Productivity.
It’s the manufacturing mantra of the corporate world. It’s about making X number of “widgets” an hour and reducing unplanned absences to maintain plant productivity.
Harley-Davidson’s CEO and President, Keith Wandell, told analyst during the Q4 2009 revenue results that the company intends to enhance profitability through continuous improvement in manufacturing, product development and business operations.
I would submit that H-D doesn’t have a productivity problem. They have an absenteeism problem! If a worker calls in sick that is considered an unplanned absent which brings down manufacturing productivity. In fact, a company document indicates the motor company incurred some 382,000 hours of missed work time during 2009 which was worth about $13 million. The document doesn’t state whether that number refers to the company as a whole or some other subset of operations, but we do know that one of the major considerations cited for moving the York Vehicle Operations from PA. to another state was the excessive absenteeism at the Springettsbury Township plant.
As a result of the concessions to keep the plant in York, changes in work culture and a new attendance policy was negotiated as part of the multi-year restructuring process. A point system was created and the new policy gives an employee points or partial points for failure to appropriately report an absence in addition to the actual absence. Now there are reports the Union (IAM) is whining about unilateral policy changes and trying to move the debate from absenteeism to policy.
Many would debate that unions cripple companies. The debate often centers around how they are anti-technology, anti-productivity and pro-wage growth. It’s like they live in a virtual reality world where price points, product-market pressures, and capital returns don’t matter. The net-net is that unions are adept at demanding the highest dollar for the least amount of time worked. And as worker costs escalate firms cut back on technology, plant investments and business process improvements. Sound familiar?
Still don’t believe me that H-D has an absenteeism issue? Well let’s look at the numbers.
H-D has about 9000 employees worldwide. Taking H-D supplied numbers of 382,000 hours and divide it by the total number of employees (9000) equals 42.44 hours of unplanned absence per employee. That’s more than one work week of absenteeism for each and every employee! This in addition to the 15 work days of annual leave (vacation + holidays) employees typically receive in U.S. based companies. Wow, talk about “iron-clad” benefits! Yet, it’s actually worse because to correctly analyze the absenteeism number you need to take into account standard manufacturing practices which are based on the number of Full Time Equivalents (FTE) and available work hours a year (1928 hours) per FTE. Calculating absence using this method means there were 198 employees (FTE) absent all year during 2009.
I don’t know if this situation is an accurate reflection of the mental state of the H-D work force or if it’s an edge case due to issues like H1N1? However, an absenteeism rate which effects ~20% of your work force is a systemic issue and without a doubt one of the most significant factors to affect quality in an assembly line along with negatively effecting employee morale. Let’s hope they get a handle on this issue.
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