Munich Personal RePEc Archive

Enriching Production: Perspectives on
Volvo’s Uddevalla plant as an alternative
to lean production
Sandberg, ÅkeNatinal institute for working life / Arbetslivsinstitutet, Sweden,
Deprtment of Sociology, Stockholm University

1995

Online at https://mpra.ub.uni-muenchen.de/10785/
MPRA Paper No. 10785, posted 28 Sep 2008 00:38 UTC

Enriching production
Perspectives on Volvo’s Uddevalla plantas an alternative to lean production

ÅKE SANDBERG, Editor
Swedish Institute for Work Life Research
Stockholm, Sweden

Digital edition
Stockholm 2007
With a new preface by Åke Sandberg, National Institute for Working Life,and KTH Royal Institute of Technology, Stockholm.
E-mail ake.sandberg@gmail.com or akesan@kth.se

Avebury

Aldershot • Brookfield USA • Hong Kong • Singapore • Sydney

Digital edition© Å. Sandberg and the authors 2007

Printed edition© Å. Sandberg and the authors 1994
All rights reserved. No part of this publication may be reproduced, stored ina retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise without the prior permission of the publisher.
Published by
Avebury
Ashgate Publishing Limited
Gower House
Croft Road
Aldershot
Hants GU11 3HR
EnglandAshgate Publishing Company
Old Post Road
BrookfieldVermont 05036
USA
A CIP catalogue record for this book is available fromthe British Library and the US Library of Congress.
Typeset by
Axel Henriksson, Datadromeda
for Newman Information Design AB
Maria Bangata 6
S-118 63 Stockholm
SwedenISBN 1 85972 106 0

Contents

Preface
The book and its authors
The Uddevalla experience in perspective, Åke Sandberg

vii
ix
1

Part I

Volvo’s innovative Uddevalla and Kalmar plants
The creation of a new production system at the Volvo automobile
assembly plant in Uddevalla, Sweden, Kajsa Ellegård
Production system design – a brief summary of some Swedish design
efforts, Tomas Engström and Lars Medbo
The Uddevalla plant: Why did it succeed with a holistic approach
and why did it come to an end? Lennart Nilsson
Volvo Kalmar – twice a pioneer, Thomas Sandberg

37
61
75
87

Part II

The performance of the Uddevalla plant in a comparative
perspective
The fate of the branch plants – performance versus power,
Christian Berggren
105
Assembly skills, process engineering and engineering design,Henrik Blomgren and Bo Karlson
127
Building for new production concepts, Colin Clipson, Jesper Steen,
Anders Törnqvist and Peter Ullmark
137

iii

Designed for learning: A tale of two auto plants,
Paul S. Adler and Robert E. Cole
157
Limits to innovation in work organization?,
Bob Hancké and Saul Rubinstein
179
Group work and the reception of Uddevalla in German car industry,
Ulrich Jürgens
199
Part III

Volvo car plants internationally and the alliance with Renault
Volvo truck and bus in the UK: The clash of the Titans,
Paul Thompson and Terry Wallace
Volvo-Gent: A Japanese transplant in Belgium or beyond?
Rik Huys and Geert Van HootegemFirst DAF, then Volvo and now Mitsubishi, Ben Dankbaar
Missing the road: Working life at Volvo Nova Scotia,
L. Anders Sandberg
Volvo in Malaysia, Hing Ai Yun
The origins of team work at Renault, Michel Freyssenet
Fait accompli? A Machiavellian interpretation of the Renault–Volvo
merger, Karel Williams, Colin Haslam and Sukhdev Johal

217
231
249
269
283
293
309

Part IV

Beyond lean production
Japanese work policy: Opportunity, challenge or threat?
Norbert Altmann
Lean production in the automobile industry: Second thoughts,
Dan Jonsson
Humanization of the production system and work at Toyota
Motor Co and Toyota Motor Kyushu, Koichi Shimizu
Recent developments at Toyota Motor Co, Terje GrönningSocial preconditions for lean management and its further
development, Paul Lillrank
Lean production. The Micro-Macro dimension, employment
and the welfare state, Peter Auer

iv

329
367
383
403
427
437

Preface to the Digital Edition 2007
The innovative, productive and humane Volvo Kalmar and Uddevalla
plants, with various concepts of group work, were closed in 1994 and 1993
respectively. Times were changing. Unemployment was rising; unions werefocussing more on job creation and employment than on quality of work.
Globalization put pressure on homogenization of production processes.
Volvo got a new top management, after Pehr G. Gyllenhammar who hadconceived the new factories in cooperation with unions. The bestselling book
‘Lean production’ (Womack et al) articulated and reinforced the ideologythat there is just one best way and that no viable alternatives exist.
Today the Kalmar plant is rented as a warehouse, and for ICT production. In the Uddevalla plant Pininfarina with 800–900 employees producesa Volvo convertible using a product flow assembly system. In the other halfof the plant Volvo Bus is welding space frames.
But ideas of competitive and human-centred forms of industrial production are still alive and they are practiced in various sectors. The Volvo
Kalmar and Uddevalla production concepts are still used, by academics andpractitioners alike, as reference points and as reminders of the possibilityof alternatives with quality in both work and products.
The print editions of Enriching Production were quickly sold out. In
January 2007, as a result of the centre-right government’s decision to close
Arbetslivsinstitutet/ Swedish National Institute for Working Life, we areorganizing our archives and we found discs with the book. As there is still ademand we decided to prepare a digital edition, with no changes in the text,
except this preface. Many thanks to Lena Karlsson for digital editing.
Enriching Production was followed by a workshop and a special issue
on ‘Good work and productivity’, in Economic and Industrial Democracy,
Vol. 19, No 1, 1998.
An indication of the topicality is a recent interview with Pehr G. Gyllenhammar in LO-tidningen, the journal of the Swedish Trade Union Confederation (Sept. 15, 2006). Gyllenhammar expresses an understanding
for strikes in industry after 1968, and he states that ‘companies must use
the full potential of the employees, and the competitive advantage of goodeducation, professional skills and an advanced form or work organization’.
The basic idea is the same as when the Kalmar plant was planned 30 years
ago, Gyllenhammar says: ‘Why should it be so damned boring to assemble
a car, when everybody loves to repair and tinker about with the same carin their spare time? It should be the other way around, delight and pride in
producing the car.’
Stockholm in January 2007
Åke SandbergvPreface
The background to this book is the closure of Volvo’s car assembly plantin Uddevalla in western Sweden. The fate of the plant, being a symbol forhuman-centred production, was debated by policy-makers and researchers
around the world. The Swedish Institute for Work Life Research decided
that the experiences of the plant should be gathered in a book with an international and comparative perspective.
Cecilia Runnström has assisted me in the editorial work, and her work
has been important for the realization of this book project. Fern Scottedited the English of all the chapters; also Aina Godenius and Ann-Britt
Hellmark contributed here. Gary Newman and Axel Henriksson prepared
the camera-ready copy. At the Institute director Anders L. Johansson andprof. Casten von Otter supported our work on the book during the wholeprocess, and Iris Frank and Gudrun Hagberg helped with administrative
tasks. Thank you all.
Postscript. January 1995
As this book was on its way to the printers, Volvo announced its intention
to develop convertible and coupe versions of its 850 model in cooperation
with the British TWR and to produce them in the Uddevalla plant, applying
its unique production concept. This is good news; the Uddevalla conceptof teams assembling whole cars may be further developed and get a chance
to show its potential in car production which, as suggested in this book, isincreasingly consumer oriented.
On the other hand, for production in longer series at the Swedish Torslanda plant and at the Belgian Gent plant, Volvo has made the choice ofanother production concept: preassembly of modules (often with long job
cycles) to be finally assembled on a line with a high degree of automation.
As researchers argued in the debate, Volvo in fact not only made a reduction
in capacity, but a strategic choice of production concept basically different
from that of Uddevalla. But with the Uddevalla plant again as a point ofreference, possibilities grow of developing human-oriented and productive
production concepts, ‘enriching production’, also adapted for production
in long series.
There is not, as the authors on ‘lean production’ want us to believe, one
single best work organization model. In the changing realities of industrial
production, Uddevalla’s ‘enriching production’ remains an important contribution to future developments.
Åke Sandberg

vi

The book and its authors

This book discusses a pathbreaking effort to unite good jobs with productivity in industry – Volvo’s innovative Uddevalla car assembly plant wherecompetent workers in groups built complete cars during a short period offour years.
The assembly line was not only broken, it was totally abandoned and thegroups all worked in parallel independently of each other. The skilled workers were supported by advanced computer technology to guide the vehicles
transporting components to the groups. Each car produced was destined
to one specified customer. The plant started operation in 1989 and three
years later the decision was made to close it down – together with the older
Kalmar plant, the pioneer in breaking with line production. The authors of
the book, a wide range of distinguished scholars of the field, analyze thisexperience in an international and comparative perspective.

Enriching production
The double goal of good jobs and productivity is the essence of what wewant to call enriching production. Production that is enriching to work andworkers and to investors and owners.
Lean production can never be the ultimate goal and form for human productive activity. Some ‘fat’ is needed to make the workplace a decent place
for human activity, a place where you can unfold as a human being.
The concept of enriching production has grown out of work with this book.
The study of Volvo’s Uddevalla plant, visits to the most advanced Japaneseplants and discussions with colleagues, managers and trade unionists athome and abroad helped shaping the contours of a necessary alternative tothe lean production concept.
We do not, like the authors of The Machine that Changed the World pretendthat we have the solution for all types of production in all countries. But wevii

think we have a contribution to make to those interested in the possibilityof high quality jobs, that are at the same time productive.

The chapters of the book and the authors
Below follows a short presentation of each chapter and of the authors.
The introductory chapter by Åke Sandberg, associate professor at Institutet för arbetslivsforskning (the Swedish Institute for Work Life Research),gives a background. Its focus is the Uddevalla plant – its rise and fall. The
plant is put into an international comparative perspective. No one questions
the uniqueness of the human side of the plant. Becoming also very productive, it was an example of enriching production in a double sense.
Part I
Kajsa Ellegård, associate professor at the Department of Human and Economic Geography at Göteborg University describes the development of
the Uddevalla plant from the first ideas of conventional line assembly, toqualified workers building whole cars in a completely parallelized production. She followed and took part in the whole design and implementation
process.
Tomas Engström and Lars Medbo played a major role in the design of
the Uddevalla production concept. Engström is the associate professor
and Medbo licenciate at the Department of transportation and logistics at
Chalmers tekniska högskola in Göteborg (Chalmers University of Technology). They describe the ideas behind whole car assembly, the assemblyand human-oriented language to understand the functions of the car andthe advanced logistics that make this model of car-building a radical stepbeyond Fordism.
Lennart Nilsson, associate professor at the Department of Education,
Göteborg University, took part in the process of development of the Uddevalla concept focusing on holistic learning. His commitment is strong,
and this is reflected in his chapter where he discusses the successful use ofholistic learning principles in order to design the whole production process
in Uddevalla. He also tries to understand why the potential of this concept
was not fully realized and why the plant was closed.
Thomas Sandberg, associate professor at the Department of Business
Administration, Uppsala University, tells the story of Volvo’s Kalmar plant,
from the 1970’s until the 1990’s. He focusses on recent developments. Assembly workers were involved in change processes. There was a focus on
quality. By replacing the original carriers – one for each car – with so calledtaxi-carriers, dock assembly could be reintroduced with richer work content.
viii

Indirect tasks like quality control and repair work have been integrated withassembly tasks.
Part II
Christian Berggren, researcher at the Institutet för arbetslivsforskning (theSwedish Institute for Work Life Research), and professor of industrial management at Linköping University, analyzes the impressive performance of
the Uddevalla plant not only when it comes to assembly hours, but especiallyregarding customized cars with very short delivery time. Berggren criticizes
Volvo’s official justification of the closure and demonstrates the weaknessesof its calculation of cost savings.
Henrik Blomgren and Bo Karlson, doctoral student and PhD in engineering respectively, at the Department of industrial economics and management at the Kungliga tekniska högskolan (Royal Institute of Technology)
in Stockholm give an illustrative example of the potential of the Uddevalla
plant when it comes to product design and industrial engineering. Interaction
between engineers and car builders with a high competence level may create
exceptional conditions for a holistically oriented improvement process.
Colin Clipson, Jesper Steen, Anders Törnqvist and Peter Ullmark are
all architects focussing on workplace design. Clipson is professor at theArchitecture and planning research laboratory, University of Michigan,
Ann Arbor, Törnqvist associate professor at the Department of industrial
planning at Chalmers tekniska högskola in Göteborg (Chalmers Universityof Technology) and Steen and Ullmark associate professors at Industrial
planning at the Kungliga tekniska högskolan (Royal Institute of Technology) and Steen and Ullmark associate professors at Industrial planning at
the Kungliga tekniska högskolan (Royal Institute of Technology) in Stockholm. They analyze the design and layout of Volvo’s Uddevalla plant. The
relation between physical layout and the possibility for ‘good jobs’ and forflexibility in the organization of work is discussed.
Paul S. Adler and Robert E. Cole, professor of management, University ofSouthern California and professor of business administration and sociology,
University of California, Berkley respectively, compare Volvo’s Uddevalla
plant and the Toyota-GM joint venture Nummi from the point of view oforganizational learning. They argue that Nummis version of Lean production
is superior to Uddevalla’s human-centred model when it comes to productivity and quality and that the quality of work life at Nummi is acceptable.
Bob Hancké and Saul Rubinstein compare the Uddevalla plant to GM’s
Saturn plant. They ask the question: How far can technological and organizational innovations go in ‘insular settings’, and what role does the wider
corporate and industrial relations structure play in such innovation procixesses? They conclude that good economic performance of innovative plants
is not enough to secure their future. Both authors are doctoral candidates at
MIT, Hancké is a research fellow at Wissenschaftszentrum Berlin für Sozialforschung (the Science center Berlin for Social Research) and Rubinsteinat the International Motor Vehicle Program.
Ulrich Jürgens, professor at Wissenschaftszentrum Berlin für Sozial-forschung (the Science Center Berlin for Social Research), analyzes the recent
German discussion about group work, human-centred production and lean
production. In several plants stationary long cycle work was combined withmodified line production, but basically the Uddevalla concept of whole-car
assembly was seen as a linear extension of the job cycle rather than as aparadigmatic shift. Lately Uddevala’s closure has helped shift the balance
towards Japan-oriented concepts.
Part IIIPaul Thompson and Terry Wallace, discuss Volvo bus and truck productionin the UK. They emphasize a ‘market rules’ perspective with a tendency
towards line assembly for standard vehicles and dock assembly for special
vehicles. This creates a repertoire of work organisation practices within thecompany. The authors see parallels between closures in Sweden and the UK.
Thompson is professor of management at the Business Studies Department,
Edinburgh University and Wallace is lecturer in Human Resource Management at Leeds Metropolitan University.
Rik Huys and Geert Van Hootegem, researcher and assistant respectively,
at the Department of sociology of labour and organization, Katholieke
Universiteit (Catholic University), Leuven, analyze recent improvements
at the Belgian Gent factory – during many years regarded as Volvo’s ‘bestpractice’ car plant. Team work with integration of certain control and repair
tasks and at the same time short job cycles are current tendencies.
Ben Dankbaar, PhD and research director for the programme of ‘Technology, work and organization’ at MERIT, Limburg University, Maastricht,
analyzes the stages in development of the Born plant, now a joint venture
between the Dutch state, Volvo and Mitsubishi, the latter two now developing a common medium size car. Will the Mitsubishi variant of Japanese
production concepts dominate or has Volvo still – after Uddevalla – a contribution to make?
L. Anders Sandberg, assistant professor at the Faculty of Environmental
Studies, York University, discusses Volvo’s assembly plant in Nova Scotia.
He describes Nova Scotia as a peripheral region in Canada and sees the plantin light of concessions extended to Volvo; concessions are also expectedfrom the work force, which is reflected in the work organization.
x

Hing Ai Yun, senior lecturer, Department of Sociology, National University of Singapore, discusses Volvo’s presence in Malaysia. Like otherforeign car producers Volvo established itself there because of different
types of restrictions on car imports. She describes this background and theorganization of work.
Michel Freyssenet, directeur de recherche at CNRS, IRESCO-CSU,
Paris and GERPISA international network, discusses group work especiallyaround automated segments of production and has later generalized this approach with substantial influence of Japanese concepts, keeping shortcycle,
standardized tasks.
Karel Williams, Colin Haslam and Sukhdev Johal discuss the politics andbusiness economics behind the alliance and planned merger (now disolved)
between Volvo and Renault. They give a Machiavellian interpretation. With
internationalization of corporations they see, in concluding, risks for social
dumping with the more generous social settlements like the Scandinavian
welfare states being defeated by less ambitious welfare systems. Karel Williams is reader at the Department of Accounting, University of Manchester,
Colin Haslam and Sukhdev Johal is reader and lecturer respectively, at theBusiness policy section, University of East London.
Part IV
Norbert Altmann, professor at the Institut für Sozialwissenschaftliche Forschung in München (Institute for Social Research) in an overview article
describes, analyzes and criticizes social aspects of Japanese production
concepts. His point of departure is The Machine that Changed the Worldand its neglect of consequences of lean production for employees and for thesociety as a whole and for individual enterprises and their productivity.
Dan Jonsson, associate professor at the Department of sociology, Göteborg University gives a methodological criticism of the best-selling bookon lean production, The Machine that Changed the World. He reconstructs
a casual model that makes explicit the ideas in the book that he analyzes,
and he points at the weaknesses in the logical structure and the empiricalvalidity.
Koichi Shimizu, professor of economics at the University of Okayama, has
as a basic thesis that in the mid 1990s, when it appears that ‘lean production’is being adopted by all automobile producers, Toyota has been reorganizing
the very production system upon which ‘lean production’ is based. He seesa tendency towards humanization of work at Toyota. The background was
recruitment problems and ‘the crisis of work’ but the tendency continues inspite of the recent recession.
Terje Grønning, lecturer, Institute of East European and Oriental Studies,
University of Oslo, wrote his PhD thesis on the social organization of proxi

duction at Toyota and NUMMI while at the Sociology Department of Ritsumeikan University, Kyoto. His chapter focusses upon recent developmentsof the production system of Toyota and especially personnel administration
practices such as subjective personnel assessment and wage systems.
Paul Lillrank, studied quality control in Japan while a researcher at
the Science University of Tokyo. He is now an affiliated professor at theEuropean Institute of Japanese Studies at the Stockholm School of Economics. His chapter tries to discern present tendencies towards post-leanmanagement with more ‘worker-friendly’ work environment combined with
automation.
Peter Auer, senior research fellow and head of project at the Wissenschaftszentrum Berlin für Sozialforschung (the Science Center Berlin forSocial Research), looks at the micro-macro relation in lean production. He
sees a risk that lean production in industry, with little room for social aspects,
may lead to overwhealming pressures on state-financed social welfare.
Corporate level lean production should perhaps allow for some fat in the
production and be accompanied by macro level demand side politics.

xii

The Uddevalla experience in perspective
Åke Sandberg

The focus of this book is the rise and fall of Volvo’s Uddevalla plant on
Sweden’s west coast – a unique achievement in the history of car production and industrial production more generally. This pioneering example ofsocial and technological innovation is discussed against the backgroundof other Volvo establishments as well as international developments in car
manufacturing. The Uddevalla plant was unique in its combination of goodjobs and productivity. We would like to regard the plant as an example of‘enriching production’, enriching to both work and workers and to investors
and owners, benefitting by its productivity.
The Uddevalla plant was closed in 1993 after only four years of operation.
The plant was outstanding in its human-centredness and the quality of workwith groups building whole cars based on theories of holistic human learning. The plant also introduced advanced computer technology in logistics
and planning in order to supply the teams with the components they needed
to build a specific car in an efficient way. The plant was perhaps the mostadvanced in a long Scandinavian tradition of job redesign – often seen as aEuropean alternative to Toyotism and lean production.
Although the focus here is on the Uddevalla plant, Volvo’s Kalmar plant,
created in the beginning of the 1970s deserves attention as well as a pioneer
when it comes to breaking up the assembly line. It was closed in June 1994.

