General Motors has offered to buy out all of its 74,000 hourly workers. Up to 56,000 workers could retire by 2011. That would help GM slash costs and catch up with its foreign rivals, but it would also create a huge knowledge gap on the plant floor.
If you’ve ever travelled on London’s legendary Underground system, you’ve undoubtedly heard the quaint expression “Please mind the gap.” It’s a polite way to warn people to be careful when entering and exiting carriages. Perhaps that expression should also be applied to the U.S. auto industry.
While analyzing the recent news about General Motors’ record-setting, mind-boggling $39 billion loss, several things jumped out at me. On one hand, it’s great that GM appears to be on the verge of finally narrowing the gap with its foreign rivals. Once all the dust settles in a few years, GM’s cost per car per worker will be around $2,000, which represents a significant drop.
In recent years, GM has also narrowed the quality gap and the productivity gap with its competitors. So, I applaud the GM brass for all their cost-cutting, efficiency-boosting efforts. It certainly looks like brighter days are ahead for the company, which is celebrating its centennial this year.
However, I think all the efforts to trim jobs could widen another gap that is often overlooked: the knowledge gap. In its latest move, GM has offered to buy out all of its 74,000 hourly workers, which would pave the way for less expensive new hires under its recent landmark agreement with the United Auto Workers union. Because GM has the oldest workforce among Detroit’s Big Three, up to 56,000 workers could retire by 2011.
On paper, that strategy will save GM tons of money, because many new workers will be hired under the lower-tier pay scale. However, it could also turn the current knowledge gap that exists in the auto industry into a wide chasm.
Several years ago, I wrote an article in ASSEMBLY that warned about this impending gap. As GM and other automakers continue to offer early retirement packages to their employees, there will be less experience roaming around plant floors in the future.
The operators left behind will be forced to change the scope of their daily routines. That has already happened on the engineering side, where many people are wearing many different hats today. As a result, manufacturing engineers have less time and fewer resources to devote to project management.
One systems integrator I spoke to told me that this knowledge gap sometimes leads to unforeseen problems. For instance, the new kids on the block don’t always have the experience needed to correctly specify new equipment or to manage all the steps in an automation project. Sometimes, they can’t read blueprints or communicate important things such as capacity requirements or cycle rate.
Projects are not being reviewed as closely as in the past, which leads to half-baked plans. The new breed of manufacturing engineers are not putting the appropriate amount of time into ensuring the success of projects There aren’t as many face-to-face meetings as in the past and engineers aren’t writing detailed specs for multimillion dollars pieces of equipment.
Of course, there’s also a bright side to this knowledge gap. The changing role of operators will present equipment suppliers and systems integrators with an opportunity to provide value-added services. That may eventually require them to locate more experts directly on the plant floor.