrangler and Jeep Cherokee SUVs annually from 2014 to 2016, the
plant's two production lines began running at well over 100
percent capacity, according to data from AutoForecast Solutions.
This level of capacity utilization is rare in the industry.
    Still, Fiat Chrysler could not keep up with demand in both
the United States and in the 105 countries where the Toledo-made
Wrangler is sold.
    To ease the crunch, the company proposed moving the Cherokee
to another factory so Toledo could make more Wranglers. In
return, Local 12 was promised another new product. Baumhower
said the local accepted the move based on that promise.
    The plant is now ramping up production of the Gladiator
pickup truck, which shares many parts with the Wrangler and is
getting glowing reviews in the automotive media.
    But while FCA's Toledo success shows what can happen when a
Detroit automaker and its union work together, it also shows how
a strong local can also punch back. In February 2018, for
instance, Local 12 publicly protested an FCA plan to replace 88
UAW-represented truck drivers with contractors, forcing the
company to back down.
    "We're good at getting along if you want to get along," said
Bruce Baumhower, who has been president of Local 12 for 26
years. "And we can fight all day if you want to pick a fight."

    
 (Reporting By Nick Carey and Ben Klayman
Editing by Joseph White and Edward Tobin)
  
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