Toyotism – the end of history?
Does the closing of these two unique industrial design efforts signify theend of the road to a human and productive alternative in industrial production? An alternative that has been the focus of discussions in Swedish andGerman car production. Will we now see the dominance of lean production
as the new ‘best way’ after Taylorism? Is Toyotism the end of history ofindustrial production?
1

This volume shows that a broad array of solutions and alternatives exist,
and that the Uddevalla concept is one of the more remarkable among them.
Not only are there cross country and cross company variations, but there
are variations within companies and within countries as well. Volvo truck
and car plants differ between countries like Sweden, Belgium and the UK,
and within Sweden the same Volvo car was assembled in three plants withdifferent production concepts. Toyota differs from Nissan. Although one
can discern a more coherent concept or strategy within Toyota than within
Volvo, the new Toyota plant in Kyushu island is different from the old ones.
A similar kind of variation is true for other companies and countries.
The closing down of Uddevalla thus does not mean that only one way
remains. With this book I hope we are able to show that Toyotism or ‘lean
production’ as presented in the bestseller The Machine that Changed theWorld by Womack, Jones and Rose (1991), is not, as they seem to claim,
the only possible industrial organization of the future.
Internationally, not least in the German case discussed by Ulrich Jürgens
in his contribution, the impact of The Machine that Changed the World, andof Japanese production concepts is strong in the first half of the 1990s. In
German car industry there was a relatively strong influence of Volvo’s production concepts in the 1970s and 1980s. German work reformers how-everdid not accept the Uddevalla concept of stationary whole-car assembly, nor
the idea of a qualitative difference between short cycle line assembly andgroup whole-car assembly with a several hours work cycle. Rather work
reform was seen as a linear growth of work content both in subassembly ofparts besides the line, and to a lesser extent along the line. Today we see a
re-appraisal of the assembly line and a tendency to roll-back cycle times.
Yet, according to Jürgens, there seems to be a belief in longer job cycles
than the traditional short cycles.
German car industry is trying to integrate lean production features withhuman-centred features such as group autonomy. Pressure from Japanesesolutions and competitors is tough. But national and historical preconditionsof an economic, political and social character like type of product, industrial relations, labour markets (employment and qualification levels) andcorporate and union strategy will influence the way workplaces transform(Turner and Auer, 1994).
Human-centred production is not at the end of the road but it will have to
be transformed to include ‘lean’ elements to enhance productivity. Althoughproductivity at Uddevalla was high by Swedish and European standards,
it was not high enough compared to Japanese factories. Scandinavian andGerman work reform must now learn from Toyotism and lean production to
focus even more on productivity while maintaining its human-centredness.
International industrial relations and cooperation across borders concern2

ing social conditions of work will probably be important in determining theweight of human aspects in future industrial production.
The fate of Volvo’s Uddevalla plant, its development and closure – situated in an international and comparative perspective – has a lot to teachus about those decisive issues. It presents us with a possible and radical
alternative to lean production, an alternative that will be among remain in
the focus in the future.

A view of Uddevalla
One episode that I myself experienced during a visit to Volvo’s Uddevalla
plant in the spring of 1993 demonstrates clearly the advanced customer
orientation of the Uddevalla production model. Far from being disturbed byan ‘intrusive observer’, the members of an assembly team casually asked if
I was a customer wanting to take part in the team’s assembly of my car.
What I continued to observe at the plant further demonstrated the humanorientation of the work being done. In a typical example, a group of nine
workers assembled a car from beginning to end. They conferred with eachother while working, resulting in the completion of the entire car before
the morning coffee break. This team like all others in the plant had no supervisor. And the first level manager of this and the seven other teams in
the product workshop, was on vacation; the groups could clearly manage
their own work.

The closure decision
However Volvo was in economic difficulties and had too much capacity
for the actual demand. In November of 1992, the Volvo board decided
to close its car assembly plants in Kalmar and Uddevalla. Uddevalla wasclosed half a year later, and Kalmar followed suit in 1994. The plants had
been heralded worldwide as symbols of a productive and human-oriented
alternative in industrial management and work organization. Kalmar was thefirst car assembly plant to break up the traditional pattern of assembly line
production. In Uddevalla the line was completely abolished with parallelgroups assemblying whole cars.
Mercedes-Benz director Edzard Reuter, expressed astonishment at thedecision to close what he considered to be ‘the most modern factories you
have in Sweden’. Mercedes new Rastatt plant is partially built on principles
similar to those of Uddevalla (Svenska Dagbladet, Nov. 6, 1992). A linewith moving assembly platforms is combined with stationary workplaces
for modular production with work cycles of up to two hours (Jürgens1).
However, Peter Wickens, the personnel director of Nissan UK, regarded3the closure of the Swedish plants as an indication of the triumph of ‘lean
production’ (Wickens 1993). To Peter Cressey (1993:89), who coordinates
researcher networks on participation and work within the EC, the demise of
the two plants represents ‘potentially a seismic shift in the reference points
that determine how to create the conditions for efficient production andcollaborative social and design processes. In the car industry for instance,
the choice has been between old fashioned Fordism, its newer variant “leanproduction” and the sociotechnical approach represented by these twoplants.’ Japan’s industrial sociologists gathered for an annual conferencein Fukuoka in 1992, were studying the Uddevalla plant, as an alternative toJapanese industrial organization.
The Kalmar and Uddevalla plants have been used widely as models inacademic courses on job design. They have also served as reference points
and examples in trade union programmes and training in many countries.
Unions within Renault, the alliance partner of Volvo until the autumn of
1993, are but one example.
Disappointment concerning the closure decision seemed to be felt in many
quarters. This was shown in the public debate that resulted in Sweden. This
book is an attempt to contribute to preserving the experiences gained from
Uddevalla, in terms of the innovations made in both human and industrial
fronts2.
In this first chapter I will introduce the reader to the Uddevalla experience and its background. In doing so, I will refer to other chapters, while
con-tributing my own understanding of this experience, based on interviews
and visits to Uddevalla, Renault and to some Japanese plants.
I intend to show that the closure of Kalmar and Uddevalla was not an
inevitable outcome of the performance of these plants. In terms of productivity and quality they were on the same level as, and according to someevaluations they even out-performed Volvo’s main Swedish assembly plantin Torslanda, Gothenburg. However they were small and perhaps diverging
elements in a wider long-term production strategy within the Volvo-Renault
alliance still in development at that time. The decision seems to be based
not on local performance but on a global production strategy.

The design of the Uddevalla plant
The process of designing the Uddevalla plant began in 1985. In 1989 thefactory was opened, as the result of a long process of active cooperation
between Volvo management and engineers, unions (both local and national)
and researchers. This was a pet project of the socially and humanisticallyoriented general manager of Volvo, Pehr G. Gyllenhammar. The academics
provided a long research tradition of parallelization of production and of
4

long cycle-time work, as a way of achieving high productivity, quality andflexibility. Volvo’s top management and the unions stressed quality of work
as a high value and also as a way to secure recruitment of competent workers
to assure productivity. An important background to the whole project was
the labour market situation in Sweden at the time with almost full employment which meant recruitment problems for industry.
A visitor to Uddevalla, during its time of operation, would immediately
note that production was on a relatively small scale. There is one central
building and two clover-leaf structures with three plus three smaller buildings. The central building contains materials and components. Each leaf inthe clover is built for one product workshop consisting of eight productiongroups with seven to ten workers in each; each group builds whole cars.
The Uddevalla model is similar to that of ‘lean production’ in its efforts toachieve customer orientation, quick delivery, as well as worker involvement
and learning. However, the means to achieve the ends are different. What wasso special about the Uddevalla plant, one could ask. This will be discussed
in detail, in chapters written by some of the researchers that were involvedin the design of the plant, of what they call ‘reflective production’ (see Ellegård, Engström and Medbo, and Nilsson; also Ellegård et al., 1992).
From a production design research point of view, two problems in highly
parallelized production had to be solved. Traditionally, it was presumed thatthe learning capacity of assembly workers is no more than a few minutesof work content. In contrast to this principle of additive learning, holistic
learning clearly argues that if the entire working activity is meaningful, thenthe capacity to learn during work is very high (Nilsson, 1985). A training
workshop in Uddevalla had begun operation in 1986 which uniquely instigated the theoretical principles for holistic learning and parallel production
technology into practice.
Learning capacity is also related to a second problem, which is how to
supply materials in this type of production. In experimental workshops,
products were disassembled and analyzed, making it possible to develop aformal representation and language with information about components thatwere organized according to the functions of the car (like doors and trim).
This was done in a way that was meaningful and efficient in the long-cycle
assembly work. These studies formed the basis of the sophisticated computer
software which controlled materials supplied to each team while building
a specific car (see Engström and Medbo).

From 700 workers on a line to 9 in a group
The development of the Uddevalla plant was a long process. It grew fromthe original idea of a factory where each of approximately 700 persons
5contributed their task in a job cycle of two minutes, to the final idea of afactory where 48 small, parallel stationary teams assemble whole cars witha job cycle of around two hours (Ellegård describes this trajectory). The low
horizontal division of labour, corresponded to a decentralized organization.
It addressed issues such as quality, production technology, personnel, andtools, each type of issue handled by a team member with special training andwith a rotating role as team representative. Eight teams of approximately
80 workers comprised a product shop with a shop manager as the first levelin the hierarchy. Each team member could hold a maximum of two of theabove specialities concurrently, thereby dispersing competence as well assalary, as workers received extra pay for the special functions, including
team representative, that they held. This sophisticated design is far from theneocraftmanship nostalgia that Womack et al., (1991, p. 101) refer to.
Why did the Uddevalla design process result in this radical solution (Ellegård)? In the mid 1980s Volvo needed to expand its production capacity
although the labour market was tight. The Metal workers’ union wanted to try
out their ideas of ‘good work’. The experiences of the Kalmar plant were goodin terms of productivity, but also image and publicity. Therefore a proposal tounite productivity and ‘good work’, was in line with the Volvo trajectory, as
were efforts to further develop union and management cooperation.
More broadly stated, by the 1970s industry was already experiencing
recruitment problems; absenteeism and turnover soared and wildcat strikes
were common. Volvo responded by building its Kalmar factory. In the 1980s
Uddevalla was built with a similar labour market background. At the sametime, assembly of more complex customized vehicles made dependence on
the workforce stronger. Product- and production-driven upmarket change
was probably a more important factor than previously in the 1970s. Ever
since their programme ‘New factories’ around 1970 the Swedish Employers’ Confederation (SAF) had a network furthering group work as part of astrategy of ‘coordinated independence’, that is decentralization to productworkshops and profit centres under central management control. During
the 1980s however, the union side, especially the Metal workers’ union
developed their own proactive ideas on the ‘good jobs’ implying ‘ladders ofdevelopment’ for job content and wages at the same time. This was also partof an effort to get some union control over wage determination processes that
employers tried to decentralize as much as possible, keeping unions out.

The Volvo trajectory
Before returning to Uddevalla, its performance and its closure, a shortsketch will be made of the Volvo trajectory of development of alternatives
to line production based on Berggren’s (1993a) study of the company. This6

will provide a background and situate Uddevalla in the company context.
There is also a chapter by Thomas Sandberg on Volvo’s Kalmar plant, but
unfortunately we were not able to include a separate chapter on the Torslanda plant.
Volvo plants are characterized by a diversity of both technical and organizational concepts. This variety reflects both market conditions for different
product lines and social and labour market conditions in countries where
Volvo production is located.
Transformations of work organization were more encompassing in Volvo
than were those in Saab, the other Swedish car-maker which faced similarmarket conditions. Berggren ascribes this partially to the ‘Volvo culture’
with long time CEO, and later board chairman Pehr G. Gyllenhammar’s
interest in new production concepts; the close cooperation with the tradeunions; and the openmindedness among Volvo engineers, although there
were those both in management and unions that were in favour of traditional
production concepts. However the Volvo culture was not the decisive factor. Social conditions in different countries lead to different solutions andBerggren concludes: There is no ‘Volvoism’.
In Sweden we find the following conditions: Union membership was high.
The high employment levels of the 1970s remained in the 1980’s, with an
unemployment level mostly below 3 percent. Labour force participation was
high. Wage differences were small, and the social benefit system was uniform across the labour market. Therefore, tough working conditions could
not be compensated for with higher wages, or attractive social benefits. Suchsocial and labour market characteristics together may be seen as ‘selective
disadvantages’ for production (Porter, 1990).
Furthermore, the product strategy of the Swedish auto producers was tomove towards demanding upmarket product segments. Product variation
increased and the dependence on foreign sales contributed to the need foradaptation to different customer demands.
Sweden faced combined pressures from the product market and the labour market which forced companies to be innovative in human-centred
directions, especially in labour-intensive assembly. (Berggren 1993a; seealso Streek, 1987 and Sandberg et al., 1992). Flexible quality production
demands a stable workforce, and a high employment level made it difficult
to recruit and keep workers for Taylorized jobs. Volvo trucks for example,
followed different production strategies. In Belgium with an abundantlabour supply (an unemployment level of around 10 percent in the Gent
region) and a lower level of job security, Volvo invested in assembly lines
for simpler products. Whereas in Sweden, with a more demanding labour
force, Volvo invested in flexible, holistic forms of production of complex
and customized vehicles.
7

If we now move to the examples of the Volvo trajectory in Sweden we findthat although Kalmar and Uddevalla were the symbols of the Volvo trajectory of alternatives to the assembly line, some of Volvo’s human-centred
solutions have survived in its engine and truck plants.3
In Volvo’s Kalmar car assembly plant, established in 1974, twenty teams
worked with objects transported on automaticaly guided vehicles (AGVs), ina series connected flow divided by buffers. There were four to five stations
in a team area, where the object could move from station to station. But
the team could also perform its work on stationary carriers at ‘docks’. The
restriction was however, that the sequence of objects had to be maintained
which created stress for the workers or disorder in production, wheneveran object was removed from the central flow. With more model options the
problems grew. Management’s focus towards the mid-1980s had changed
from employee motivation to using the elastic technical system to rationalize
and raise work intensity. Gradually Kalmar became Volvo’s best Swedish car
plant, in terms of assembly hours and quality. In the beginning of the 1990s
there was a revival of long job cycles and dock assembly in new forms, based
upon new so called taxi-carriers, replacing the centrally controlled AGVs.
Volvo’s truck plant in Tuve outside Gothenburg was opened in 1981. It
was built as a compromise between line and integrated assembly in groups.
There were buffers between groups which gave them some control over work
pace. More important than the production design changes were, however, theorganizational changes. Groups could influence everyday decisions, such as
the distribution of tasks and short leave periods, and a rotating role as grouprepresentative replaced foremen and quality inspectors. With higher output
and a more complex product programme, buffers tended, like in Kalmar, tobe transformed into workplaces. The series link created quality problems
as groups had to release unfinished vehicles. As a result personnel turnoversoared. Management strengthened shop-floor supervision and at the sametime, started a two-step dock assembly for the most complex products. – Theways in which the introduction of dock assembly in Volvo truck and bus
plants abroad depends on market conditions, is a theme in the contribution
by Paul Thompson and Terry Wallace.
At the Torslanda volume car plant in Gothenburg, inaugurated in 1964,
Volvo tried different strategies over the years to improve productivity andmotivation. These strategies included attitude campaigns, organizational
experiments and mechanization, which were all based on continued line
manufacturing and all proved insufficient. In 1986, a reorganization project
returned to an earlier idea of gradually replacing the assembly line with amore flexible transport system between workshops. This meant producing
parts of a car with group work and varying degrees of parallelization, thus
combining line and dock principles. This created problems with the flow,
8

such as those in the cases above. In 1989, a new project proposed the installa-tion of three shops for building whole cars similar to the Uddevalla
concept. At the same time line assembly was to continue for the majorityof the cars. An initial whole car shop was soon abandoned as it represented
an alien body in what may be called a predominantly Fordist culture. The
plant swung back to more traditional solutions. (On Torslanda compared to
Uddevalla see also Granath, 1991.)
Volvo has announced that an Uddevalla type production facility of a limited scale is being installed in the Torslanda plant for production of special
cars like ambulances and police cars. For these types of vehicles, the Uddevalla production system has proven to be drastically more efficient thanline production. In Uddevalla, police cars were built from scratch using
fewer man hours than were needed in Gothenburg to strip a standard car andconvert it into a police car. To the number of hours in the Gothenburg case,should be added the hours for first assemblying the standard car.
We have seen several examples of efforts to replace, partially and gradually, line production with more holistic alternatives. We have also seendifferent problems for such combined solutions and occasionally a return
to conventional solutions. It remains to be seen whether the gradual transformation of the lines in Torslanda that is now on its way will overcome
these types of problems. The transformation includes more developed preassembly, ergonomics and automation.
In contrast to the situation in Torslanda around 1990, the Uddevalla project
after two years of work came up with an alternative to line production. The
solution was, as we have seen, a fortyeight-fold parallelization, with eachteam making a complete car. Assembly jobs were based on the different
functions of the car (like doors, drive line, interior), rather than on balancing of time along a line. A language was developed with proper meaningful
names in order to facilitate assembly of different variants, learning andcommunication. Part numbers like 25792, 22367 and 15178 were replacedby correct names like brake cylinder, brake leads and brake pedal.

Uddevalla performance
A look at the performance of the Uddevalla plant itself will make it difficult
to understand the closing-down.4 Comparing measures of productivity for
Torslanda and Uddevalla gives the following picture. (The Volvo plant in
Gent had better performance than the Swedish plants.)
Assembly-time in Torslanda in October 1992 was 42 hours per car and in
Uddevalla 32.8 work-hours, to which 6 hours of white-collar work should
be added. Productivity measures like these are difficult to compare, but
indicate that Uddevalla and Torslanda were roughly on the same level. One
9indication of the potential of the Uddevalla production system is the factthat several workers assembled whole cars in less than 20 hours. One of
the workers there managed to build a whole car in just 10 hours, plus a few
hours for materials handling etc. (Metallarbetaren, 1993).
The quality of the cars assembled at Uddevalla was at least as high asthat of Gothenburg, both measured as number of defects per car (6 versus
7 respectively) and according to the internationally renowned J. D. Powers
customer survey. Kalmar’s quality however, was the best among the three
Swedish plants.
In the autumn of 1992, Uddevalla’s total lead time for delivery, from theindividual customer order, was down to four weeks, and a further reduction
down to two weeks was planned for the first half year of 1993. Customers
could make changes in the specification as late as three days before assembly. One explanation for this flexibility was Uddevalla’s highly parallelized
production system, which provides no balancing problems and no need fora fixed product mix. Customized production and short lead times, means
higher sales prices and virtually no cost for finished car stock.
Uddevalla needed less investments in tools and equipment than did theGothenburg plant. For example, due to long job cycles the number of jigs
needed is reduced, as one operator finishes a whole task rather than the task
being divided among several workers, each one needing one jig.
Model changes in Uddevalla needed less time and less costs in tools andtraining than did the Gothenburg plant. The explanation is low-tech simple
tools and the workers’ high competence level, which facilitates the rapid
learning of new tasks.
The new design principles allow reductions in both space requirements
and technical production support to the work groups (see Engström andMedbo). Furthermore, Uddevalla assemblers discovered design problems
that neither assemblers nor process engineers at Torslanda were aware of(Blomgren and Karlson), thus providing a potential for a more active role
for assemblers in the area of product development (also Ellegård).

