Arctic freezer plant.

Pesch, Michael J. ; Ahmad, Sohel ; Nebosis, Timothy 等

CASE DESCRIPTION

The primary subject matter of this case concerns managing diversity issues in the workplace and the application of total quality management principles. Specifically, an appliance manufacturer is experiencing challenges involving Somali refugees who comprise a significant percentage of the plant's available labor pool. These challenges include quality and productivity problems caused by the Somali workers' lack of English skills and adherence to cultural and religious customs, as well as by the plant's own poor preparation to manage this group of employees. The case has a difficulty level of three or four, appropriate for junior or senior level students. The case is designed to be taught in a ninety minute class period, with two hours of outside preparation time by students.

CASE SYNOPSIS

Imagine the challenge of being a manufacturing plant manager of a major employer in the community, faced with the need to satisfy rigorous customer requirements in the areas of quality, price, and delivery. You must fulfill these requirements with a local labor pool that has a limited supply of applicants and recently has become populated by refugee immigrants who speak little or no English. Additionally, these refugee employees have cultural and religious customs that pose challenges in the areas of plant safety and productivity.

As a leading employer in the business community, you know the spotlight will be on your company to help come up with ways to address the community challenge of helping a new immigrant population become productive members of the community. The last thing your company needs is bad publicity in the area of relationships with workers from diverse ethnic backgrounds. Yet you know that your plant must compete on a global basis and your giant retail customers will spare no time in seeking other suppliers if you cannot meet their requirements.

INTRODUCTION

It was 7:30 am on a Friday in late September, when Susan Michaels, a senior manufacturing engineer at the Arctic Freezer plant in Xenia, Minnesota, knocked on plant manager Jim Gromberg's door. "Excuse me, Jim, but we're at the 3-week mark since we launched the third shift on the upright line, and it's been pretty much of a quality and output disaster, with not much hope in sight for improvement. Despite everything we've tried, there are so many problems with these new Somali workers that we're almost out of ideas. I'm not sure how much longer we can go on before it starts hurting our quality and delivery reputation."

Jim was afraid of this. The third shift on the large up-right freezer line had been added in early September to address a growing backlog of orders from major customers such as Best Buy and Sears. The demand for freezers tends to be counter-cyclical to the national economy and this was proving to be true once again; retail demand for freezers was up 20 percent in the past year, as consumers began shopping for bargains and stocking up on meat and other frozen food items. However, the third shift was not meeting productivity expectations and certain issues that related to the 90 Somali workers (out of 120) on the third shift were proving to be more challenging than first expected. The moment had come for Jim to assess the situation and make a decision.

COMPANY AND PLANT BACKGROUND

Arctic Home Products was a subsidiary of WH Alliance, a Norwegian appliance manufacturer. The Arctic plant in Xenia, Minnesota, manufactured approximately 2 million chest and upright freezers per year, about 60 percent of the total annual number of freezers that were sold in North America. The plant employed 1,600-1,700 International Association of Machinists Union employees who worked on the chest and upright freezer assembly lines. The plant operated 2-3 production shifts per day. As is typical of assembly line work in general, the work involves repetitive tasks completed on high unit volumes. Due to high variations in demand, the workforce is subject to frequent layoffs and rehirings, resulting in extremely high turnover of employees. An assembler was typically paid $10.54-$10.79 per hour. No prior work experience is required, but a high school diploma or a general equivalency diploma is necessary to be hired.

Background on Somali Immigrants in Minnesota

Since the late 1980s, civil war and famine have caused over 1,000,000 Somalis to flee to neighboring countries like Kenya, Ethiopia, and Yemen. In addition, the United States, Britain, Canada, and Sweden have provided refugee status to tens of thousands of Somalis. By the year 2002, Minnesota had approximately 50,000 Somali immigrants, the highest Somali density outside of East Africa.

