October 30, 2011
The General Motors (GM) manufacturing plant located in Fredericksburg, VA was purchased and renovated by GM in 1978. Although this is a small plant comparatively to many of GM’s other plants it is a staple within the small town of Fredericksburg. As a major producer of the Torque Converter Clutch (TCC) for GM’s automatic transmission worldwide the Fredericksburg plant plays a key role in GM’s manufacturing line. In the late 1980’s to the mid 1990’s the plant struggled to meet budgetary goals and was faced with potential closure. These struggles stemmed from the plants inability to increase efficiency and reduce cost. Reducing labor costs could only be accomplished through natural worker attrition because GM’s contract with the United Auto Workers Union (UAW) made it almost impossible to lay workers off. As workers retired and left the company current employees found themselves working many hours of overtime to make up for the decrease in staffing. Because the plant was looking to make changes they were reluctant to hire anyone new. The abundant amount of overtime pay adversely affected the plants ability to meet their budgetary goals. Any decrease in overtime also caused grief amongst the workers, as many of them heavily relied on the overtime pay to support their families.
Both the management and staff of the Fredericksburg plant understood that if they did not start meeting the annual budget their time as an open plant would be short. Because the plant was located in such a small town many of the employees had family members also working there. If the plant were to shut down it would have huge negative implication to the town as a whole. Although the plant employed many highly skilled and motivated workers it was difficult for management to implement change. The GM genetic code had not changed in many years, especially at plants like Fredericksburg. The same assembly lines that were used when the plant was established were still being used in the mid 1990’s. Although the company had started to implement new, more technological lines, this had been a slow process and had not eliminated the old lines. In order to get many of the plant employees on-board with any change the plant management would also have to get the union to agree to the changes. “Getting the union to agree to change that might require greater productivity from workers could be difficult.” But unless the plant does something to increase genetic variety, it will find it very difficult to increase efficiency and meet annual budget goals (Hamel & Prahalad, 1994).
In February of 1996 the Fredericksburg plant hired Joe Hinrich as the new plant manager. Hinrich had worked for GM since 1989, holding many supervisory and manager positions during his career. It was after completing his graduate work at the Harvard Business School that GM moved Hinrich to the Fredericksburg plant. Hinrich had shown motivation, knowledge and passion for GM as a company and was likely moved to Fredericksburg for those reasons. He had fresh ideas and because he was new to both the town of Fredericksburg and the GM plant he didn’t bring tired genetic codes from the past with him, instead he could contribute in increasing the plant genetic variety. The plant was in dire need of change and it was apparent that GM thought that Hinrich could accomplish it. Prior management had failed to accomplish much of the change needed to help the Fredericksburg plant meet its annual budget goals. Hinrich hoped he could change that. By implementing change slowly, taking the time to include union leaders in the changes and talking to the supervisors and staff throughout the change process Hinrich hoped to build trust and accomplish things that previous managers could not. Hinrich had a keen eye for noticing when procedural changes could be made and utilized...