Organizational learning
The overview of the Uddevalla plant’s performance presents a positive
picture. However, not all observers agree. The possibilities of organizational learning and continued development of performance in Uddevalla isquestioned in the chapter by Robert Cole and Paul Adler. Basically, Adler
and Cole argue that ‘lean production’ is the way to maximize organizational
learning. Work tasks are specialized and standardized gesture-by-gesture,then strictly and identically implemented in the whole organization. This10

standardization, is combined with worker involvement in the definition andimprovement of the standard work procedures.
Adler and Cole write that one cannot systematically improve what has
not been standardized. They challenge the German-Scandinavian ‘humancentred’ model, which implies that organizational learning is best served bylong work cycles in teams with a high degree of autonomy. Using data fromthe International Motor Vehicle Programme (IMVP, which was summarized
by Womack et al., 1991), they argue that Uddevalla assembly hours were
somewhat lower than the average for European luxury producers, but far
higher than Japanese luxury producers’ average. Although Uddevalla’s performance during the last year drastically improved, they doubt that mechanisms of improvement across the work groups were really put in place. They
admit that an enormous improvement and ‘crisis learning’ took place, butthey are not certain whether that learning could have continued. Adler andCole found better performance rates in terms of assembly hours and productquality in the Toyota-GM joint venture, Nummi, than in Uddevalla.
Both Christian Berggren and Kajsa Ellegård in their contributions, as well
as Uddevalla managers interviewed in the spring of 1993 admit there had
been productivity problems in Uddevalla. They all emphasize, however,that much changed during Uddevalla’s last year of operation. Although theprimary goal for Uddevalla, during the first couple of years, was to developfunctioning working procedures whereby each team would develop andutilize its own working model, at a later stage one was able to focus on theorganization as a whole.
Changes were occurring on the managerial level to facilitate communication and learning in the whole organization and to focus management’s attention on the total production process. Initially, the new plant manager flattened
the hierarchy so that teams communicated directly with shop managers, who
made up the bulk of the new management committee of the plant. The result
was a flat organization with only three levels: worker, product shop manager,
plant manager. Secondly, the plant manager planned to relocate all managers
from the central office building to facilities close to the production process.
The aesthetically elegant and symmetrical plant layout, with an office building radically separated from the workshops, may in fact have contributed to
keeping integration of different personnel groups at a low level. It may also
have prolonged the separation between conventional management and innovative shopfloor practices (see Clipson et al.). The closing-down decision
prevented the implementation of this second step.
The first step, that of a flatter organization, was carried through. Shop
managers began learning more about assembly, while other productionengineers split their time between working in the teams and communicating with other teams. A Kaizen programme was successfully introduced
11

(Kaizen is the Japanese word for continuous improvement). As a result,team members visited other product shops to learn how they solved specificassembly problems. Consultants from the Kaizen institute, remarked on theextra ordinary willingness to rationalize at Uddevalla.
Ellegård and Berggren stress the radical and promising organizationalchanges, which took place during the last few months of operation in
Uddevalla. They conclude that there were great possibilities for further
organizational learning and that Uddevalla demonstrated the initiation of apromising learning curve.
Futhermore Lennart Nilsson is convinced of the productive potential of
the Uddevalla concept. He strongly argues that after a succesful period of
application of the principles of ‘holistic learning’ the return to more conventional ideas of ‘additive learning’ had a negative effect for the developmentof competence as well as for productivity. But during the last year he seesa renewed application of ‘holistic learning principles’ and a constructive
development of the organization.
These positive views of Uddevalla’s potential contrasts with Adler andCole’s doubt that performance would have continued to improve at the ‘crisis learning’ rate, much less at an accelerated learning rate. Adler and Colepondered at the limits to organizational learning, and if they were intrinsic
to the Uddevalla model or were external. They conclude: ‘What we do know,
and what we can all agree upon, is that it was a tragedy that the plant wasclosed and these questions will remain unanswered’.
If we draw the preliminary conclusion that Nummi was and would forsome time remain a more efficient plant in terms of assembly hours, there
are other relevant aspects to be included in a more complete comparision.

Beyond assembly hours
Beyond assembly hours, one should consider the commercial benefits of
Uddevalla’s quick delivery of the precise specifications requested by the
dealer and customer. This results in a substantially higher sales price thanfor cars produced in more conventional plants according to prognoses ofcustomer demand, like the Torslanda plant.
Considering human work, skills and autonomy, these aspects further pointin favour of Uddevalla. Cole and Adler do conclude that Uddevalla provides
more scope for the development of workers’ human potential, but they situate Nummi’s quality of work within the ‘acceptable range’. However, in aplant of Nummi’s type, although workers participate in Kaizen activities,
the line exerts a strict control over the individuals’ work procedures andwork intensity.
The Uddevalla plant was, as already indicated, after only three years of
12

operation, at least on the same performance level as the more traditional
plant in Gothenburg. The Kalmar plant – which would merit a book of its
own – was even better, after drastic improvements in the 1990s.
Why then was Uddevalla closed? Volvo’s official answer is low sales,losses and overcapacity. Therefore, they saw a need for capacity reductions. Volvo certainly had an overcapacity problem and preferred closing
the smaller and uncomplete5 plants in Kalmar and Uddevalla, concentratingproduction to the larger Torslanda plant in Gothenburg. Closing smaller
branch plants is a standard solution in overcapacity situations as Karel Williams and his colleagues underline (Williams et al.). There may thus havebeen good structural economic and policy reasons for closing Uddevalla
and Kalmar. But to explain why these factories were closed and not others,
Volvo presented a cost calculation, which under closer scrutiny does notsupport their claims. Practically all cost items in the calculation have beenquestioned. Figures much more in favour of Uddevalla (and even more so
Kalmar), were presented in the public Swedish debate. For example Volvo
regarded the transportation of bodies from Gothenburg to Uddevalla as
an extra cost, but the debate showed that total costs for transportation ofcomponents were lower for Uddevalla than for Gothenburg.6 The revenues
projected considering Uddevalla’s potential for reduced bureaucracy andindirect costs, contributions to design, as well as customization, smaller
stocks and higher prices all contribute to further challenging the calculation.
There is therefore reason to doubt whether Volvo’s calculations show theactual reasons behind the closure.
One aspect that was not raised in the calculations has to do with the issueof control. The productivity and learning in the Uddevalla concept, dependent to a large degree on the individuals and groups, could not be easily controlled by management. Whereas the Japanese concepts, as Ulrich Jürgens
emphasizes in his contribution, seem to offer the possibility of a uniform
and continuous process of improvement, one which is easier to control bymanagement. As mentioned above however, during the very last months at
Uddevalla there were efforts to secure more of plant-wide learning, and this
could in turn have strengthened overall management control.
Perhaps to understand the closure one must look also to organizational
politics and dominating ideas within Volvo.7

Organizational politics
One explanation of the decision to close Kalmar and Uddevalla, could bethe ‘battle of ideas’ between traditionalists and innovators at Volvo. As
early as 1989, one manager on Volvo Group level said that the ‘Uddevalla
experiment’ was connected with Sweden’s tight labour market and that if
13

Volvo moved its production to the Baltic States or to Southeast Asia, thenthe probable model would be Taylorism (Hammarén, 1989).
Over the years, the Volvo Group management and P. G. Gyllenhammar
supported Uddevalla, but at the same time more conventional solutions wereallowed to live on in other Volvo plants. Uddevalla played an innovative role.
By many it was however regarded as an experiment to be closed in tougher
times. Even within the Uddevalla project group, there were technicianswith a more traditional view (see Ellegård). Similar examples of struggles
between Volvo managers representing different production concepts could
bee seen in other parts of Volvo, such as the Skövde and Vara plants within
the engine division. At a new engine plant in Skövde, sociotechnical solutions with group work, long work cycles and buffers were introduced. A
follow-up study, seven years later, showed little sociotechnical renewal after
the first year and signs of regression, as a few key personnel left and theirreplacements were frequently traditionalists trained in a different environment (Forslin, 1992).
Turning now towards the trade union side, one union reason for scepticism towards Uddevalla may have been that in contrast to MTM-based
wages in line assembly, group work of the Uddevalla type could lead toan uncontrolled intensification of work, as well as a loss of trade union
influence on the relation between wages and work performed.8 Torslanda
and Gothenburg has the numerical advantage. It is also the ‘cradle’ of thecompany. In economically bad times, the Gothenburg unions had a need todefend the jobs remaining in Gothenburg.
In this context, it is interesting to compare Uddevalla and GM’s Saturnplant, in terms of differences (such as type of car built) and similarities. As
Hancké and Rubinstein explain in their chapter, both plants are relatively
small operations in large corporations, and they are innovative and different. To understand the closing down of Uddevalla, they conclude, one has
to regard the politics of both management and the union. Uddevalla did nothave a winning coalition that backed it, but was dependent upon a parent
corporation’s willingness to pump money into its development. Furthermore, the Uddevalla local unions were dependent upon the Volvo Grouplevel unions, in regard to access to strategic decision making bodies.

Renault and Volvo
As key decisions were made within Volvo, Renault was the partner in analliance with Volvo aimed at close cooperation and finally merger, so it isrelevant to look at the production organization at Renault and its possible
influence on developments within Volvo. The relevance for the decisions
that were made remains although the alliance was later dissolved. Also a
14

discussion of Renault is of interest, as an example of a major European car
manufacturer and of Volvo’s competitive market environment.
Within the sphere of work organization, those within Volvo opposing
the Kalmar-Uddevalla trajectory are likely to have been strengthened by Renault’s entry onto the scene. Interviewing Renault managers and consultantsin the spring of 1993, one Renault manager expressed what he regarded as
a common view, that although Uddevalla was seen as advanced in terms ofwork organization, Volvo’s economic difficulties may be related to some ofher plant’s new production concepts and low volumes. In a similar vein, aconsultant’s report for the French government was very critical of the set-up
in Kalmar and Uddevalla and concluded that their ‘production model has
reached its limits, and has no place in today’s competitive context’ (SRI,
1992). Thus, cooperation with Renault may have contributed to the decision
to close these plants.
Discussing work organization philosophies with Renault representatives,
they often distinguished between Taylorism, Scandinavian-type sociotechnical solutions and Toyota inspired production systems. As in many othercountries, labour market pressure during the 1970s forced Renault to try sociotechnical experiments with substantial changes in division of labour andhierarchical relations. As Michel Freyssenet discusses in his contribution,such changes that endanger division of labour and assembly line production
were disputed and often discontinued, but later group work was acceptedby Renault management ‘as soon as it was conceptually separated from afundamental threat to flow-like production in the form of assembly lines or
automated production lines’.
At the same time, ambitions of job enrichment and skill development
continued and was maintained as one of the bases for an agreement thatwas concluded in 1989 between Renault and five trade unions, of which
CFDT was the largest.
These unions represented a weak majority among employees. The communist oriented CGT, which represented just below fifty percent did not signthe ‘Accord a vivre’. The agreement specified that work should be organizedin Unités Elementaires de Travail (UET), elementary work units, comprising
10–20 workers under one supervisor responsible for their performance. It
should be possible to identify the product of the UET and its principal ‘suppliers’ and ‘clients’ upstream and downstream within the production flowof the factory.9 The idea is that the group members should be multi-skilled,
including such tasks as quality control, maintenance, problem solving etc.
Yet, the work should remain based on assembly line technology. The CGT
is critical towards the UET and the way they were introduced. Other unions
raise the criticism regarding a risk that the UET become administrative
units whose performance is controlled, but that little really happens when15

it comes to work organization10. Whereas Renault unions regarded the Uddevalla production organization with great interest, personnel managementof Renault, according to Michel Freyssenet’s contribution, see the assemblyline work as inevitable for economic reasons, but they emphasise that thenature of the line is changed due to subassembly besides the line and automation of heavy operations.
It is obvious that there is a basic difference between Renault’s UETs andthe work done at Uddevalla. Although both pride themselves in group work
and worker competence, the asssembly line with short job cycles versus
parallelization and whole-car assembly are expressions of fundamentallydifferent philosophies. Another basic difference is the emphasis on production workers’ careers in Renault versus development of competence andwages while remaining on the same job in the group in Uddevalla11. The
need for interplant comparisons and the possibilities of moving production
between units, that the alliance with Renault may have brought about, may
have put pressure on the smaller Volvo to adapt its production technology
and work organization. As further evidenced during the collapse of the alliance it was as a case of two production cultures colliding (see also Williams
et al., Williams and Haslam, 1993 and Rickhamre, 1993).

The plant and its environment
Pioneers often face high costs of entry, as well as opposition to their ideas.
Volvo cars have developed a plurality of different production concepts,
which has meant substantial costs for research and for industrial engineeringand production preparation. The overwhelming majority of car factories in
the world are based on line production, which has allowed for a far reaching standardization of production technology. This makes development anduse of alternatives costly, especially for a small company. The degree ofcongruence between an organization and its wider environment is thus crucial in the assessment of the innovative organization’s future (Hancké andRubinstein). This is true for Uddevalla within Volvo and for Saturn within
GM. It was also true for Volvo, in relation to Renault and still for Volvo inrelation to the car industry in general.12
The consequences of the alliance and planned merger with Renault may,in summary, be regarded in two perspectives. First, there may be good
policy reasons, at least in the short and medium term, to close plants like
Uddevalla and Kalmar that differ fundamentally in philosphy and layout
from other Volvo and especially Renault assembly plants. Coordination of
production networks and also ideological coherence, may be easier with amore streamlined set-up of plants. The second aspect is, as we have seen,
16

organizational politics, representing the struggle between different dominating ideas within the organization.
The reduction of volume, and for that reason antagonism between workplaces in the Volvo group, together with a change in management of thecompany and the entrance of Renault, could be seen as releasing factors
for the shift in balance between opposing dominating ideas.13 An importantbackground factor for the decision to close Uddevalla, is the suddenly highunemployment level in Sweden. This made the need for good jobs weaker.
‘Crisis consciousness’ was at a peak in Sweden in the autumn 1992, withan interest rate from the Bank of Sweden as high as 500 % and with ‘crisis
agreements’ between government and opposition.
Uddevalla managers interviewed in the spring of 1993, were certain that
it was a strategic mistake to close this plant, particularly due to its uniquequalities in customer orientation, cooperation between design and production, and worker competence and motivation. Volvo representatives in the
public debate, however maintained that the closure of Kalmar and Uddevalla
was purely due to capacity reduction and not a strategic choice of production concepts14.
Corporate level support and commitment to the bold new plant and to its
potential in terms of market aspects and human aspects were neither strong
nor sustainable enough to allow this potential to develop and to be transferred
to other parts of the company. In contrast, GM’s Saturn plant, at least initially(Hancké and Rubinstein), had a strong support from corporate levels as amodel for future production organization and industrial relations. A new car
was developed to be produced in the new plant and the company proudly
advertised the car referring to its human production mode. Volvo kept alow profile for the Uddevalla plant and no special vehicle was developed
uniquely adapted to its assembly system. Without a corporate vision andpositive strategy and support, excellent performance was not enough for the
Uddevalla plant to prove it had a place on a crisis struck car market.

Trade union role
What has been the role of the trade unions? The newspaper of the Uddevalla
region, Bohuslänningen, wrote of the protests of the unions in Uddevalla andthe excellent performance development of the Uddevalla plant. In contrast
the national business media spread a message inspired by Womack et al., of
Uddevalla as a ‘nightmare factory’, and information from Volvo about drastically improved performance at the Gothenburg plant. The Volvo Group
union organizations in Gothenburg and the national trade union organizations were quiet. The national Swedish Metal Workers’ Union issued little
public support of the plant, the creation of which was partially dependent17

on its support in earlier critical stages. The union’s silence contrasts with
its pioneering and longstanding commitment to what it calls ‘the good jobs’
and ‘solidaristic work policy’. The national union seemed to have difficultyin finding a role for itself in this situation of overcapacity, closure andconflict of interest between plants, and referred to the Gothenburg Volvo
Group level union as the legitimate actor15. The latter union was already ina difficult position, as many auto jobs had already been lost in Gothenburg.
(On the problematic union role see Berggren and Hancké and Rubinstein,
and Sandberg, 1994.)
There seems to be a need for reexamining the mechanisms necessary
for implementing a ‘solidaristic work policy’ and to work out the relations
between different workplaces and union levels in this respect. This is agenuine dilemma for a democratic organization with elected bodies on
several levels. Perhaps the national union could have engaged in the publicdebate emphasizing the unique qualities of the two plants as well as theirsymbolic value, at the same time as they allowed the workplace and grouplevel unions (each one supported by their own consultants), to weigh different aspects against each other and make the final judgment.
We have thus far discussed the Uddevalla plant considering the Volvo
trajectory in Sweden on the one hand, and the European car industry witha focus on the former alliance partner Renault, on the other hand. It is now
time to widen the perspective to the Volvo car factories abroad covered inthis book.

Volvo abroad
Although we have pointed to the existence of a specific Volvo trajectory withfactories developing different alternatives to line assembly (many of thembased on parallelization and advanced team work), we have concluded that
there is no ‘Volvoism’, except for an unusual degree of pluralism, adapting
to contingencies. This conclusion is underlined below in the overview of thecases of Volvo in the the Netherlands, UK, Belgium, Canada and Malaysia
presented in chapters in this volume.
Between 1972 and 1975 Volvo was a minority owner of the car plant
Born in the Netherlands. Between 1975 and 1981 however, it became themajority owner of this plant. Although Kalmar was opened in 1974, noneof the Kalmar ideas were transferred to Born. Ben Dankbaar in his chapter
concludes that: ‘… apparently there was little or no expectation that the newconcepts would contribute to productivity in a situation where absenteeism
and personnel turnover were less of a problem’. Later, from 1986 on, however, some experiments with longer job cycles were carried out. A few AGVs
were introduced and there were some try-outs where complete bodies were18

assembled by a small team. In both cases necessary changes in layout andequipment were considered too expensive to justify more general changes.
Apart from these experiments, work cycles have been and continue to be
between 30 and 60 seconds.
In addition to the labour market conditions emphasized in the Born case,the product market is one more factor to explain Volvo’s choice of production
concept and work design in different contexts. Thompson and Wallace, in
their discussion of bus and truck production in the UK, regard the repertoireand choice of production concepts as a mirror of the company’s strategic
response to shifting market conditions.16 Given different circumstances, therepertoire may act as a resource for actors striving for different solutions.
Within Volvo there is a plurality of concepts including some of the mostadvanced alternatives to assembly line production. These are then realized
depending on the market conditions.
With the Belgian Gent factory in 1965, Volvo got closer to the EEC market.
The plant, today, is based on assembly line technology. There are carriers insome sections of the line, but there is no dock assembly. In the mid 1970s,
there was an experiment with workers assembling complete engines, with acycle-time of 30 minutes. However this ‘island’ in the plant came to an end.
Workers felt socially cut off from the production line and unions were notpleased with the experiment. The Uddevalla plant, in Belgian car industry
as in the Dutch case, was looked upon as an answer to a Swedish problem
of absenteeism, high educational level and low unemployment.
To increase flexibility, the Gent plant began implementing so called
VEC-teams (Volvo Europe Car teams) in 1989, Rik Huys and Geert Van
Hootegem report in their contribution. In the VEC teams, 8–12 workers areheaded by one team leader, not chosen by the team members. Work stations
are unchanged (with 86 seconds job cycle time), but workers must know
at least three jobs for possible rotation. Additional team tasks concerning quality, maintenance and materials handling, are taken on by a teammember, the position rotating among team members. An evalutation of the
new team system will have to look at the extent to which operator jobs are
significantly enriched or to which extent, the new tasks are mainly executedby the team leader.
Writing the history of Volvo’s plant in Nova Scotia, Canada, Anders
Sandberg concludes that Volvo did not bring ‘a little bit of Sweden’ toNova Scotia. ‘Instead, the company quickly adopted to and exploited the
peripheral conditions of its new location.’ Concessions were extended to
Volvo and it is suggested that these consessions were also reflected in thework organization and the labour climate of the plant. Although some tiltstations and also robotics were introduced Anders Sandberg uses the term
‘despotic Taylorism’ (see Adler and Cole) to characterize the plant. There
19

are several reasons why workers still stay: wages are relatively high andso is unemployment.
The Swedish Motor Assemblies Sendirian Berhad (SMA) in Malaysia, isa joint venture between AB Volvo and their local distributors and the firstcar assembly plant in Malaysia, established in 1966. Jobs are routinizedwith tight hierarchical supervision. The background to such establishments,
explains Hing Ai Yun, was high import tariffs and other restrictions on
car imports. Later a national car project with strong state ownership madeconditions difficult for other car assemblers, so production diminished also
for the SMA.

The future: lean production, automationand human-centred production
Looking just at Volvo plants we found different production models under
different market conditions. In Japan today we find not only the very big
plants but also smaller ones, like for example Takada Kogyo Co. presented
below, producing short series of cars for very specific customer segments.
We will also find that lean production is not monolithic. Solving the
problems of lean production when it comes to vulnerability of production
and perhaps most of all the ‘crisis of labour’ and recruitment problems wefind, not least within Toyota, tendencies towards humanization of work in
the newer plants; in the background there is now criticism from Japanese
auto unions. Also continued automation is at present not a self-evident solution; Toyota’s newest plant has a lower automation level than the precedingone.
Lean production with tough working conditons for a reduced number ofworkers is usually discussed only on the micro, company level. If appliedin workplaces in general, there may be important macro consequences witha very heavy burden placed on the public sector, which already has fiscal
problems.
Together the above factors seem to contribute to a growing importancefor human-centred production, and we will discuss them more in detail in
the following sections.