Refugee status generally brings a host of special adaptation challenges that are not generally featured in non-refugee immigrant groups. Among these challenges are higher rates of illiteracy, lack of English skills, significantly lower economic resources, and often a stronger adherence to refugees because these people have been suddenly uprooted from their traditional way of life and, by necessity, must seek out a new approach to providing for themselves and their families.

Somalis are only the most recent immigrant group to arrive in Minnesota, joining previous groups of immigrants who have settled in the state over the past twenty-five years, arriving from Mexico, the former Soviet republics, Southeast Asia, China, and India. There are several reasons for the general increase in immigrant populations over this time period, especially in Minnesota. First, a change in immigration law in 1997 allowed family members of refugee immigrants from several African countries to enter the U.S. under the family preference provisions of the law, instead of the refugee provisions that impose a high standard of proof of the likelihood of persecution in their home country. Somalia was one of the countries included in this change in immigration law.

Second, Minnesota is well-known for a strong economy that features many low-wage jobs in food processing, meat and poultry packing, agriculture, and the hospitality industry. The state also provides exceptional social services from both public and private/religious agencies, generous welfare programs, excellent schools, and high levels of medical care.

A third factor is the cultural and social support structures for particular groups of immigrants that are created when a critical population level is reached to attract additional members of immigrant groups who may have initially settled in other parts of the U.S. Even Minnesota's climate has played a role in the increase of immigrants, with some Russians moving to Minnesota because they prefer Minnesota's climate to the warmer regions of the U.S. It is considered likely that the current factors that have promoted the immigration of foreign-born people to Minnesota will continue to build this segment of the state's population.

THE NEED FOR A THIRD SHIFT

There were three main reasons why a third shift was needed on Arctic's upright line. First, a plant workers' strike had drawn down inventory to minimum levels. Second, major customers such as Sears conducted model changes in the spring of the year and inventories of the old model numbers had been allowed to gradually phase out. Third, the mild economic recession had boosted consumer freezer sales by about 20 percent, as mentioned previously.

Hiring the Third Shift

Despite the increase in national unemployment statistics, workers continued to be scarce in central Minnesota. Arctic competed aggressively with other area employers of low skill workers such as Gold 'N Plump (a poultry processor), and Fingerhut (a catalog sales company).

In mid-August, Jim began hiring the 120 line workers for a third shift on the upright freezer line. The Minnesota Workforce Center, a state employment agency, referred a large number of newly-arrived Somali immigrant refugees to Arctic for employment interviews. Each applicant filled out a personal data form and was interviewed for about twenty minutes to determine the applicant's education level and work history. Since most Somalis spoke little English, some information was difficult to obtain, although a handful of Somalis who spoke some English were used as interpreters during the interviews. When the hiring was completed in early September, 90 of the 120 workers were Somali.

Training the Third Shift

The training of the new workers consisted of the following: 1) Early in the week before the official launching of the third shift, the new hires were brought to the plant and divided into groups of 10-12, shown a 2-hour video on general plant and safety rules, and given a plant tour. 2) In the afternoon of the first day, the workers were paired with experienced line workers to learn how to perform assembly line duties. 3) This "shadowing" by new hires of regular line workers continued for 1-4 days, with fewer days for workers who were hired just a few days prior to the start-up of the third shift.

Performance of the Third Shift

When the third shift was started the following week, quality and productivity problems were numerous. Output of finished freezers was only about 50% of standard for the third shift. Work in process and finished goods inspection revealed numerous problems, from missing parts and poor workmanship to scratched paint. These problems were expensive and time-consuming to correct. Direct labor costs per unit soared for the units produced by the third shift.

Jim Gromberg and his staff recognized that the third shift was going to need more assistance in getting the line up to speed than could be provided by the standard number of two supervisors and one area manager per line. He asked for volunteers from the management and engineer ranks to work for two weeks on the line alongside the workers. Six people volunteered (one quality manager, three manufacturing engineers, one maintenance engineer, and a production supervisor from another part of the plant). These individuals supervised operations in critical areas of the line, such as door assembly, refrigerant fluid injection, and rework operations. However, this stopgap measure to boost line performance could not last beyond two weeks, since the volunteers could not be expected to work the 11:00pm-7:00am shift indefinitely. Moreover, performance of the third shift line was not improving as rapidly as needed, despite all the special attention the line was given. Performance in schedule attainment, units produced per labor-hour, and quality continued to languish. This lack of performance was one of the contributing factors in the recent loss of a 2,500-unit order from one of the plant's long-term customers.

