Fixing Manufacturing With Paper

   Delphi recently brought in Robert "Steve" Miller to head up the company.  Miller is widely touted as something of a turnaround expert.  From my perspective, it would seem logical that turning around a manufacturing company would require a manufacturing expert.  Manufacturing, however, is not Miller's forte.  He is a combination finance guy and lawyer.

   Miller's "turnaround" track record includes filing for bankruptcy protection after he took charge of Federal-Mogul and Bethlehem Steel.  He "turned around" Waste Management by orchestrating a deal to have them acquired by a smaller competitor.  After the bankruptcy, he also put together a deal to have Bethlehem bought by someone else.  The strong point to his resume is his leadership of the government bailout of Chrysler, for which the American taxpayers were rewarded by having the company taken over by a German outfit.  (oops - my mistake, it was a 'merger', with all of the important management jobs, the money and control going to the Daimler side of the merger.)  Now he is at Delphi making noise about the impact of their legacy costs on their inability to compete.  He has been before Congress already looking for a government bailout for the auto industry's under funded pension problem.

   There is no doubt that Delphi and others have a big problem with legacy costs, but that is far from their only problem, nor is it their real long term problem.  Delphi is a manufacturing company that does not manufacture very well.  In the end, they are a woefully performing producer desperately in need of a manufacturing solution.  (Becoming a whole lot leaner, for instance, would be an excellent idea.)  Bringing in accountants and lawyers to solve manufacturing problems is something akin to having the best plumber you know give you a root canal job.  For Delphi, given Miller's track record, I suspect that his turnaround will be about as painful for Delphi's stakeholders as that root canal.

   Henry Ford said that "Profit is the inevitable conclusion of work well done".  The fundamental concern is manufacturing - the work.  If the work is performed at an excellent level, profit will not be so much of a problem.  Detroit is not the only place where this simple tenet is missed.  It seems to be the case with all of the big, old manufacturers that they see all of their failures as numbers problems, that require numbers experts to solve.

   Delphi needs help and I certainly hope Miller is able to give it to them, but if he relies on his trusty tool box full of legal maneuvers, government bailouts, plant closings, mergers and other deals - in short, if he thinks that Delphi can be turned around with paperwork and in his familiar haunts of the backrooms of Wall Street and Washington, rather than in the factories - it does not bode well.

 

Comments

[Jim Dofescoy]

Great post. I completely agree with the overall premise that many (most?) companies look in the wrong direction when trying to change. What bothers me is that many Delphi plants have won Shingo awards. Is this a reflection on the Shingo Award or is it an indication that there are good plants in Delphi but they don't share lean information?

Jim

[Bill Waddell]

Jim,

Good question. My guess is that they are lean or not depending on individual plant management and that they, like so many big companies, cannot really get top management/corporate level true understanding and support for lean. Many of the big companies seem to have individual plants that get pretty lean in spite of corporate - not because of it. Maybe Kevin Meyer will weigh in on this. He has an inside family tie to Delphi.

[Kevin]

I'm afraid my family tie is a little too removed to know anymore. But it is a good question. I noticed that new Delphi plants win Shingo each year, so if I was completely uninformed I'd then draw the conclusion that Lean was being propagated throughout the company. But is it methodical, or just via informal networking? Does the corporation have a formal method of sharing Lean information, or does a plant manager happen to visit a Lean plant and "get religion"? Unfortunately I tend to believe the latter, which is probably what happens at most companies.

[Ed]

I worked at a Delpi plant in Michigan until I retired late last year, and your opinion is correct. We had some plants that really worked well and some plants that were dumps. I got to see three other plants in my last two years. One of them in Mexico was incredible with all employees wanting to do great things. One of them in the US couldn't even get its bathrooms cleaned. Didn't the different plants talk?