Takada Kogyo Co
Turning thus to Japanese experiences we will first consider a tendency of theJapanese product market, towards far-reaching customization of production.
We take an extreme example, of the production of very small lots of so called‘recreational cars’ with a fashionable design for narrowly defined customer
segments. Although Uddevalla was not intended for this type of production
20and indeed produced longer series of cars, the example, though it may seem
marginal, may serve as an illustration of Uddevalla’s potential.
Subcontractors have in cases like these, absorbed production technology
and management know-how from their parent companies and embarked on
design and assembly of finished products. They produce several car models
at a time. An example, is the Takada Kogyo Co. plant in Yokohama, within
the Nissan network17. There are 1000 full-time, permanent workers andaround 300 short term employed. Takada Kogyo started as a pressing andstamping company which now design its own car models with fashionablebodies. They buy chassis, engines and transmissions from major car companies, especially their parent company. Development time is short, down to
one year. As an example, Subaru Vivio Ttop, is planned for a total volumeof only 3000 cars, with a production of 18 cars a day, on a final assemblyline with a job cycle of about 25 minutes. Other car models, may have avolume of one to two thousand per month, like Nissan Figaro. For profitableassembly-line production at Takada, a volume for each model of at least 400
cars per month is generally needed. For small volumes of special cars likeambulances, bridal cars etc., a handicraft-like mode of production is used.
The Uddevalla mode of production could perhaps provide a productive application for the type of assembly taking place at Takada replacing
what is now short line production as well as the handicraft-like production
method. The Uddevalla model, through its flexibility and the competenceof the workers, enhances market contacts both at the design and the sales
stages, and has a potential of efficiently producing cars with a high degreeof customization18.

Lean production and work in Japan
Most discussions about industrial organization in the beginning of the 1990s,
refer to the Japanese experiences and the book The Machine that Changed
the World, by Womack et al. (1991). Dan Jonsson makes a methodological critique of this book in his chapter. The book has aroused an immenseinterest and debate mostly about productivity aspects, with little emphasison the consequences for the employees and for society19. Norbert Altmann
in his chapter considers the latter issues. He points to some negative aspectsof Japanese forms of production, such as: segmentation of the workforce;
polyvalence (meaning broader skills but not higher); a division of labour inthe Kaizen process (with special teams doing the qualified Kaizen work);
personnel assessment systems with a high degree of subjectivity; a ratio of
2:1 in wages between core manufacturing workers in large companies andfemale marginal workers20; virtually unrestricted duration and flexibility ofworking hours; and no role for unions in work design. Altmann comments
21

that these aspects imply that Japanese forms of work organizaton do not
succeed in allowing labour to unfold to its fullest capacity, so there may be
a potential for further productivity growth.
Recent developments and pressures towards change in Toyotism and moregenerally in lean management systems, are discussed in this volume by
Shimizu, Grønning and Lillrank. They all, to different degrees, talk about humanization of the production systems within Toyota against the backgroundof what Shimizu calls a ‘crisis of work’ around 1990. In its newest plants,
Tahara IV and Kyushu, Toyota focusses on work environment to a greater
extent than before. Toyota manager Tadaaki Jagawa said: ‘Maybe we made a
mistake in designing such gloomy factories’ (Financial Times, Feb 2, 1992).
Moving production to the southern island Kyushu is in itself an expression
for recruitment problems in central Japan. The long distance transportation,
overnight by ship, of most components from central Japan means a breakwith the ‘just-in-time’ principle (JIT). Furthermore, the congestion of roads
has contributed to the need for storing components, contrary to the JIT philosophy. More fundamental is perhaps the breaking up of assembly lines
into mini-lines with more autonomy for workers and teams.
In Toyota Kyushu there is a new shift system adapted to female workers,
who at the time of my visit in May of 1993 constituted 70 out of 900 manual
workers. As to the working environment, air conditioning is advanced andnoise level relatively low. The cars move on platforms, the height of whichis adjustable, which allows for a more comfortable working posture. There
are 11 assembly lines with a buffer of a few cars between each. Each linewith about 40 workers per shift has 3 foremen. For the 11 lines there are 8
pro-duction managers and 2 section managers. The shorter lines are meant
to enhance visibility of the product as well as worker autonomy and responsibility. They are also meant to reduce stress. The stress referred to is not
the one related to intense repetitive work, but rather, to the fact that small
disturbances may stop the whole factory. With buffers the workers may ina more relaxed way stop a part of a line. The job cycle was reported to be
66 seconds.
In Nissans Kyushu plant, platforms carrying the cars have been introduced. They are coupled to each other like a train. But if a platform wasstopped the platforms in front could continue and only those coming after
were stopped. Depending on volume, the job cycle time was 1–2 minutes.
When asked about work organization, a Nissan union representative had noissues to bring up, but mentioned the importance of air conditioning andworker welfare.
Moving to Kyushu and being ‘nice to people’, as the Toyota slogan goes,may be a contribution to the remedy of recruitment problems in the 1990s.
Important changes are taking place in ergonomics and physical work en22

vironment, but there is no questioning of the line technology and of workorganization with short job cycles and detailed supervision. The proportion of supvervisors and managers is high when compared with Uddevalla
and Saturn (Hancké and Rubinstein). Another recent development, is theemphasis on white collar rationalization directing lean principles towards
office bureaucracies. In a more long term perspective automation of simple
manual work has been seen as a solution (Lillrank).
In the new Kyushu plants brighter factories and cafeterias, shorter lines
with buffers between them, carriers and better ergonomics, are found, withproduction design ideas somewhat reminiscent of Volvo’s Kalmar plantfrom the 1970s. However, there seems to be little interest in more radical
concepts of work and technology like those found at Uddevalla.
There is a new attitude towards automation in the Toyota Kyushu plant
where one starts at a relatively low automation level. The automation levelis lower than in Tahara IV, where even the marriage between chassi andengine is fully automated. It is also lower than in Nissan’s Kyushu plant.
The reason given for the lower level, is the cost of automation. Perhaps,then in the medium term, automation may not be the solution to possible
labour market resistance to car industry work.

Japanese Auto Workers’ criticism
Challenges to lean production come not only from the labour market but also
from the product market. Customers may not be willing to pay for the wide
variety and for short model cycles. There are tendencies, especially in Nissan, for model cycles to become longer and the number of variants fewer.
This and other critical aspects of Japanese car production can be foundin the programme ‘Japanese automobile industry in the future’, preparedby the Confederation of Japan Automobile Workers’ Unions (JAW, 1992).
One main thesis is that Japanese auto industry has been able to maintainhigh levels of production and sales, but at the price of ‘tripple sufferings’:
exhausting the employees resulting in labour shortage, low profitability andbeing bashed from abroad.
In a similar way representatives of the Japan Council of Metal Workers’
Unions (IMF-JC), discussed the well known ‘3 M’s’: Muda (non-valueadded, waste), Muri (overburden) and Mura (unevenness in capacity utilization). They said Muda and Mura are well known and discussed in the West,but one sometimes forgets Muri, which means pushing a person or a machine
too far. Preventing Muri, could be a union task (interview in May, 1993).
Due to labour shortage and low profits, there is according to JAW, a tendency among part manufacturers to decline orders. This may threaten the‘just-in-time’ method, although the present recession may ease the labour23market somewhat. After 1995, a decline in the supply of young workers ispredicted. The long working hours are criticized abroad as an expressionof unfair competition.
The JAW also criticize a central aspect of Japanese management:
Under the pretext of sharing a common destiny, which is pleasing to theear, companies do seem to have been too demanding of their workers.
Companies and their employees have turned inwards into the confinesof the company. This has created a gap between company and society. …
The sense of ‘family’ is supported by devotion of each member, whichsometimes requires self-sacrifice. … What is needed now is … making
the self-realization of employees through their work go hand-in-handwith healthy corporate development. (JAW, 1992:21–22).
Although not explicitly stated this seems to be a criticism of the Japanese
team concept. As Peter Wickens (1993), of Nissan UK writes, such teamwork is not about certain organizational structures or leaving sequential
manufacturing. Rather according to Wickens:
A team begins with a group of individuals whose individual contributions are recognized and valued and who are motivated to work in thesame direction to achieve clear, understood and stretching goals forwhich they are accountable. The best teams come with positive leadership and tough goals.
I have referred extensively to the JAW programme because issues of thistype, particularly Japanese union perspectives, are completely absent fromthe work of Womack et al.

Work, technology and management
Returning to production technology, organization of work and management,
the role of job content remains a key aspect. In the sociotechnical, or human-centred tradition, long work cycles and work group autonomy is seen as
an important value of its own, contributing to good jobs for human beings.
It is also seen as a new productive concept, both as a way of motivating
workers and as a way of avoiding the engineering losses that follow withshort cycle line production. In Scandinavia, with Uddevalla as an important
example, and in Germany, this work organization is coupled to a relatively
strong union influence on job design.
The Japanese lean model combines short cycle jobs, standardized detailed
work procedures applied to the whole organization, and worker involvment
in rethinking and improving these same procedures. Lillrank in this volume
discusses this informal mixing of rule following and participation in im24

provement efforts. Wickens (1993, p. 87) argues that: ‘job satisfaction canarise from performing the short, repetitive cycle well, achieving high levelsof productivity and quality, and at the same time being involved in changes
to the process and a range of other tasks’. According to Cole and Adler,
such a system is part of the essence of Nummi’s version of lean production.
They say that it contributes not only to world class performance, but also
to a moderately high level of worker motivation. They call this system a’learning bureaucracy’. That may be a good description, but from a European
human-centred perspective, I think that their term ’Democratic Taylorism’
could be seen as problematic. Even in the case of Uddevalla, with its richer
work content and worker influence, both in day-to-day management and via
union influence in the design process, there is seldom talk of democracy.
On the other hand, one should not deny the satisfaction of working in a’learning bureaucracy’, which through a long process of improvement, isfunctioning very smoothly and delivering high quality products. One canimagine, however, that such a system will remain stable only if the generalorganizational principles are taken as given. Possibly more critical learningin wider circles may contribute to workers questioning basic principles ofindustrial organization – such as additive learning and sequential flow – asa logical consequence of trying to find the primary causes of the dysfunctions of sequential line production (as empasized by Freyssenet). In spiteof Kaizen, detailed division of labour and direct control might, in such aperspective, stand out as neither democratic nor learning. The continuity
from traditional ‘despotic’ Taylorism is strong and changes due to Kaizen
are sometimes exaggerated. This may partially be explained by the fact that
production workers are often involved only in low level Kaizen activities,
whereas more qualified Kaizen acitivities are taken care of by special Kaizen
teams or by more qualified workers, maintenance workers or supervisors.
There is a division of labour in the Kaizen activities.
As early as in the 1950s Robert Blauner summarizing American researchon auto work, emphasized the role of technology in determining the character of work. Later, in the sociotechnical tradition Emery and Thorsrundstressed job design. Womack, Jones and Rose (1991) emphasize the roleof management in determining work. They argue that with lean production, the same technology results in different work. This is similar to Coleand Adler’s thoughts on worker participation in improvements of standard
procedures, which would contribute to making Nummi’s Taylorism seem‘democratic’.
Expressing what could be seen as either pure contempt or ignorance ofthe socio-technical tradition, Womack et al. (1991, p. 102) comment upon
Uddevalla in the following way: ‘simply bolting and screwing together alarge number of parts in a long cycle rather than a small number in a short25

cycle is a very limited form of job enrichment’. Based on a 5 plant surveyof how workers perceived working conditions, Berggren (1993a), is able torefute this point of view. He demonstrates a close connection between technical-organizational design and working conditions. The results are clearcut:‘The further from traditional line assembly a plant moves, the better theoutcomes in terms of variation, prospects for personal growth, the taking of
responsibility, and the opportunity to use ones skills’, and the lower the levelof physical strain and severe fatigue after work. In all fragmented assembly,
production workers expressed a strong desire for more variety and integrated
tasks. Holistic, long-cycle assembly, thus, turns out to be something elsethan simply ‘screwing together a large number of parts’.
Uddevalla’s ‘enriching production’ is fundamentally different from Taylorism and Toyotism, from human, technical and market points of view. In
assembly, lean production like Taylorism means repetitive, standardized shortcycle jobs. To this comes ‘team work’ with some rotation and supplementarytasks like inspection and minor repair work as well as contributing to refinement of the standardized procedures.21 Human-centered work of Uddevalla’s
type is very different in that it abolishes the line and presents a total parallelization of production which allows for advanced customer orientation,interaction between workers and designers, as well as worker autonomy andlong work cycles in assembly. It tries with reasonable success to integratework, technology and management in a learning, non-alienating process.

Lean production and society
So far we have focussed on the consequences of lean production for work
and workers. A broad and widely spread application of lean production
would also have major consequences on the societal level. There is an important micro-macro dimension in lean production. Analyzing this dimension, Peter Auer in his contribution argues that, although lean production
may be a remedy for individual companies, it may create deterioration of
the economic and social climate in general. In a lean cost-cutting world,social responsibility for companies will be impossible, and the whole social
burden will be placed on the public sector. Massive job shedding may takeplace and remaining jobs may not be enough to finance an advanced welfare
state. In summary, Auer argues that if lean production is widely introduced
the macro-economic consequences may threaten even the fundaments ofthe economy itself. In an isolated supply side micro-economic view, highwages are cost factors that will affect competitiveness and destroy jobs. In
a demand side macro-view, high wages spur demand and creates jobs. It
might be necessary to achieve a combined supply/demand and micro/macro
policy with an optimum level of leanness.
26

‘Competition and free trade does not simply expose technical inefficiencies which could and should be rectified by virtuous management efforts toimprove productivity’. It is also ‘a misfortune which undermines the moregenerous social settlements’ writes Williams et al., in their chapter, and theyhold the opinion that a prime task for the European Community ‘should beto put a floor under destructive competition between social settlements’. Ina highly competitive world, a high standard of social protection and humane
work may not be possible in one country. This type of policy needs international cooperation setting minimum standards of social and environmental
protection. A developed socio-economic logic may become an advantage
for Europe, whereas for Japan, some of the social aspects and new demands
are perhaps its achilles heel (Auer).
Some of these conclusions are supported by the the JAW report, mentioned above. The report finds that Japanese auto manufacturers engage in‘excessive competition’, because of too frequent model changes, and too
much diversification in models and parts. Such costs could be reduced tothe advantage of investments in new technology, such as environmental
protection, and also an ‘appropriate valuation of the workforce’ (JAW,
1992, p. 23). ‘To expand overseas markets based on a domestic structure ofexcessive competition is the same thing as to export excessive competition.
Before we criticize political intervention in economic activities, we should
realize that the market is not almighty’ (p. 19). In a postcript the advisor of
JAW, professor Shimada, writes: ‘Competition for the sake of competition
has dominated, and everything was sacrificed, including wages, working
hours, profits, subcontractors, dealers, the lives of Japanese workers, andemployment opportunities of workers abroad’ (p. 33).
Lean production has its limits. Profits of Japanese car producers are low.
Customers may not be willing to pay the cost for the many variants and quick
model changes. Young people are beginning to reject work in car plants due
to long and tough working hours. There are risks of job shedding that may
create social tensions and destroy the basis for social welfare and cohesion.
On the micro level, it is necessary and possible to go beyond the onesided
focus on the leanest possible production of a Japanese type. At the sametime it is necessary to develop the Scandinavian-German ‘human-centred
model’ of work so that productive performance comes more into focus. The
fierce international competition will regulate or monitor that the productivity
aspect is not neglected. To secure human work and decent social standards,
international political and trade union cooperation may give a basis for a
supplementary macro demand side policy. Also a policy is needed that will
supplement the product market driven development of still leaner pro-duction with a social-policy and labour market driven further development of
human-centred production, including its productivity potential. An interest27

ing sign is that in May of 1993, representatives from the Japan Council ofMetal Workers’ Unions, IMF-JC, and the German IG Metall Union met inTokyo, to a first comparative seminar discussing living and working conditions, wages and production systems.
With such international cooperation growing, we may see new production
concepts going beyond lean production and making use of experiences of
the Volvo Uddevalla system of reflective production. ‘Enriching production’
may become a real possibility.

Notes
1. References here and below with no year after the name of the author refer tochapters in this volume.
2. Articles by researchers, unions and management on Volvo and the closure of
Uddevalla were published in several main newspapers during the spring of 1993.
An important article posing questions to management, shareholders, politicians
and unions was written in the leading Stockholm daily Dagens Nyheter, April6, 1993, by Elsie Charron, Kajsa Ellegård, Michel Freyssenet, Bob Hancké,
Ulrich Jürgens, Rianne Mahon, Lennart Nilsson, Åke Sandberg, Jesper Steen,Peter Ullmark and Karel Williams. During the spring of 1994 debate continued
in connection with the closure of the Kalmar plant.
3. This was emphasized by Hammarström, 1993, of the SIF (Swedish Union of
Clerical and Technical Employees in Industry) in the debate on the closing of
Uddevalla and Kalmar. The engine plants in Vara and Skövde are important
examples, as well as the truck plant in Tuve near Gothenburg.
4. For a detailed analysis see the contribution in this book by Berggren and also
Ellegård, and Engström and Medbo. See also Berggren’s (1993b) evaluation
report and articles by Sandberg 1993 a, b and c.
5. The Uddevalla plant, like Kalmar, was an assembly plant. Painted bodies werebrought there from Gothenburg.
6. This is just an example of the weaknesses of the calculation, discussed morein detail in Berggren’s contribution.
7. The following sections is a development of arguments in earlier articles, Sandberg
1993 a, b and c which were based on an original article in Dagens Nyheter Feb
4, 1993; see also Berggren, Ellegård and Hancké and Rubinstein in this book.
8. Developing such a new integrated system of work organization and wages does
not only apply to Uddevalla, but is an important strategic problem for unions
trying to find an answer to modern post- or neo-Taylorist rationalization strategies. There is a need for a ‘new historical compromise’ on rationalization andwages replacing or supplementing Taylorism and piece rate systems. LO, theSwedish Confederation of Trade Unions, is among those trying to find andanswer to this challange. See also Metall, 1992, and note 11 below.

28

9. See a recent book on total quality management by Pierre Jocou (1992), theinfluential director of quality at Renault.
10. These opinions may be compared to experiences from the German auto industry
where the concepts of most auto producers express expectations that group
work will contribute to higher flexibility and performance of the workforce.
But, judging from the collective agreements, introduction of group work will
not be accompanied by substantial competence development (Ramge 1993).
Similar aspects are discussed regarding so called VEC-teams in Volvo-Gent(see Huys and Hootegem).
11. The Metal workers’ union in a recent publication (Metall, 1992:39), makessome important conceptual distinctions. Career means that some individuals(but not all), may move to another job given an unchanged work organization.
Multiskilling means that a person learns to perform tasks within another job,which may be open to all, but the work organization remains unchanged. Job
development, the preferred solution, means that all individuals have the possibility to gradually learn and perform new tasks within a broadly defined job.
The detailed division of labour in the old work organization is changed (Seealso Sandberg 1994).
12. This conclusion on the company management level may also be compared tothe difficulties concerning organizational innovations survival within one plantpartially organized according to traditional principles (see the discussion on the
Volvo trajectory above).
13. The discussion of dominating ideas and releasing factors owes much to Albert
Danielsson (see Samtal om ledarskap, ledning och ledare, 1986).
14. See article by Volvo Car CEO Lennart Jeansson in Dagens Nyheter, April 13,
1993. Jeansson wrote: ‘It is worth pointing out once more - the decision to close
the plants in Kalmar and Uddevalla is a necessary decision in terms of capacity
and adaptation to prevailing conditions and not, as many seem to believe, anevaluation of different production methods’ (author’s translation).
15. See P.O. Bergström (1993), of the Swedish Metal Workers’ Union.
16. Comparing job redesign at Volvo in Sweden and British Leyland, Pontusson,
1990, finds the explanation mainly in differing labour market conditions.
17. Professor Masayoshi Ikeda, Chuo University, generously shared with me hisknowledge and experiences of this type of small lot production. He arranged astudy visit at Takada Kokyo Co. in Yokohama, where managing director Shoshin
Migita and his staff gave us valuable information. See also a paper by Ikeda(without date).
18. As we will see below, some of the tendencies in Japan of fashion oriented designand quick model changes have been criticized for environmental and safety
reasons by Japanese unions.
19. See however e.g. Williams and Haslam, 1992, Berggren et al., 1991 on Japanesetransplants in the US, and an overview article by Unterweger, 1992.