Factors Related to Poor Third Shift Performance

Although all new shifts suffered initial inefficiencies and quality problems, these problems were usually resolved within a few days, as supervisors work with the new line workers to fine-tune their skills. However, in the case of the Somali employees, the language barrier proved to be a significant challenge in teaching workers correct work methods. First, at the startup time of the third shift, none of the technical instructions for executing line procedures had been translated into the Somali language. Second, a great deal of manufacturing process knowledge was in the heads of the experienced workers on the first and second shifts. Although the newly-hired Somali workers spent time shadowing the experienced workers, it was usually difficult for the experienced workers to explain proper procedures to the Somali workers. Third, although some Somali workers could speak some English, their level of fluency usually fell short of that which was necessary to translate technical instructions with sufficient accuracy so the non-English speaking workers could understand and follow them properly. Consequently, the learning curve for the Somali workers was much longer than for newly-hired workers of local origin.

Safety was another issue that proved more challenging in supervising the Somali workers. The printed safety information in the plant was in English and obtaining accurate printed Somali translations was proving to be difficult. There were more than 500 sets of posted instructions in the plant that would have to be translated. The plant's leadership was trying to determine how best to provide accurate translations of signage and documentation. However, as the days elapsed, management became aware that many of the Somalis were probably illiterate. For these illiterate workers, a significant safety concern would remain even after signs and manuals had been translated.

Another safety issue that was particular to Somali workers was loose clothing, particularly the traditional clothing that was worn by Somali female workers, which often consisted of long billowing dresses, yards of cloth draped over the shoulder and tied at the waist, and headscarves. These garments posed a significant risk of becoming entangled in the manufacturing equipment and endangering the workers. Plant management was able to convince workers to alter their clothing by either wearing clothing that is more typical of American workers, or by fastening the native Somali clothing more closely to their bodies. However, these changes in dress behavior happened slowly and required managers to remind some workers several times to adjust or change their work clothing.

A significant cultural issue with the Somali workers involved Muslim prayer customs that require Muslims to pray five times per day at specific times. These prayer times often did not coincide with regular work breaks. For reasons of line pacing and productivity, the workers could not take their breaks at the exact prayer times. Consequently, some workers would request permission to use the toilet, but instead would go to the restrooms to pray. Additionally, washing before prayer is another part of Muslim religious observance and some workers would excuse themselves to visit the restroom and sometimes leave large amounts of water on the restroom floor, creating a safety hazard.

Another cultural issue that sometimes affected productivity and quality performance was the reluctance by Somali men to take direction from female supervisors. Although some progress was made to convince the men to follow instructions from female supervisors, this too was slow in taking hold, partly because it was difficult to determine whether it was the language barrier or the gender barrier that explained the lack of responsiveness to female supervisor requests.

Nonverbal Communication Barriers

Other challenges involved differences in the meaning of gestures and body language. For example, a thumbs-up gesture is considered obscene to Somalis. It is also impolite to point the sole of one's foot at another person, a common occurrence when someone sits in a chair across from someone else. To Somalis, using one's index finger to call someone over is used for calling only dogs.

JIM GROMBERG'S DILEMMA

Jim knew he had to face the fact that the productivity and quality problems on the third shift upright freezer line weren't getting better as quickly as they needed to. In the current business environment of "lean manufacturing" and "just-in-time" supplier relationships, the Arctic plant operated within tight profit, quality, and delivery parameters. Many of the plant's customers didn't keep warehouses of finished goods inventory as a buffer against delivery delays. Therefore, orders placed by these customers necessarily had high delivery priority. Of course, quality problems also had a big impact on delivery time performance and were expensive to correct.