29

20. Between the years 1981 and 1989, the yearly cash earnings of employees in small
manufacturing enterprises (4–9 employees), was between 43 and 45 percent of
those earnings in enterprises with more than 1,000 employees. In 1990, female
employee earnings was about 60 percent of those of the male counterparts.
(Matsuba, 1993).
21. Stephen Wood (1993) summarizes much of the discussion of fordism and theJapanese management model, and conludes that the latter may be regarded as
neo-Fordist rather than post-Fordist: Workers participate in continuous improvement, but from Fordism management´s right to design work remains intact,
as well as work study, assembly lines, mass production and mass marketing.

Interviews and plant visits during the spring of 1993•••

Volvo, Uddevalla and Kalmar: managers, car assemblers and tradeunionists
Renault headquarters: managers and trade unionists; plant visits
Japan: plant visits to Toyota Tahara and Toyota Kyushu, Nissan Kyushu
and Takada Kogyo in Yokohama, including meetings with plant managers and at Nissan, a union representative.

Interviews with representatives for Japan Council of Metal Workers’ Unions(IMF-JC) and the Federation Of All Toyota Workers’ Unions within the
Confederation of Japan Automobile Workers’ Unions (JAW), Tokyo.
The visits to the above and other plants in Japan were organized by MatsBrusæus and Keisuke Kurihara at the Swedish Embassy and by Ryu Suzukiof the Social Research Institute of Japan. Ryu Suzuki and Kyoko Kodera
from Chuo University acted as translators during visits and interviews.

Acknowledgements
I want to thank those who so generously helped me in many ways with plant
visits and interviews. Special thanks to the former employees at Uddevalla. I
want to thank the following colleagues for comments on earlier drafts of thischapter: Jesper Steen and Peter Ullmark, the Royal Institute of Technology,
Stockholm, Christian Berggren, Niklas Bruun, Wuokko Knocke, Klas Levinson and Casten von Otter, The Swedish Institute for Work Life Research.
Cecilia Runnström (editor, with whom I worked on this book project) gave
valuable comments and so did Fern Scott. This chapter builds on an earlier working paper on which I got comments from some of the colleagues
above and from John Andersson and Albert Danielsson, Royal Institute ofTechnology, Stockholm, Kajsa Ellegård and Lennart Nilsson, Gothenburg
University, Bengt Sandkull, Linköping University and Arne H. Eriksson,
Gunnar Gelin and Birger Viklund, The Swedish Institute for Work Life Re30

search and the following visitors to the Institute: Rianne Mahon, Carleton
University, and Taro Miyamoto and Takeshi Shinoda, Ritsumeikan University. The paper was also discussed in seminars at Chuo University, Tokyoand at Ritsumeikan University, Kyoto where I received valuable commentsfrom among others Akihiro Ishikawa, Tokyo and Katsuji Tsuji, Kyoto.

References
The chapters in this book are referred to in the text above with the authorsname only (without year of publishing). They are not listed below.
L’accord à vivre de Renault, (1989), Renault Automobiles, Boulogne Billancourt,
29 Dec., 1989.
Berggren, Christian (1993a), The Volvo Experience. Alternatives to Lean Production in the Swedish Auto Industry, MacMillan, London.
— (1993b), Mästarprestationer eller mardrömsfabriker?, Institutionen för arbetsvetenskap, KTH, Stockholm.
Berggren, Christian, Torsten Björkman and Ernst Hollander (1991), Are they
unbeatable?, Royal Institute of Technology, Stockholm.
Bergström, P.-O. (1993), ‘En industriell tragedi’, Arbetet, April 22.
Charron, Elsie et al. (1993), ‘Stannar Volvo i Sverige?’, DN Debatt, Dagens
Nyheter, April 6.
Cressey, Peter (1993), ‘Kalmar and Uddevalla: The demise of Volvo as aEuropean icon’, New Technology, Work and Employment, Vol. 8, No 2, September.
Danielsson, Albert (ed.) (1986), Samtal om ledarskap, ledning och ledare, Svenska Dagbladets förlag, Stockholm.
Ellegård, Kajsa, Tomas Engström and Lennart Nilsson (1992), Reforming Industrial Work – Principles and Realities, The Swedish Work Environment Fund,
Stockholm
Forslin, Jan (1992), ‘Towards integration: the case of Volvo engine division’, P+
European Participation Monitor, Issue No 3, European Foundation, Dublin.
Gyllenhammar, Pehr G. (1993), ‘Bräckliga påståenden’, DN Debatt, Dagens
Nyheter, April 1.
Hammarén, Maria (1989), article in the journal Ny teknik, spring
Hammarström, Olle (1993), ‘Rädda idéerna i Uddevalla’, Göteborgs-posten,
May 16.
Ikeda, Masayoshi (no date), Production and Development Network Between Large
Corporations and Subcontractors, Chuo University, Tokyo (mimeo.)
JAW (1992), Japanese Atuomobile Industry in the Future: Toward co-existencewith the world, consumers and employees, Confederation of Japan Automobile Workers’ Unions, Tokyo.

31

Jeansson, Lennart (1993), ‘Dystra siffror viktig bakgrund’, DN Debatt, Dagens
Nyheter, April 13.
Jocou, Pierre and Frédéric Lucas (1992), Au cœur du changement, Paris, Dunod.
Matsuba, Masafumi (1993), ‘Contemporary Japanese Economy’, Ritsumeikan
Social Sciences Review, Vol. 29, No. 2, September
Metall (1992), Löneteknisk handbok, Stockholm.
Metallarbetaren (1993), ‘En besviken metallarbetare’, January
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comparison of Volvo and British Leyland’, Economic and Industrial Democracy, Vol. 11, No. 3.
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Ramge, Ulrich (1993), ‘Aktuelle Gruppenarbeitskonzepte in der deutschen Automobilindustrie’, Die Mitbestimmung, No 9.
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32

Womack, James P, Daniel T Jones and Daniel Roos (1991), The Machine that
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33

Part I

Volvo’s innovative
Uddevalla and Kalmar plants

The creation of a new production system atthe Volvo automobile assembly plantin Uddevalla, Sweden
Kajsa Ellegård

Some comments will be made on the creation of the new production system,
which we, as researchers, have named the ‘Reflective Production System’(1). It was created when Volvo, in the late 1980s, planned a new automobile
factory in Uddevalla (2).
Some fundamental questions for the understanding of this creative process
will be put forth. The point of departure is that the ‘Reflective Production
System’ relies on a set of assumptions that differs in nature from those assumptions which support the production system in plants whith an assembly
line. Also, some characteristics of the product flow pattern of the ‘reflective
production system’ in the Uddevalla factory will be briefly de-scribed, as
well as the work organization and the necessary prerequisites for it. Theseare extended competence in car building, parallelized assembly work stations and a steadily ongoing process of change and improvement.

1. What is new?
This question can be answered by taking the role of a first time visitor to
the Uddevalla factory: The first impression concerns the visible part of thework environment, which is very light and spacious.
This does not differ so much from any other modern factory, though otherthings appear that do differ from what can be seen in other car plants:
•
•
•
•
•

it is quiet,
the cars being assembled stand still, side by side, during the assembly,
people are working together in small groups and they communicate
frequently,
nothing seems to go on in a hurry,
the car stands at the same place for a long period of time, equalling
several hours,37•and the factory is small compared to most other car plants.

The next impression concerns the technical equipment:
•
•

•
•
•
•
•

that is the absence of an assembly line. The flow of cars is instead
extremely parallelized in the product shops,
sets of materials are individually packed for each body (small details andlarger components are placed in a strict order on shelves and stands).
The car body and its sets of materials are sent to the assembly area byautomatic guided vehicles,
automatic guided vehicles are also used to transport the complete carsfrom the product shop,
the car remains at the same place during its entire assembly,
people are moving around the body, performing their different tasks inthe assembly work while the car stands still,
the same persons do all their work in a small assembly area,
many hand machines are in use, but there are a few big, complex machines.

Another impression is that it is very hard to discover the production pace.
It is not immediately visible due to the absence of an assembly line and dueto the long work cycles. When there are no short work cycles, the degree ofrepetitivity is very low. The same task is thus performed by the same worker
only a few times a day.
A first time visitor is not immediately aware of the fundamental structureof organization of the assembly process. However, once discussed withthe people working there, much can be learned. It is difficult, however, tointerpret the impressions from such discussions when using a set of mental
tools applicable for analysis of a traditional line factory.
Thus, a first conclusion now can be drawn. The real innovation is the way
in which human learning and human knowledge is used as a starting point
for developing new principles of production techniques. One of the mostim-portant technical principles concerns the handling of materials when the
body stands still during the assembly (3). The materials handling is arranged
so as to facilitate the assembly work, by taking into account the ways inwhich people think and perform in a natural way.
Human knowledge, i.e. personal knowledge and ability of the individual
worker, is a fundamental underlying prerequisite for the production technique developed in the Uddevalla factory. The total body of knowledgeof assembly work is distributed among the people and utilized in a quite
different manner from other car factories. More knowledge is demandedfrom each individual in the teams. The workers themselves exercise control
over the totality of assembly work, including work pace. They have an inner view of the process, and when they have the complete set of materials
38

for assembling one car they can perform their work very efficiently. This
makes the ‘Reflective Production System’ very flexible and resistant tosuch distur-bances that in traditional productions sites would cause severe
problems (4).
The main reason for the need of extended individual competence was thedemand for effiency and profitability. Extended competence allows for an
overview for the individuals, which is necessary for their understandingof the assembly process. Once an understanding is achieved it becomes
possible for the individuals to trace new and better ways to perform. This
leads to increased efficiency, higher productivity and profitability. Thus,
the combination of competence and a technical system built to meet humanabilities, generates goal achievement.

2. Why did this new production system develop?
In the mid 80s Volvo needed to expand its production capacity. The demandfor Volvo cars increased steadily during the first part of the 80s, whereby
existing plants could not meet this demand without great changes. At thesame time, work in industry was not correlated with positive values amongpeople in the work force in Sweden, and the car plants were mere symbols
for monotonous work on seemingly endless assembly lines. Concurrently,
the labour market in Sweden was very hot during the mid 80s, with an
unemployment rate of only about 2 percent. Hence, it was hard to findpeople willing to work in traditional industries in general and automobile
industries in particular. The metal workers union in Sweden had for several
years argued and worked for the creation of ‘good work’ for its members.
The national metal union in Stockholm, as well as the local Volvo metal
union in Gothenburg, found the plans for a Volvo plant in Uddevalla to be
an opportunity to put into practice the ‘good work’ philosophy. Others,
however, in Gothenburg saw the plans as a threat to the jobs for the metal
union’s members in the old plant in Torslanda, Gothenburg.
Volvo wanted to be able to recruit good workers to its automobile plants inorder to produce quality cars in an efficient and flexible production system.
Since the experiences from the Kalmar plant (an innovative plant of its time)
were good, not only concerning production results but also because it led
to positive publicity all over the world, the company wanted to make a neweffort to create something extra.
Volvo raised the goals for the Uddevalla plant which aimed at the creationof a profitable and flexible factory, with high total productivity, the best quality and where at the same time the people felt that they had a good job. Also,
the cooperation between the company and the unions were meant to develop
further during the planning of the factory in Uddevalla. Therefore, it was
39

important that all union representatives were favourable towards the creationof a good working environment in the factory. This meant something very
different from short cycle work tasks on an assembly line. The unions wererepresented in the planning group from the very beginning of the project.
One person in the management staff of the Volvo company, was fascinated by the concept of ‘holistic learning’ and ‘natural work’ presented at aseminar by a researcher from the University of Gothenburg. As a result of
this interest the researcher was engaged in the planning of the Uddevalla
factory from the start.
Volvo had for many years made experiments with new production layouts
and flows, both in truck and car production on a small scale. Some of theseexperiments had shown very good results, even better than expected. Therewas, however, no obvious answer to the question: Why is it so good? The
leading production technician from these experiments, a ‘free thinker’ in thecompany, was also involved in the planning process of the Uddevalla factoryfrom the very start. He also utilized his contacts with researchers in the fieldof alternatives to line production at the Chalmers Technical University in
Gothenburg. They knew, theoretically, that it should be more efficient andprofitable to replace the assembly line with a highly parallelized productflow. This would, as a consequence, improve the working environment.
The theoretical statements were yet to be proven. Their involvement in thedesign process became deeper and deeper through the years.
Involved in the planning process were also a few production techniciansof a more traditional school whom exerted great influence in the beginningof the planning period. This meant that there was an intellectual struggle
between these two groups of technicians. Some steps in this struggle will be
indicated below by showing the changing plans from the planning group.
There were several circumstances present that worked in favour of thedevelopment of the new ‘Reflective Production System’. Most important
was the unique opportunity to combine the different spheres of knowledge
and experience from the Volvo car company on the one hand, and fromresearchers, on the other. This was a necessary precondition and without
it, the result would probably not have been successful, in spite of the otherfavourable circumstances. Some of the more important of those other factors were:••

Various parties within Volvo were in agreement as to the direction of the
project and were thus in fact able to strengthen each others argumentsin the daily work.
The leader of the planning group handled new ideas in a way thatfavoured the new ideas favouring good working environment. New
suggestions were not laid aside solely for lack of time, but were accepted even though they involved extra efforts in securing the approval
40

•

•

•

of the parties involved. For example, the first suggested layout for theassembly shop was laid aside because it lacked renewal. It was moreor less a copy of the ten year older Kalmar factory. The majority of theplanning group, the company executives and the union representatives,
all envisioned something better than that.
The close cooperation between the representatives from the four different unions and the creation of a new role for themselves were of dicisive
importance (5). They were able to leave the role of ‘demanders’ making
claims and instead take the position of ‘suggestion-makers’.
The entire planning group was seated in the same office, and all members, including the union representatives, worked full-time with theplanning process. This geographical proximity made it easier to develop
and try new design proposals, as discussions constantly could be started
and all members of the planning group were easily involved.
The negotiations concerning pollutants were protracted. This was important since the delay led to cancellation of the body and paint shops.
Thus, an assembly shop only was eventually built. This cancellation atleast had one short term positive and one long-term negative effect. The
positive effect was that the planning group could concentrate on making something new in the assembly shop. Until the decision to proceedwith the planning of an assembly shop only was made, the resistance tochange concerning new ideas had been greatest in the subgroup planning
the assembly shop. Now all forces were concentrated on that spot. The
negative effect, the decision in autumn of 1992 to close the Uddevalla
factory, was due in part to the lack of the body and paint shops.

3. How did the new ‘Reflective Production System’ evolve?
3.1 The trajectory for goal attainment – a descriptive model
The evolution of the ‘Reflective Production System’ followed a nonlinear
trajectory over time. The initial goal of the planning group was to create aprofitable factory. Whereby, the concrete goals were: high flexibility, highproductivity and best quality, together with employee satisfaction. The goals
remained the same during the entire planning process, as their attainment
steadily improved. The planning process went more and more in the direction of a ‘competence intensive’ factory.
When the ‘Reflective Production System’ in the Uddevalla factory was developed, there was an interdependence between industry and research. Stepby step the theoretical statements were tested in the factory. The stepwise
development occurred, due to the strong resistance from many ‘traditionalists’, both on different levels in the company and within the unions.
41

Thus, during the developmental process the theoretical and practical levels
were closely linked to each other as theoretical statements were practicallytested and worked out. For example, an educational workshop was started
in the spring of 1986, even before the final decision to build the factory.
In the educational workshop, the first 20 car builders were on Volvo’s payroll. Together the researchers and some skilled workers from other Volvo
factories, transformed the theoretical principles for technology and learning into the small educational work shop, where it was applied. This test
showed that the principles were correct, even when confronted with realworld conditions. It also showed that it was possible to learn how to build acar with long work cycles, when the materials were exposed in such a waythat the assembly was facilitated. In fact, the car builders quickly learned
how to build at least one quarter of a car. After some months many of themwere able to build half a of car, some of them could build three quarters ofa car and eventually there were some who could build the whole car alone.
Therefore, this intensive competence growth proved to be achievable, when
the new principles for learning and for grouping and exposing the materials
were practised.
Using a descriptive model to give an overview of the creative planning
process, the planning of the Uddevalla assembly plant can be seen as a trajectory. The trajectory, shown in figure 1, moves from the first idea presented,
where each one of about 700 persons performed individual work tasks ofabout two minutes long in duration. The final idea shows a factory where
small, independent parallel teams, with about seven to ten members, assemble the whole car themselves. The time duration of the individual worktasks were now a couple of hours.
Below, the steps of the trajectory are described one by one. The steps
show how the new production and learning principles were integrated in
the thinking of the planning group. In the beginning, the ideas were simply
beautiful words, which seemed to be unattainable goals, but in the end they
were realized. It is clear that the development was slow when compared toa traditional planning process, but on the other hand, it was very creativeand successful.
3.2 May 1985 – quite a traditional layout: ‘Not good enough’
In May of 1985, half a year after the initial meeting, the planning group had
to present a layout for a complete automobile plant which include a bodyshop, a paint shop and an assembly shop. The group presented a sketch ofa factory layout which emphasized the goals for the factory.
The assembly shop, however, remained quite traditional. For example, inthis layout the product flow in the assembly shop was more or less similar
to that in the Volvo Kalmar assembly plant. There were two minute work
42

Figure 1. Illustration of the trajectory describing the movements of the Volvo
trajectory (line V), during the planning process of the Uddevalla plant. The
model has a time dimension and a dimension of production mode. The end
points of the horizontal dimension is the idea of automatized assembly ona large scale on one hand and the idea of ‘craftmans like’ assembly on large
scale, on the other. The position of the planning in January of 1988, is shownby the angle touching the line NOW: January, 1988. The trajectory shows
clearly the steps in the planning process that are described in more detailin the text. The first layout for the Uddevalla plant would have meant thatabout 700 persons should have assembled each car together. The layout inJanuary of 1988 meant that 8 persons made one car.

43

cycles in a serial flow, which were meant to be changed into a partly parallel
flow later on. Whereby 700 persons together should have the competence
to build a car with opportunities for the assemblers to learn about 10 work
cycles, of approximately 20 minutes of work.
Many members in the planning group, among them the union representatives, did not find this layout corresponding to the goals set up. It was important to reach an agreement, as one of the goals set up for the Uddevalla
factory was that the planning process itself should improve the cooperation
between the company and the unions. The unions refused to acknowledge
this traditional layout as something better than existing other factories.
The top management at Volvo were of the same opinion. This layout was
rejected at a planning meeting. A new layout, in better accordance with theinitial goals set up for the factory was sought. Furthermore, environmental
pollution emissions had to be considered.
3.3 December 1985 – the start of something really new
Half a year later, in December of 1985, the planning group had worked out a
new layout. The general ideas of smaller organizational units, parallel work
stations and extended work cycles were integrated in the layout. According
to this layout, the assembly plant should be divided into eight series-linked
product shops. In each product shop one eigth of the car should be assembled,and each product shop was to be an independent unit in the organization.
Within the eight product shops, the work stations were to be parallel. This
meant that all assembly work performed in each product shop (i.e., one eigthof the car) should be done on one single station per car. See figure 2.
The car should stand still in a ‘dock-station’ during the assembly, withpairs of assemblers doing all assembly work at each parallel station. Not
only assembly work should be performed in the product shops, but also,much of the materials handling. The materials handling should be performedon an-other floor of the building. The work tasks would thus become morevaried. Whereby, each employee would be responsible not only for assembly,
but also for materials handling related to the assembly task at hand. This
meant that the work cycle for every assembler should increase to about
15–20 minutes on every car (6). Thus, this layout presented to the steeringcommitee in December of 1985, presented something really new.
The assembly plant was meant to be located in and upon the big shipyard
dock. It would become very expensive to control the level of moisture in
the ship yard dock. The planning group still did not recieve an answer fromthe authorities, concerning the negotiations regarding polluting emissions
from the factory. These circumstances resulted in the steering commitee’srequest for a less expensive layout: one which made use of pre-existingbuildings on the ship yard land area, and did not use the dock.
44

<Figure 2, Page 45, Part I, Ellegård>Figure 2. The second layout was something new (December, 1985). The
car should pass one work station in each one of eight seriesl inked productshops. On each of these stations (the stations within the product shop wereparallel), all work was to be performed by a pair of car builders, who also
were responsible for their own materials handling.
At the end of one year of planning an acceptable layout was not yet found.
Negotiations regarding emissions also slowed the process. The result wasan oportunity for a unique type of factory, previous unknown to the automobile industry.
3.4 Putting the assembly line into history
This opportunity was felt, ‘in the air’ by the project leader. He set up asmall sub-group, with a couple of free-thinking technicians and one union
representative. Together they produced a layout based on the two main ideas
from the researchers.
One of them favoured parallel product flow and a materials handling according to the flow. Which meant that the material to be handled were ‘carrelated’ and not primarily related to a geographical area in the factory. The
other idea focused on the human’s ability to learn huge work tasks when an
overview of the production process and understanding of it as a whole areemphasized. This occurs when one has control over the working order andworking pace, as well as finding meaning in the work. It had already been45

<Figure 3, Page 46, Part I, Ellegård>Figure 3. The shape of the Uddevalla plant at the final decision to startbuilding the plant. Six parallel product shops (no 1. to 6. in the figure), two
test shops (no 7. and 8.) and one rust protection shop (no 9.), and one central
shop for material handling.
theoretically shown that, the smallest content of a work task in car assemblythat fills these criterias is approximately one quarter of a car. These were
the basic starting points for the subgroup.
An important result from the subgroup work was that the small, independent organizational units, the product shops, were proposed not be linked in a
serial flow. On the contrary they should be independent of each other. This
meant that they should be parallel, and thus that whole cars should be built
in each one of them. This was manifested by the location of the buildings, as
one separate house was to be built for every product shop. This was a radical
change compared to the earlier layouts put up by the planning group.
3.5 June 1986 – The buildings support the idea of parallel product shops
These ideas were identified by the rest of the planning group as interestingand progressive, and they were involved in the further development. One
point, however made some persons anxious. That was the lack of opportunities to return to a serial flow – if the new production system should not46

work. In the final layout given to the steering commitee in June of 1986, theindependent product shops were placed corner to corner in two three-clover
leaf configurations. See figure 3. In that way, it was possible, but expensive,
to return from the highly parallel flow to a serial flow of a more traditionalkind. All materials handling means, in a car factory relying on the principles
of reflective production, preparation of individual sets of materials for eachindividual car. These were to be performed in an existing building fromthe ship yard era. This meant that there was a physical separation between
material preparation and assembly.
Some months before the decision was made to build an assembly factory
according to this layout, it was also decided that no body or paint shop
should be built. The main reason was that there still was no answer fromthe authorities regarding the negotiations about the permitted level of pollution emissions. Another reason was that the cost of the paint shop wasvery high.
3.6 The educational work shop – testing the theoretical statements
All creative efforts were now concentrated to plan an assembly plant wellmeeting the goals. The researchers in technology and educational science
had already given their view of how to do this. Theoretically, it was shownthat the time use for assemblying a car should be much shorter in a highly
parallel product flow, than in a serial flow (7). Theoretically it was also shownthat learning was facilitated (much more effective) if it contributed to theunderstanding of the car as a whole and which had meaning to the learner(8). The big question remained if these theoretical truths correspond to what
would appear in the real world, when the principles were put into practice.
This question was answered when the educational workshop was started
in spring of 1986. The first 20 carbuilders were deeply involved in planningand equipage of the educational workshop. Work methods were tried, as theylearned the work content of at least one quarter of a cars assembly. Not oneof these carbuilders had worked in the automobile industry before.
In the educational workshop the carbuilders then proved that it was possible to learn very quickly, how to assemble one quarter of a car, and toassemble it with high quality. There were two main reasons for this. The
first, is that all materials to each individual car were placed in preparedsets on stands defined for that car only. The second, is that the materials
on the stands were grouped and arranged in such a way that the assembly
work was facilitated.
Some months later, all car builders mastered one quarter of a car, many ofthem half the car and others still had achieved three quarters of a car. Sometime later, in the educational workshop, one or two car builders were able
to build the whole car themselves.
47

When the decision was made to build an assembly plant in Uddevalla,
the planning group knew that they would succeed if they kept the buildings, equipment and learning according to the principles. In June of 1986,
the final decision to build the Uddevalla factory was made, after which no
substantial changes were made in respect to buildings, but there were greatchanges in the product shop layout. This process was constantly fed witharguments based on experiences from the educational workshop. In it, newideas and improvements were tried out. The competence to build a wholecomplete car was, step by step, geographically concentrated.

<Figure 4, Page 48, Part I, Ellegård>Figure 4. Product flow through one of the six product shops (the other ones
were intended to be the same), the layout in June of 1986. Whole cars in
product shop, one car is made by 80 persons. The four quarters of the car(I. Leads, II. Decor, III. Drive line and IV. Interior), define the content of
the work in each team zone (that is in 1/4 of the product shop. Two teams
constitute each team zone.
3.7 Whole cars in a product shop: one car is made by 80 persons
In each of the six parallel product shops whole cars should be built, according to the layout presented in June of 1986. In each product shop, thetotal assembly work was divided into the four quarters of the car, and each48

quarter was to be built in a separate area (9). The four separate areas wereseries linked and called ‘team-zones’. That meant that; one quarter of the
product shop was equipped for assemblying the first quarter of the car, leads(electricity and water and other fluids), the next quarter for decor (ceiling,
windows etc), the third quarter for the drive line (engine, gear etc) and thefinal quarter for the interior (chairs, steering wheel etc). See figure 4. Thesefour areas in the product shop were labled ‘team-zones’, and there were two
teams in each of them. This constituted approximately 80 employees in a
product shop with four team zones.
The work stations within the separate series linked team-zones were parallel. A pair of workers did all the assembly (one quarter of a car) on one
station and when they had finished their quarter they sent the car to the next
team-zone, where the next quarter of the car was to be assembled. When
the whole car was ready, it had passed through all four team-zones, and one
work station within each team zone.
3.8 Whole cars in a team-zone: one car is made by about 20 persons
In January of 1987, the planning group realized that the production arranged according to the June 1986 plan, still gave only a limited overview
of the assembly to the workers. They had no immediate feedback as to theconsequenses of their work. Why not then, concentrate the assembly workand build the complete car in a team-zone, i.e., in one quarter of the productshop? None of the buildings were equipped as yet, so this change was not
expensive. The planning group decided to follow the idea, and thus there
were four parallel team zones in each product shop. In each team zone about
20 persons assembled the whole car. See figure 5. Their parallel work stations
were equipped for each quarter of the car. The area in the building was adecisive restriction. However, when this layout was related to the production volume required, it was clear that it would not meet the requirementsof 40,000 cars per year, in one shift.
3.9 Whole cars in the team I:
One car is made by 8 persons on two work stations
Because of the restricted area, it was now necessary to use even less space
to reach the production volume required. This could only be done by geographically concentrating work tasks even further. The results showed that a
car should be built on two stations only, with half the car assembled at eachstation. The first three product shops in the Uddevalla factory were equipped
according to this layout. See figure 6. When production ceased in 1993, theproduction pattern still was the same in these three product shops.

49

3.10 Ergonomic arguments for efficiency
If a work task is easily performed, it also can be effectively performed,
though much can be related to mental efforts. Variations in the work tasks
are good for the human body and mind. Such questions were dicussed in
the planning group and the group pointed out that one central component
in work is related to ergonomics. The planning group made great efforts
to improve the ergonomics at work in the Uddevalla plant. Less repetitive
work tasks (i.e., long work tasks of about two hours), is one result. Whenyou repeat the same task only four times a day, your body does not get wornout as quickly as if you have to repeat the same task more than 200 times aday. Another effort was the development of hand machines adapted to thehand size of women (10).

<Figure 5, Page 50, Part I, Ellegård>Figure 5. Product flow through one of the team zones in the layout fromJanuary of 1987.Whole cars in team zone, one car is made by 20 persons.
This layout is principially the same as the previous one, but the scale ischanged and now four parallel team zones make complete cars in eachproduct shop.

50

The ergonomic argument also was relevant for the way the assembly tasks
are performed. In ordinary assembly work, only 20 percent of the work in
the tasks are performed standing in an upright position. The remaining 80
percent of the work, is performed bent or standing with hands above thehead. The ergonomics of assembly work was improved in the first three
product shops in Uddevalla, but further improvements were still possible
to achieve.
It was clearly demonstrated that when ergonomics are improved, according to the principles of reflective production, the result is not only a ‘good
work’ for the employees, but also a more efficient production performancein the plant.
3.11 Whole cars in the team II:
One car is made by 8 persons on one station
A small group of carbuilders had the opportunity to develop a completely
new ergonomic and at least as efficient, way of performing the assembly
work. They worked together with a health care engineer. The way to build
cars that they developed involved still another change in the basic layoutof the product shop, as the complete car now could be assembled at only
one station. That station should be equipped with a ‘tilt’, which made it
possible not only to lift the car body, but also to turn it 90 degrees in both
directions. This made it possible to perform the work tasks more efficiently
and lowered the risk for personal injuries. Thus, the three product shops thatwere to be started after 1989, now were equipped according to this way ofbuilding cars. Therefore the Uddevalla factory continued to be innovativeeven after production started in 1989.
This layout did not only result in better ergonomics, it also allowed agreater flexibility concerning how the assembly work could be performed.
In this later layout, each team remanined the same size as before (about eight
members), and could easily divide itself into subgroups. Where one pair ofindividuals could master the whole car, they could form one subgroup, use
one of the tilt-stations, and build cars themselves. At the same time the othermembers of the team, forming another subgroup, assemble the cars according to their competence and following another work distribution rule.
3.12 A comparative perspective on the result of the planning process
Now it is possible to place a developmental perspective within the planning
process and compare the two different types of assembly work.
I.

A complete car is assembled at one station, by a team of about eight
persons.
II. A complete car is assembled at about 200 series linked stations by 700
persons.
51

There are some obvious conclusions to be drawn from this comparision.
Firstly, the workers individual competense must be greater in the first case,as the capability to build a whole car is spread over only eight persons. In thesecond case, the same competence is divided by 700 individuals. Secondly,
the possibility to achieve an overview of the assembly is much greater inthe first case, as the car stands in the area of the same team during the entire
assembly. Thus feedback is facilitated if any problems occur that are related
to the assembly done earlier.

<Figure 6, Page 52, Part I, Ellegård>Figure 6. The layout of the complete Uddevalla plant from which the layout of one product shop is focused in which the layout of a team’s area ispresented in detail (January, 1988). The team has four work stations at its
disposal, but only two of them, one lift station and one tiltstation, are used
for an individual car. A pair of car builders work on one tilt-station and theybuild half the car, then the car is moved over to one of the two lift-stationsin the team’s area, where another pair of workers build the other half ofthe car.
52

4. Which were the results achieved by the new plant?
The results achieved by the new plant can be focused upon from different
perspectives. Due to the closure of the factory in Uddevalla, only shortterm effects could be observed, though there are several indications of favourable long term potential as well. Focus will be put on competence andorganisation, firstly on the results in the short run and secondly the longrun potentials.
4.1 The performance of the Uddevalla plant: CompetenceWork content
In most assembly plants there are short cycle work tasks of about one totwo minutes in duration. One such cycle is called a ‘balance’. ‘Multiskilled’
workers on an assembly line are responsible for up to ten ‘balances’, whichmeans that they have a good command of about 20 minutes of assembly work.
In these plants, the assembly line controls the pace and work is measured by
the number of minutes, and not by its content related to the total assemblyof a car. In the Uddevalla plant, all workers knew how to assemble at least
one quarter of a car, which means that all workers controlled the assemblyof at least one ‘assembly-functional group of materials’. One quarter of acar equals about two hours of work. One point in a ‘reflective production
system’, is that work content is superior to time. Other competence derived
fundaments are the understanding of a meaningful whole, overview over
the work object and tasks of the work day. Also, that control over the work
distribution and pace in the teams is essential for a successful result. All
this means that quality is what matters most, time and volume are mere
restrictions.
Flexibility at work
In the Uddevalla factory there was a great flexibility concerning competence
and work performance. It was possible, although it was not common, forteams to form subgroups. It was easier in the newer product shops, those
who were equipped according to the ergonomic/efficiency idea, where the
car was completed on one work station, than in the three older product shops
where the car was assembled on two different work stations. As indicatedabove it was possible for two persons to assemble the whole car, if they had
the appropriate competence.
In addition, when the Uddevalla factory closed down, approximately 25
persons mastered the assembling of a complete car, with high quality andwithin the full production pace. In fact they could control the same work
content that is distributed over hundreds of persons in an assembly line factory. In such a comparative perspective, the results in Uddevalla reveal that53

the basic competence equals the compentence of at least 60 workers taken
together in a plant with an assembly line.
Improving competence
Improving competence is a fundmental task in industry. In the beginning of
the Uddevalla factory’s production, there were problems other than thosewhich appear in a factory with a serial product flow. The unusual parallel
flow pattern in Uddevalla caused some problems in the beginning. First,
there were some problems related to the independence between the parallelteams in the product shops, making the diffusion of improvements difficult. Second, there were problems related to the independence between theparallel product shops, each of them eager to create a productive milieu byitself.
There were also problems caused by the high level of dependence between
the material shops and the product shops as they were linked to each other ina serial flow. The problems that appeared between the teams and between the
product shops respectively, were mainly caused by the absence of a smooth
information flow. Two measures were taken which led to success. One ofthem, was to flatten the organization in the plant, so that the product shop
leaders, all were put into the leading group of the factory (only three levelsin the plant). This gave the product shop and the material shop leaders better
insights into each others working conditions and bottle neck problems. The
second measure, aimed at improving the diffusion of experiences and new
and better ways to arrange the assembly work. Here, the production technicians were decentralized into the product shops, where their work time wasdivided between two tasks. One, was to do their production technical workin the office and to keep in touch with and spread improvements to the otherparts of the entire factory. The other work task to be performed by the technicians, was to work with the teams in their product shop, in the assembly
work. This made them more skilled in the various assembly tasks and madethem think in ‘real categories’ rather than in ‘administrative categories’. In
this way, a process of very rapid and well structured improvements in theentire factory was started. Some good results were yielded immediately andthe probability of more seemed likely to come.
Employment strategy
The employment strategy used was closely related to the principles of competence growth and competence utilization. The strategy was also meant tolead to a reduction in sick leave and an increase in teamwork. The personnel in the Uddevalla factory were brought together in several ways. There
were about 40 percent women, a blend of ages, and in the beginning Volvo
looked for former shipyard workers. The goal was to employ 25 per-cent of54

the employees of the age of 25 years and younger, 50 percent between 25
and 45 years and another 25 percent over 45 years of age, and 40 percent
were to be women. Each team was composed so that both sexes and morethan one age group were represented. The aim was to make use of the factthat people are different and that they have different positive and negative
qualities. The sick leave was lower than in other factories in the Swedish
auto industry, but not as low as many persons had hoped, during the planning phase.
Flat organization
The objective was to form a flat organization in the Uddevalla factory. In
the beginning there were four levels in the organizational scheme; plant
manager, production leader, product shop leaders and teams. During thelast year of the life of the factory, there were only three levels namely, plant
manager, product shop leaders and teams. Therefore, the flow of information between the top manager and the shop floor was very rapid, compared
to any other assembly plant.
In the product shops, the teams were put in focus. There were eight teams
in every product shop. In the teams there were two kinds of tasks to be met by
the team members. The most important one was car building, as there would
be no plant without production. All team members thus were car builders.
There were also complementary specialist taks to be mastered by the teams.
Team members who had expressed interest in performing specialist tasks,
were taught to perfom these taks. The tasks were for example, personnel
issues (information, recruitment and planned days off), as well as maintenance and teaching. There was also a role as team leader, who per-formed
most of the work tasks done by foremen in traditional factories. The teamleader was appointed by the team members and the product shop leader
together. The team leader role was rotated among the team members, who
had aquired the relevant competence and skills required for the role. The
team leader as well as the other specialists of each team were all involvedin the car building during most of the working day.
As indicated above, each product shop had a production technician, who
was the most skilled specialist in technical aspects related to the productshop. The technician was also responsible for spreading technical as well asorganizational improvements, to all teams in the product shop and to his/hercollegues, as well as to the production technicians in the other product shops.
To succeed and keep his or her own practical knowledge in car building up
to date, the technicians worked in the teams for a portion of every week.
The wage system was created to increase according to additional competence. There was also a basic wage, dependent on the time worked at thejob and the individual skills in basic car building. Extra pay for increased
55

competence in car building was added per hour for every additional quarter ofthe car mastered in assembly. In addition to this, there was extra amount foreach specialist competence (personnel, technician, maintenance and teaching), and for the team leader competence. Then there was also a bonus system(measured on quality and quantity), based on the team performance.
Comments on quality, production volume, productivity and model changes
The quality index followed a positive curve from 1988 (before the openingof the factory), up till the closure of the plant. The highest quality ratings
occurred during the spring of 1993, the period when people knew that theywould be unemployed within some months.
Due to the falling sales figures for Volvo during the period when the
Uddevalla factory was fully trimmed in, the production volume neverreached the total capacity level. But, the figures in the production plans
were achieved.
The productivity showed a positive development. In the autumn of 1992,
before the decision to close the factory was made, the productivity figures
for some weeks was far better in the Uddevalla plant than in the old Torslanda plant.
The Uddevalla factory was the most successful in changing from one
year model to the next. The same results appear whether you compare timeor costs for the changes. The Uddevalla factory made the fastest changes,
three years in a row and the factory also made the changes to the lowest
cost per car. This is due to the high competence level and the low level ofmechanization.
4.2 Potentials of ‘Reflective Production Systems’ indicated by the Uddevalla plantSome long-term potentials, derived from the ‘Reflective Production System’, were fit for use in Uddevalla during the last half year, before the decision to close down the factory. Revolutionary steps were taken in relation
to the market. First, the factory only produced cars that were already sold.
No stock cars at all were being produced in the Uddevalla factory during thisperiod. Second, a number of customers were invited to follow the productionof the car they had bought. This procedure was favourable for Volvo. Where
else in the world could a customer follow the birth of his own car, and get an
overview over the process? It was also favourable to the customer to recieve
the personal touch, which strengthened the incentives for the teams to makesuperior quality. It was also favourable to the team, who have personal relations with a customer which made the job still more stimulating.
The production planning in the factory was a factor of flexibility and righttime delivery. The customer could make changes in his order to the factory,
56

for example orders for new special options, and this resulted in negligtible
delays. Changes in orders did not cause the replanning of the entire production program, or to put the changed car at the end of the production program.
Any of these actions would cause delays in delivery. Thus, the production
planning could be used as a tool for flexibility, and it made it easier to produce cars exactly adapted to the demand of the customers.
Another long term potential concerns the relation between production andpreproduction, which is a field of increasing importance in the automobile
industry. The Uddevalla factory had unique possibilities to use the complex
and skilled knowledge of all its competent team members in order to improve products as well as, tools and processes. This potentiality becomes
clear only to those who adopt the thinking behind the ‘Reflective Production
System’. Others, will not be able to recognize it. They will think rather thatthe ‘Reflective Production System’ is at best, a local Swedish improvementin production for social purposes. It indeed was true that the social factors
worked in favour of the Uddevalla factory, but it also proved to be a goodinvestment for high productivity, effectivity and flexibility.