Jim also was well-aware that the problems on the third shift upright line necessarily affected overall plant delivery performance. This was due to the fact that several major customers regularly placed orders for a mix of different freezer models. As often as possible, the plant would load all the models in a single order together in one semi-trailer for shipment to the customer's store. For these mixed model orders, a delay in the production of a single model could hold up the delivery of all the other models to the customer.

Jim wondered, "How long could the plant afford to absorb the effects of the third shift's suboptimal performance?" He picked up a report that had just arrived from the information systems department. First, he looked at the productivity chart (Figure 1). The chart showed the productivity figures for all shifts for the five weeks prior to the start of the third shift (Weeks 1-5), as well as for the three weeks following the launch of the third shift (Weeks 6-8). Jim could see that aggregated productivity for Weeks 6, 7, and 8 was hovering around 4.3 units per labor-hour, about 20% lower than the historical average for the line. This was disturbing to Jim, especially since only the basic no-options version of the upright freezer line was scheduled for the third shift, while first and second shifts produced the more complex versions of the upright line. The third shift had a long way to go to meet the productivity standards that the first and second shifts were achieving.

Jim recalled that Eileen Engdahl from the shipping department wanted to know if something could be done in manufacturing to reduce late deliveries. Jim pulled out the late delivery chart (Figure 2) he received from the shipping department. Again, late deliveries appeared to be a problem that could be traced to the introduction of the third shift at the beginning of Week 6. Although delivery performance had improved slightly over the past three weeks, about 20% of the deliveries still did not meet the promised delivery time. "It won't take long before we lose some long-time customers if we do not dramatically improve delivery performance," Jim thought. Arctic's customers were used to getting on-time delivery. Data from the five weeks previous to the introduction of the third shift attested to this fact. Jim noticed that only Week 2 had about 2% late deliveries; all other weeks prior to the start of the third shift in Week 6 showed 100% on-time deliveries.

"What can be done from a manufacturing standpoint to help the shipping department?" Jim wondered. The data on schedule attainment may provide some clues, he thought. However, the schedule attainment chart (Figure 3) delivered more bad news. The newly introduced third shift consistently lagged the other two shifts on the upright freezer line. Moreover, there was no sign of improvement. From past experience, Jim knew that failure to attain schedule had a cumulative effect on late delivery due to the mixed-model shipping requirements of the plant's customers. "This is not good," Jim murmured to himself.

Jim knew his plant was inexperienced in dealing with large numbers of non-English speaking immigrant workers. Out of all the managers and supervisors, only two were fluent in a second language and in both cases the language was Spanish. Also, diversity training for the plant's staff consisted of two videos, one on how to accommodate individuals with physical disabilities, and another that superficially discussed the advantages of workplace diversity.

As he reflected on the disappointing performance of the third shift, Jim realized that the training approach taken for the Somali workers had inadequately prepared them to perform to plant standards within the expected length of time. Jim also wondered if the plant could afford to address all the special needs required of workers like the Somalis. On the other hand, the shortage of low-skilled employees in the region made him consider that perhaps management had little choice but to learn and adapt to the needs of the available labor pool. Despite all of the unique issues that were associated with the new Somali workers, Jim knew that none of these issues necessarily meant that the Somali workers could not become just as productive as the other workers in the plant. (Jim recalled that his friend, Brent Haws, Human Resources Director at Gold 'N Plump, commented to him that the Somali workers in his company's poultry processing plants were among the "best workers" in terms of low absenteeism, low turnover, and high productivity.) Jim also knew that as a major employer in Xenia, Arctic would be in the community spotlight in discussions of how best to assist the Somali people in becoming integrated into the Xenia community. Jim thought to himself, "Should I discontinue the third shift to stem productivity losses? Or is there something else I can do to more effectively achieve Arctic's strategic goals?"

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Michael J. Pesch, St. Cloud State University

Sohel Ahmad, St. Cloud State University

Timothy Nebosis, St. Cloud State University