5. Concluding remarks on reflective production
In this paper the presentation of the principles of the new ‘Reflective Production System’ is not made in a theoretical way. Instead, there has been a
concrete description of the long and adventurous way in which it was developed and utilized. Some of its problems and advantages were demonstrated.
The importance of competence was emphasized, based on holistic learningin combination with a production technology adjusted to the ways in which
individuals think, learn and act in industrial work. The paper will be closedwith two examples, showing the necessity to think in new ways if a company
wants to lead the way into the future of the automobile industry.
The majority of those within the Volvo company in Gothenburg were not
motivated by the principles underlying the ‘Reflective Production System’.
During the entire history of the Uddevalla plant there had been a struggle
both within the company, and within the unions, a struggle much like thatbetween different religious groups or actors. The basic problem is that thetwo ways of reasoning (the serial flow on an assembly line compared to theparallel flow in production teams in the Uddevalla plant), may very welluse the same set of measures for evaluation, but they lean on fundamentallydifferent basic assumptions. If the evaluations reveal that the results fromthe old factory and the new factory are equally good, then the fundamental
assumptions behind these could be of decisive importance in the final conclusion about how to act.
A person who does not accept the principles underlying the ‘Reflective
57

Production System’ realized in the Uddevalla plant, of course can not see its
immanent potentials, since the ‘Reflective Production System’ as a wholecontradicts his basic assumptions. These potentials, however, are immediately clear to a person convinced of the correctness of the basic principlesof the Uddevalla factory.
Finally, I will recall an interesting remark made in the spring of 1993,
by one openminded first time visitor to the Uddevalla factory. During thevisit, one of the car builders, who had the competence to build the whole
car himself, asked his work mates to cover his eyes with a scarf. He thenasked the visitor to get anything from the material stands in the team area.
The visitor chose after a while a small thing and gave it to the car builder
who said, after having felt the thing over with his fingers: ‘This was easy!
Get me to the engine’. And there he placed the thing in its right position,
still with his eyes covered. Then the visitor exclaimed: ‘Is it hocus pocus?
Or is it that easy?’

Notes
1. There is a detailed description in Swedish of the principles behind the production
system in Ellegård, Engström, Johansson, Medbo and Nilsson, 1992, Reflektiv
produktion. Industriell verksamhet i förändring, and a shorter description in
English in Ellegård, Engström och Nilsson (1989), Reforming industrial work
– Principles and Realities in the planning of Volvo’s car assembly plant in Uddevalla.
2. Uddevalla is a town located on the Swedish west coast, some 90 km north of
Gothenburg where Volvo’s oldest factory is located. The decision to locate thefactory in Uddevalla was strongly influenced by the fact that the state owned
shipyard there was closed down in 1984 and more than 2,000 people were
unemployed.
3. Somewhere between 1,800 and 2,400 objects make up each single car.
4. This holds true for example, concerning high sick leave or materials missing,even if such a problem occurs only at one single station on the assembly line.
5. There were one blue collar union and three white collar unions involved.
6. This work cycle duration corresponds to the demands from the metal workers
union set up in the spring of 1985.
7. See for example Engström and Medbo,1990, and Wild,1975, and Ellegård,Engström, Johansson, Medbo and Nilsson,1992.
8. See Nilsson, 1985, and Ellegård, Engström, Johansson, Medbo and Nilsson,
1992.
9. The four quarters were labeled: 1. Leads, 2. Decor, 3. Drive line and 4. Interior.

58

10. In the Uddevalla factory, at least 40 percent of the work force were female.
11. Not more than two team members assemble the same car at the same time. Eachteam has four work stations at its disposal.

References
Alvstam, C. and Ellegård, K. (1990), ‘The organization of work: a determinant of
the future location of manufacturing enterprises: The case of the new Volvo
plant in Uddevalla, Sweden.’ in M de Smith och E Wever (ed.), The Corporate Firm in a Turbulent Environment. Case Studies in the Geography ofEnterprise. Routledge. London.
Ellegård, K. (1991), ‘Volvo’s Planning of the Automobile Factory of the Future– A Process of Continual Reform.’ in Y. Quénnec and F. Daniellou (ed.), Designing for Everyone. Proceedings of the 11th Congress of the International
Ergonomics Association in Paris. Taylor and francis. London.
Ellegård, K., Engström, T. and Nilsson, L. (1991), Principles and Realities in the
Reform of Industrial Work – the planning of Volvo’s car assembly plant in
Uddevalla. The Swedish Work Environment Fund. Stockholm.
Ellegård, K., Engström, T., Johansson, B., Medbo, L. and Nilsson, L. (1992), Reflektiv Produktion. Industriell verksamhet i förändring. AB Volvo. Göteborg.
Ellegård, K., Engström, T., Johansson, B., Johansson, M., Jonsson, D. and Medbo,
L. (1991), ‘The possibilities of “Lean Production” – A Comparison between
Different Production Flow Concepts in the Automotive Industry.’ International Journal of Operations and Production Management, vol.12, no.7/8.
MCB University Press.
Ellegård, K. (1989), Akrobatik i tidens väv. En dokumentation av projekteringen
av Volvos bilfabrik i Uddevalla. Choros no. 1989:2. Kulturgeografiska institutionen, Handelshögskolan vid Göteborgs universitet. Göteborg.
Ellegård, K., Engström, T. and Nilsson, L. (1989), Principer och realiteter vid
förnyelse av industriellt arbete. Projekteringen av Volvos bilfabrik i Uddevalla. Sammanfattning av forskningsprojektet “Dokumentation av utvecklingsprocessen för Volvos Uddevallafabrik 1985–1988. Arbetsmiljöfonden.
Stockholm.
Ellegård, K. (1989), Metalls medverkan i projekteringen av Volvos Uddevallafabrik. Svenska Metallindustriarbetareförbundet. Stockholm.
Engström, T. and Medbo, L. (1990), ‘Material flow analysis, sociotechnology andnatural grouped assembly work for automobiles and trucks’. 1990. Proceedings from European workshop – research and development strategies in thefield of work and technology. Dortmund 1990. Physica Verlag, Heidelberg.
Nilsson, L. (1985), Naturligt arbete och industriellt lärande. Institutionen för
pedagogok. Göteborgs universitet. Göteborg.
Wild, R. (1975), ‘On selection of mass production systems’. International Journalof Production Research.

59

Production system design – a briefsummary of some Swedish design efforts
Tomas Engström and Lars Medbo

1. Introduction
Production system design traditionally includes aspects connected to thematerials flow patterns inside the factory. Therefore, the design process ofthe production system includes, for example, problem areas such as work
place design, layout planning, materials flow analysis, etc.
For example, concerning the manufacturing of components using expensive production equipment, the design process will focus, among otherthings, on the utilization of the individual machines, as well as, introducing
methods such as group technology, mechanization of the materials handlingbetween the machines, etc. If, on the other hand, components are assembled
into complete products, as is the case in the final assembly of vehicles, it
becomes important to better utilize the human being in order to reduce therequired manpower. The design process will, therefore, focus on: balancing
methods, ‘just-in-time techniques’, etc.
The system design of production systems for final assembly, has in manycases, consisted of a process of refining the existing production systems,
i.e. the traditional assembly line, rather than implementing non-traditional
production principles. This is due to the risks involved as well as intellectual
barriers to some extent (Granath, 1991).
We argue that today there exists an empirically tested coherent theoryof how to design non-traditional production systems for final assembly oflarge products, such as yachts, trucks, buses and automobiles. However, thistheory has not been fully recognized and communicated at an international
level. In most cases, this is probably due to the fact that Swedish efforts are
generally considered and presented as social experiments, assumed to beisolated from important technical dimensions, like materials flow pattern,materials feeding techniques, etc.
61

2. A brief history
At the beginning of the 1970’s, the most radical changes in assembly work
took place within the manufacturing of trucks. A very similar production
system was used at Volvo in Sweden in the small Volvo Arendal work shop
and at British Leyland in the United Kingdom (Blackler and Brown, 1978).
In British Leyland’s production system, a group of 12 workers assembled
complete trucks.
The Arendal workshop proved to have a superior productivity and productquality. At that time there was no valid theoretical explanation for this phenomenon. A general theoretical analysis had been performed in the Volvo Car
Corporation (Rosengren, 1981), but these were not generally recognized.
This production system was in many aspects identical to the one introducedby the Volvo Truck Corporation several years later, that of a parallel flow
with integrated sub-assembly, characterized by unpaced high-autonomy,collective work. The parallelized flow means that the flow of products isparallel instead of in a series, as is the case with the traditional assembly
line, thus increasing the cycle time (the amount of time required to complete
one work task in repetitive work).

<Figure 1, Page 62, Part I, Engström>

Figure 1. The Saab-Scania body shop in Trollhättan was changed from serial flow to parallel flow, thus increasing the productivity and the technicalautonomy. Paradoxically, it became possible to simultaneously combine
efficiency and humanized work (Karlsson, 1979). The organization wasreformed to suit the technical preconditions determined by the changed
technical dimensions.
62

The most prominent example of an alternative production system was implemented during the mid-1970s in the Saab-Scania body shop in Trollhättan.
Note that in a body shop the work consists of grinding and welding on the
naked automobile body. Thus, one does not need to supply a large numberof components, as is the case in final assembly. Therefore, the most crucial
research task was to develop methods for supplying materials to parallelized
flow production systems.
In theory and in a number of case studies, it later proved to be bothpractical and economically viable to supply materials to large products inparallelized flow. This was achieved by using kitting of the materials anda combination of decentralized and centralized materials stores (Engström
and Karlsson, 1982; Engström, 1983).
Although this possibility existed, the traditional materials feeding techniques (methods used to supply the components needed for the assemblywork) and the need to use both the traditional assembly line and the alternatives simultaneously in the same plant, led to the development and implementation of the so-called ‘mini-lines’ at Saab Scania in Trollhättan.
This was a serial flow production system with intermediate buffers, integrated sub-assembly stations and the possibility to continuously regulate thepace of the line. Thus, it was possible to use traditional materials feeding
techniques. These ‘mini-lines’ appear to be similar to those implemented in
the Japanese factories at Kyushu and Tahara almost ten years later.
The Volvo Uddevalla final assembly plant wich ran between 1987–93, wasthe latest full-scale example of a practical application of the design theories
of non-traditional production systems. In fact, the Uddevalla plant provided
the last key elements needed to complete the theory and its application.
While the ‘mini-lines’ were a compromise, concerning the materials feeding techniques, among other things, the Uddevalla plant, on the other hand,
was an example of an inverted design process. By turning the design process
the other way around, i.e., starting the design process from scratch, someof the generally accepted traditional design criteria were transformed into
methods. For example, long cycle time and parallelization were methods
used for achieving high productivity and quality, as well as flexibility. Long
cycle time was not considered as a goal in itself.
The original phrasing of the research area during the 1970’s, as a materials
feeding restriction against parallelization, originated in dialogues with representatives from the automotive industry. This was somewhat misleading
but relevant during the early period. The components needed for a single
product were perceived to be far too many, thus requiring far too muchspace provided the materials were to be exposed on a work station using
traditional materials feeding techniques.
It was therefore assumed to be impossible to supply the components
63needed for complete automobile assembly on a work station. This waspartly due to the fact that the all-embracing information system in the Volvo
corporation deformed the product perception emanating from the designers’ product structure. This also implyed an enormous amount of productvariants. (The product structure is the way information on the product isorganized in the information system by using numerical, alphabetical andverbal codes in a hierarchy).
During the design of the Uddevalla plant these assumptions proved to
be false. Although extensive analyses of the real product and its traditional
representations in the information system had been carried out, further
analyses as described below was required.
Another critical restriction towards parallelization during the 1970s waslearning. How could it be possible to learn the tasks in an extended cycle
without prolonged training? The generally accepted assumption, according
to traditional learning theory (Argote, 1990; Wright, 1936), was that the
shorter the cycle time, the shorter the learning process and the more efficient the work.

3. The design method used for
the Volvo Uddevalla final assembly plant
During the 1970s and 1980s, automobiles and trucks were assumed to bedifficult to understand from an assembly point of view. In retrospect, thisassumption was incorrect. It is now clear that the product structure used
today by most Swedish automotive manufacturers, leads both researchersand practitioners to erroneous conclusions.
This explains why the efforts of researchers, despite comprehensive empirical and theoretical analyses, did not achieve penetration in the largest
industrial systems during the 1970s. It did not matter if one knew how to
do it – it had to be proven and explained using the nomenclatures familiar
to the practitioners. Hence, methods such as disassembly of complete products, the use of prototypes of materials handling equipment, prototypes of
information systems using computer print-outs, etc., were used. In fact, it
proved necessary to use a large experimental work shop for the six-year
period between 1985–91.
The shop was filled with automobiles and trucks in various stages ofdisassembly, as well as equipment for the manufacturing of prototypes ofmaterials handling equipment. The facilities also included full computerized support connected to the centralized data banks at the Volvo Truck and
Car Corporations.
It was necessary to disassemble products, since we needed to understandthe real products as well as the corresponding computerized formalization
64and different documents published by the design department or the central
process engineering department. This was a time-consuming and mentally
trying process, because of the inconsistent and often poor quality data.
We were able to translate the product structure and information received
from the design and manufacturing engineering departments into a final
assembly-oriented product structure. The method used was to compare
computer print-outs and actual components, and to modify the structure inaccordance with the disassembly and assembly work.
The guiding principle for long cycle-time assembly work, is that there
must be conformity between the work perception on the shop floor itself,
the materials display on the work station and the description of the work.
This implies that in long cycle-time assembly work, the description of the
product and the work needs to be based on a final assemblyoriented productstructure.
The final assembly-oriented product structure used in the Volvo Uddevalla
assembly plant comprised five main so-called ‘final assembly functionalgroups’. These were simultaneously verbal and visual ‘maps’. They described the product and the assembly work in a way that maintained stable
relations between the description of a specific automobile and all possible
individual product variants.
The distinguishable functional groups were: 0. Doors; 1. Leads for electricity, air and water; 2. Drive line; 3. Sealing and decor; and 4. Interior.
This division was designed to categorize the components so that the groups
of materials, both individually and in interrelation, formed contexts andwere distinguishable from each other. For example, that a component was
to be used in the assembly of the interior, was clear not only from a single
component but also from the other components being related to a group ofmaterials assigned a descriptive name, which also belonged to a multi-levelverbal, visual and spatial assembly-oriented product structure.

<Figure 2, Page 65, Part I, Engström>

Figure 2. The final assembly-oriented product structure on an aggregatedlevel where each distinguishable functional group corresponds to 1/4 of anassembly work on an automobile.
65

Although some workers in Uddevalla did assemble complete automobiles
single-handedly, the most practical way was to organize the work in pairsof workers, using a cycle time of 100 minutes or more. This was dependent
upon the specific competence and choice of intra-group work patterns.

<Figure 3, Page 66, Part I, Engström>

Figure 3. Schematization of the difference in complexity between different
intra-group work patterns. The experiences from Uddevalla indicate that efficient work groups performing long cycle-time automobile assembly ought
to contain five to nine operators and consist of sub-groups of two operators.
These operators should be supported by one or two alternating individuals
co-ordinating several subgroups, building subassemblies in close proximity
and performing general services, such as checking material, cleaning, etc.
The base for the technical concept of the now defunct Volvo Uddevalla plant
was the increased efficiency demonstrated as a result of parallelization andthe result of the elimination of inefficiencies, as illustrated in figure 3 (Wild,
1975; Engström, Lundberg and Medbo, 1993).
According to our observations, interviews and video recordings, theassembly performance of fully run-in work groups assembling complete
automobiles in Uddevalla was 14–16 percent better (equal 10–12 hours)
than the time calculated by the industrial engineers, using time and motion
studies. These performance results should not, however, be mixed up withor compared to Volvo’s official data wich reported an assembly time of 32
hours in November of 1992, since this figure refers to all blue-collar workers
in the plant, including materials handling, maintenance, etc.

66Serial flow
Theoretical Observed
Balance loss (%)
Division of labour loss (%)
System loss (%)‘Work inefficiency’ (%)
Total need of manpower (%)

5
6
25
35
136

30
25
80
135
236

Parallel flow
Theoretical Observed
1
4
5
10
110

5
15
20
40
140

Figure 4. Theoretical and observed inefficiencies for serial and parallel
flows. The figures show that the parallel flow is obviously the most efficientone. The observed data are derived from several of our studies of Swedish
automotive manufacturers, while the theoretical losses have been calculated.
The losses are expressed in relation to the so-called ‘necessary work’ timeequivalent to 100%, which is the work time required for one operator tocarry out all the work under ideal conditions. The ‘necessary work’ needed
is defined by the product design. Only the time from the point when theworker has the component in position for assembly until the component
has been fitted, is included. The figures in the table above clearly show thesuperior performance of the parallel flow production system (140% contra
236% total need of manpower). These figures are more correct than the official assembly times published by Volvo, proclaiming the productivity ofdifferent Swedish production systems to be equal.
One design criterion behind this production system was that human capabilities and needs, as well as market demands should be the starting point
for the design of technical and administrative preconditions, the common
denominator being the product itself.
The parallel flow and the extended cycle time used, called for pre-structuring the information and materials needed to facilitate the assembly work.
This pre-structuring demanded non-traditional materials feeding techniques.
Therefore, the materials were supplied as kits in kitting fixtures containing
materials for the individual product, combined with advanced information
systems. The systems were contingent on a precise verbal network complementary to, for example, the part numbers traditionally used by automotive
manufacturers. This means, among other things, that every component isdesignated a name indicating its function, assembly position on the vehicle, etc. In fact, the information system in Uddevalla even included locallydefined nick-names of certain characteristic components.
The complete product constituted a whole that formed the basis for the
structuring of the assembly and materials handling work. This was made possible by the product being described in detail by the design department.
67

<Figure 5, Page 68, Part I, Engström>

Figure 5. Schematization of the flow pattern in Volvo’s final assembly plantin Uddevalla. We have illustrated the intra-group work pattern used in work
shops 4–6 (the blocks in the upper part of the figure). Note that these work
shops are not identical to work shops 1–3. In 4–6 the body is standing stillat one internal work station during the whole assembly, while in 1–3 it is
moved once. There are also other dissimilarities with regard to the locationof the subassembly stations, assembly tools, etc. The labour-intensive subassemblies, such as doors, engine and instrument panel, were integrated into
the work groups. The aim was to increase the internal assembly-active buffer,e.g., the amount of work time available but not always used. The differencein layout was due to the work shops being put into operation successively(thus avoiding the difficulty of co-ordinating and training the whole workforce at the same time). The experiences gained from the work shops inoperation could be applied to the design of work shops completed later.
68

The long cycle-time assembly work can, in itself, be said to verify the prestructuring of information and materials performed in advance. This method
ensures that the products assembled are in accordance with the productdesign specification, which has proved not to be the case in traditional
production systems.
This type of work and information structuring is possible, through thefact that the components included in an automobile are related to each otherand to the symmetries that exist or arise in the vehicle during the assembly
process. The components are related to each other due to the causal connections, assembly sequence, as well as the variations in the total flora of
product variants, forming long chains with a varying degree of self-explanation during the assembly. This becomes evident if one compares different
product variants to each other, or if one understands the functions of thesubsystems in the vehicles.
When the automobile stands still during the assembly process, as was thecase in Uddevalla, these relations become obvious. Using specially designed
materials feeding techniques it is, for example, possible to achieve a relationship between the components fitted and the one to be fitted. It is also
possible to exploit the vehicle’s organic as well as generic characteristics,
thus constituting ‘holistic learning’ as opposed to ‘atomistic learning’. In‘atomistic learning’, the starting point is fragmented work tasks. In ‘holistic learning’, on the other hand, the individual focuses on the message oridea being communicated. Such an individual is said to have a ‘holistic approach’. For example when viewing the learning aids as a whole, in which
the parts are seen in relation to this whole (Marton, 1986; Marton Hounsell
and Entwistle, 1986)
When a traditional assembly line is used, it is obvious that the movementof the automobile body through the plant determines the nature of the work.
In the Uddevalla plant, however, the work was characterized by the intragroup work pattern. To the untrained eye, this work does not seem efficientsince nothing appears to happen. On the assembly line, on the other hand,
the work pace is more obvious. The nature of the design of the technicaland administrative preconditions in the production systems advocated here,
ought to be such that the individual and the work groups have to become
increasingly skilled. Increased knowledge has to pay off in the form ofextended technical and administrative autonomy, both at individual andgroup levels.
Such extended autonomy was not fully achieved in the Uddevalla plant.
Among other things, the development of a ‘bureaucratic’ production planning and scheduling system was not suited to the shop floor characteristics.
However, a new concept for planning and scheduling was developed before
the shutdown, but not in time to be implemented.
69

4. The Uddevalla production principles
The inverted design process of the Volvo Uddevalla plant generated five
new production principles, methods for achieving high productivity, quality,
as well as, flexibility:
1.

2.

3.

4.

Parallel flow pattern and autonomous group work. In fact this was anorganic flow pattern characterized by successively decreased mechanization, increased parallelization and maintained or expanded sorting
capacity from the beginning of the process to the finished product. The
work group members carried out assembly work on several products
simultaneously. It seldom occurred though that more than two workers
were working on the same product at a time. Thus it was possible to varymethod and pace, depending on how the work proceeded. This was also
independent of the work status and variation of other work groups.
Prestructured materials feeding to individual products. The larger
components with their obvious positions in the product were brought
to the place of assembly in kitting fixtures. On the kitting fixtures werealso a number of plastic boxes containing medium-sized components
as well as plastic bags containing small components (Johansson, 1989;
Johansson and Johansson, 1990). These plastic bags contained the small
components needed for every automobile. There was a large number ofthese small components and they represented the greatest share of theassembly time. Through this arrangement, a considerable reduction inmaterials-handling time was achieved. Moreover, this way of feeding
materials served in itself as a learning aid and work instruction.
Naturally grouped assembly work. This presupposes that the traditional disintegration is broken and professional skills are created (thecharacteristics of a skill are: natural rhythm, holistic view, functionalgrouping and result orientation). The skills involve a number of tasks
being combined in work functions (Nilsson, 1981; Ellegård, Engström
and Nilsson, 1991). In practice, this means that the natural relationships between materials display, administrative work description andthe method of working are preserved. This in turn has led to the development on the shop floor of a professional terminology and concepts
which draw on the design work to a greater extent than usual.
A final assembly-oriented product structure. This leads to more efficient
information handling, where the product and the work derive from anassembly-oriented product structure and where they are described using a number of predefined interrelated ‘charts’. The naturally grouped
assembly work was supported and formalized by an information system
which is capable of breaking down the product into its smallest components and relating this information to the long cycle-time assembly
work.
70

5.

Materials and production control based on the principle that productsthat are similar for assembly purposes are also principally similar. Thisis so when it comes to materials handling and product descriptions including work instructions, so-called assembly variants. This meant lessneed for replanning and also a materials consumption sequence, which
was more consistent with the planned sequence. It also led to reduced
buffer volumes, better just-in-time efficiency and a reduced number ofvariants in the final assembly. However, as previously indicated, thistype of production control was never introduced, due to the decision toclose down the factory.

The application of these production principles had the following nonobvious, or initially accepted effects:
•

•

•

•

Reduced space requirements including buffer volumes compared to
traditional line assembly. This was due to few products being placed inintermediate buffers between different production phases and to reduced
need for transport areas. This was the case as most automobiles in the
product workshops were ‘assembly active’, i.e., subjected to assembly
work. Despite the resulting space increase due to the under-utilization ofoperator positions around the product, more efficient work was achieved
as a whole. Or put another way, if the flow is parallelized, the space isincreased because the larger work stations are more than compensatedfor by the reduction of the buffer volumes needed for technical reasons
between work groups placed in a series (Engström, 1993).
Reduced need for expensive tools compared to traditional line assemblyfor several reasons: (1) the degree of mechanization was lowered on
account of greater work content and less complicated tools; (2) fewer
tools with a fixture function were required, as the assembly workers in
the work group commanded the whole tolerance chain and were capableof fixing the component, adjusting its position and finally fitting it to
the required torque; (3) expensive production equipment was utilized
jointly by several work-groups, and (4) glued components were fittedusing small fixtures with low pressure allowed to be applied for a longer
period. This was in contrast to short cycle work and products that movefrom work station to work station, implying that glueing requires highpressure and a short application period.
The efficient information handling led to a speeding up of the time andresources needed to implement a change of model and to effect changeorders. In this respect, the Uddevalla plant also proved superior to
Volvo’s other automobile plants.
Successively reduced need for technical production support (productionengineering and supervisory functions) to the work groups.
71

•

•

Flexible work scheduling, which led to shorter lead-times than in traditional production systems. It has in practice only become possible
to manufacture automobiles which have already been sold to the customer.
The difficult, time-consuming or complex product variants could bemanufactured at the same time as more common variants, without generating disturbances in the production system. It was possible to startbuilding certain product variants, try-outs, as the introduction of newvariants did not require extensive work by the worker or the industrial
engineers.

5. Conclusion
Finally, we conclude with one important fact concerning the Volvo Uddevalla plant, namely, that the unique production principles used led to superior
performance due to reduced inefficiencies. This has confirmed the relevanceand validity of the theoretical and empirical frames of reference, as well asof the extensive research and development background only touched uponin this article. The technical dimension formed the vital preconditions foradvanced work organization on the shop floor, as well as for flexible manufacturing, including the organization of white-collar work. This potential
was unfortunately not fully realized during the plant’s short lifespan.

72

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Reform of Industrial Work – the planning of Volvo’s car assembly plant in
Uddevalla. The Swedish Work Environment Fund. Stockholm.
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Johansson M. I. (1989). Product Design and Materials Handling in Mixed-model
Assembly. Department of Transportation and Logistics. Chalmers Universityof Technology. Gothenburg (doctoral thesis).
Johansson M. I., Johansson B. (1990). ‘High Automated Kitting System for Small
Parts – a Case Study from the Volvo Uddevalla Plant’. International Symposium on Automotive Technology & Automation. Vienna. Proceedings, Vol 1,
pp. 75–82.
Karlsson U. (1979). Alternativa produktionssystem till lineproduktion. Sociologiska Institutionen, Göteborgs Universitet. Göteborg (doctoral thesis in
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Marton F., Hounsell D., Entwistle M. (1986B). Hur vi lär. Rabén & Sjögren,
Stockholm (in Swedish).
Nilsson L. (1981). Yrkesutbildning i nutidshistoriskt perspektiv. Acta Universitatis Gothenburggensis. Göteborg (doctoral thesis in Swedish).
Rosengren L.-G. (1981). Potential Performance of Dock Versus Line. International Journal Production Research, Vol. 19, No. 2, pp. 139–152.
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Science, Vol. 3, pp. 122–128.

73

The Uddevalla plant:
Why did it succeed with a holistic approach
and why did it come to an end?
Lennart Nilsson

This paper will ask and answer the question: how did Volvo succeed in developing a new concept for production and learning at its Uddevalla plant?
The answer lies in the unique combination and arrangement of the follow-ing factors:a)

The ways in which the materials (components) were handled througha new and unique grouping strategy.
b) The replacement of line-assembly by parallellized work places, where
the assembly work is carried out by a few people at each work place.
c) The arrangement of the assembly work in accordance with new organicand holistic descriptions within learning strategies which support the
integration of physical (manual) and mental capabilities needed to carryout the total assembly work.
The story of Volvo’s Uddevalla plant is a story of how it was, and still ispossible to create a realistic alternative to main-stream industrial work, notonly for the automobile industry, but also for working life at large.
Let me explain, as one of those who provided input into the renewal ofwork with car assembly. As stated above, points a and c are the resultsof research on human learning, particularly within vocational learning (Nilsson, 1992c), while point b refers to how materials and working processes arecarried out. With these three points in mind, we have developed strategies
for organic and holistic descriptions (Engström & Nilsson, 1992).
A basic presentation will be made in this paper. For further discussions
regarding point b and the reasons behind the change from line-assembly
systems to parallellized work stations and the efficiency of this system see
Engström, 1992a and 1992b.

75

The beginning
The Volvo Uddevalla plant was expected to be innovative in that it would
make car production more efficient and at the same time provide humanconditions for industrial workers. The primary objective of the project
management, one which was supported by Volvo general management, wasthat the technical equipment should be adjusted to the workers and theirgrowing capabilities (skills).
It was also agreed that Uddevalla should be a work place for women andmen of varying ages, as a mixed workforce should be viewed as an asset.
New learning and technical strategies should be developed. This was thestandpoint in 1985 when the story began.
However, nobody at Volvo could answer the question of how to bringabout this innovation. The management therefore sought external help fromscientists who had knowledge of practical applications. It is a long standing
practice of Volvo to seek external help in order to innovate.
The Volvo board and the project group for the Uddevalla plant considered
the experiences of the Volvo Kalmar plant as a model to develop from. But
this view gradually became problematic as the new Uddevalla plant became
qualitatively different from the Kalmar plant.
As an external consultant, I was asked how long can a time-cycle be forthe workers? I had as a researcher and teacher in the field of vocational
learning for 20 years, never been asked such a question as the main issue ofconcern. Why this type of question? Gradually I realized that this question
was the key to understanding the way of thinking of most people at the newplant. The starting point for them was time and not content.
The question I was asked could not possibly be answered because theanswer depends on what people do. I suggested that they view the problem
differently, in terms of content and context, and I also understood that theway of thinking of many people in the planning group was a reflection of
the thinking in traditional assembly-line production.
The Kalmar plant assembly work at that time consisted of just an additionof five to seven minute short-time cycles from standard line production.
This addition resulted in a work cycle of 20 to 30 minutes. Now the Volvo
people were considering the possibility of adding some other small pieces
of work in order to create a longer work cycle.
What they didn’t understand at that time was that in doing so they restricted
themselves to an additive and reductionist way of thinking. Although thisapproach is also valid, it is not conductive to the creation of something
new and more efficient than the existing systems. There are alternative approaches and I suggested another way to think and act from a holistic model
which focuses on content and the context from the workers’ point of view.
In my opinion, the change from time to content as the focus for renewal76

of assembly and material handling work is the most important qualitativechange needed for innovation.
As a result some people changed their minds while others returned to theTorslanda traditional plant. Many people behaved as mental prisoners of
the line-system. This was a reality that later created a lot of problems for
the Volvo Uddevalla plant.
However, some leaders of the planning group wanted to create what theycalled ‘natural work’, as a contrast to the traditional conditions related toline-production. They had difficulties in expressing what they meant by thisterm, as it was really an umbrella term for all those who wanted a change
from line-production.
Because of this ambiguity I was asked to explain the meaning of this term,‘natural work’, and to define criteria for the kind of activities such work maycomprise. ‘Natural work’ I characterised (Nilsson, 1985) as the following:
1.
2.
3.
4.

The worker is in control of the work performed during the day, andusually, over longer periods of time.
The work in its entirety should be surveyable.
The work is meaningful from the workers’ point of view and is notpredetermined by time factors.
The transfer of knowledge takes place principally from one workergeneration to the next generation within the profession.

The main point here is that the work content and qualities are superior to
the administrative division of working time into small pieces, which is theway assembly work has been carried out during the last 70 years.
This fundamental view in natural work, as I have defined it, made it possible to deal with the content in assembly work from a qualitatively new
approach, an organic and holistic approach. This approach differs from themechanistic additive approach and its applications of scientific management. This change of orientation to support ‘natural work’ had a great impact on renewal. It has become possible and interesting to talk about what
supports human learning. Gradually during the spring of 1986, a strategy
for learning that supports the human being in mastering the complexity ofmaterials handling and assembly work, was developed in the planning groupwith my help as an external consultant.
The strategy can be summarised by the following six points:
1.
2.
3.

Learning must be established in work with real products, for example
on cars produced for the market place.
Learning must be organised to allow the product and work processes
to be surveyed by the learner/worker.
Learning must comprise the work in its entirety or at least functional
wholes of the work content.
77

4.
5.
6.

Administrative division of working time should be replaced by an organically functional work content.
Vocational competence in terms of knowledge and skills must be transferred from the professionally skilled to trainees.
The learning process should include tempo training with maintained
quality of work performance.

The total car assembly process was the starting point of the learning process.
The car was the means. But the means also resulted in a real product produced for the market. By using the product as a tool in the learning process
it was possible to avoid the otherwise customary division of learn-ing into
small, additive, and defined steps. Now the learner could see the meaningof his learning and was able to survey his work.
Using the results of the organic and holistic descriptions of the assembly
process and the materials handling, it became possible to implement a generative and organic approach to learning. This approach and the descriptionsof the car as an organic structure enabled creating the competence needed tomaster the great number of components and tools that were used in combination with different demands on precision within the assembly work.
Learning must comprise the work in its entirety and the learner and theworker must be able to survey the work, as well as to have autonomous control over the process and tools with which to assess quality. The holistic view
and its corresponding demands means that different emotional, manual, andintellectual demands will be placed both on the individual and on the groupsof people working together. The learning process must, therefore, be oriented
towards the development of the individual’s competence, as well as towards
optimal co-operation within the teams. It is the collective results of the teamthat are crucial to the attainment of the desired production quality and productivity (here and below used as a measure of the output per time unit)
In the learning of the ‘enlarged’ assembly process the car (i.e., the bodyand its components) is always the means as well as the result, or end, of theprocess; but it is not the goal. That is, it is the competence that is the goal. The
competence will be used to attain the desired quality and productivity.
To create the competence needed to master long-cycle work, such as
expanded assembly work, it is necessary to develop an ‘inner monologue’.
This inner monologue should co-ordinate the relationship between ‘the workof the hand’ and ‘the work of the mind’. The aim in developing an innermonologue is to link these processes at the individual level, as it refers toa mental orientation in the form of self-reflection and thoughts in relation
to aspects of work, both before and during the actual work. This is a fundamental point in the development of learning strategies for the creation ofa vocational identity.
In order to encourage the development of inner monologues, as an external78

consultant I had to formulate questions in relation to the different phasesof the expanded assembly work. The character of these questions are, froma learning point of view, an important determining factor for the kinds ofknowledge the trainee will aquire.
Vocational identity for the growing group of car builders includes: Theability to relate ones’ own knowledge and experience to questions relating
to materials (components and structuring of the work), choice of tools,
demands on precision, work patterns as well as general assembly skills andergonomic aspects of work, and also how to inspect the work and makeadjustments. By following these steps a new profession was developed.
The questions were also part of the mutual relations between those learningand those in a ‘teaching’ position during the learning process. Obviously the
expanded assembly work places different qualitative demands both on theindividual and on the working teams than is the case for short-cycle work.
By making use of all aspects of human capabilities – emotional, motivational, manual, and intellectual – it is possible to break away from thetraditional division between manual and intellectual tasks and between‘blue’ and ‘white’ collar tasks. This also means a change of power andcontrol of production, as well as of the inner functioning of the plant andthe company.
The development of an inner monologue is a primary factor in the creationof a vocational identity in the centuries – old Western European handicraft
tradition, which is also applicable in the ‘New World’ in the aftermath of
the Taylorist phase of the industrial era (Nilsson, 1992a and b).

The new organic and holistic perspective for materials
handling and assembly work
An organic and holistic viewpoint percieves the variations between different
aspects and things in the world as an asset. In the case of materials handlingand assembly work this means that one makes use of the variation between
components, in terms of size, shape, colour, weight, and fragility, as important factors for the creation of memory images and for discrimination in order
to organise groups. Any kind of grouping is made for a specific purpose;in this case, the purpose is to facilitate the mastering of the complex tasks
resulting from the use of many different components.
In order to reduce the complexity produced by the amount of components
involved, the existing mechanistic way of dealing with this problem has
been to replace the natural variations by codes suited to computer systems,
but not to the unique capabilities of human beings. Herein lies the problem.
Choosing the components is not in itself difficult, nor is the assembly workin terms of knowledge, materials, and structuring of the assembly. What is79

80

Figure 1. Model of the different phases in the expanded assembly work.
Source: Nilsson 1994:c, p. 40

Model of the different phases in the expanded assembly work
Knowledgeof materials

Structuring

Assembly

Inspection

Questions such as:

Questions such as:

Questions such as:

Questions such as:

Questions such as:

Which components
are to be found in theassembly zone?

In which function are
the components included?

How should the completed assembly lookwhen it has been correctly carried out?

How are the various types of defect rectified?

How are the components fixed?

How is this information
about the assembly
obtained through documents?

How should thework patterns look
as regards relations
between individual/-s- tools, - components,- car body?

Are the components
the correct ones?
What quality demand
are there on this component?

What tools are to be
used?
What demands on
precision are there forassembly/fit?
How should the work
pattern look as regards
assembly work?

How can variation beachieved in movements
to prevent injury topeople and damage tomaterials and tools andattain desired quality
and work intensity?
Performing assembly
tasks.
How should workerinspection be carriedout during and after hework process?

What instruments areused to determine
whether the work has
been correctly carriedout?
What routines are to befollowed if defects aredetected?
How is the completed
inspection documented?

Adjustment/inspection (action)

How are the rectified
defects and desired
quality attainment
checked?
How are the rectifications and new inspection documented?
How are results reported, and to whom, toprevent recurrence of
defects?

difficult is the use of mechanistic descriptions not related to the ways humanbeings create orientation, groupings, context-relations, and survey the work.
All this can be looked at as ‘tools’ human beings use to master complexity
and achieve a professional identity.
The objective is to create descriptions which facilitate for human beings
to work by means of a natural mental approach, perceiving components asmeaningful wholes from the viewpoint of assembly and the workers’ own
apprehensions and/or experiences. This was the challenge that was taken on
by researchers from two scientific disciplines, engineering and vocational
learning, and gradually also with active contributions from workers at the
Volvo Uddevalla plant with support from the management. The way weworked together was very successful and made it possible to create new waysof handling materials from ‘input’ to the completed car. Our co-operation
also created new ways of describing the assembly and new guidelines forthe assembly work itself.
In this context it is important to remember that when the Volvo Uddevalla
plant was set up nobody had any knowledge of how to organize the flow ofmaterials so as to suit an assembly process in which the car (body) remainedin the same position (the work place) throughout the assembly process.
The way that was chosen was to group the materials according to assembly function relationships, meaning that components belonging together
in relation to assembly were arranged into groups by their characteristics,
such as size, weight, shape, colour, and fragility. The components belonging to one assembly functional group (‘family’) were also related to a main
assembly functional group (‘kin’). This made it possible to view the cars
as they passed along the assembly process from the material grouping to
the finished assembled car. In this way the process could be viewed as anorganic process instead of as a mechanistic addition of parts.
Descriptions which take into account the natural variations in colour,
shape, size, fragility and relate them to the components’ names, ‘families’,and ‘kin’, as well as to surveyable patterns and contexts, vitalize the mental, emotional and physical life of the assembly workers. The mechanistic,
descriptive, primarily numerical orientation which dominates car assembly
work limits the opportunities to enhance the competence of the workers
and is an impediment for the development of professional learning. In thiscontext it is also important to realize that the mechanistic description hasother purposes than the organic, holistic description.
The mechanistic description is organized so as to view the product fromwithin the existing work organisation. It is also possible to apply it from asales perspective. With such a perspective the final result, the car, can beviewed as the total sum of all component parts and the ‘whole’ is reduced
to a numerical code.
81But from the workers’ point of view the mechanistic description is impossible to work with. When one works in long cycles of 1.5 hours or more
and one is developing a professional identity, the work content is large andentails correspondingly many responsibilities. Furthermore it is necessary
to be able to survey the total work and to obtain support in terms of a description of the context in the space and time orientation.
It is also necessary to have access to descriptions that make it possible toobtain information on different precision levels. This last point is extremely
important both during the learning process and as a reference in the longterm in order to support quality and productivity.
The main point here is that the mechanistic descriptions had too limited
applications. But the organic and holistic descriptions have the possibility of
being used both as a tool for assembly work, materials handling, construction, and for sales; in short, a multidimensional usefulness.
Without grouping materials in relation to the car it would not have beenpossible to create an alternative to line assembly or to create parallellized
workplaces. The materials were now related to ‘the body’. The body remains
stationary during the assembly work. This technical innovation was madepossible thanks to the new description. All this work was carried out by
Tomas Engström and co-workers. Gradually the system was adjusted by theexperiences of the Volvo Uddevalla plant with assistance from the workers
and technicians at the plant. A lot of the new description was naturally usedin the integrated learning and development processes at the plant.

Some notes on the processes of creating competence
It is possible to distinguish three different phases during this period of
about six years:
The first phase was very constructive. The work content was at the sametime approximately one quarter of the total assembly time of the car. Aftera certain time period the worker would continue to the next quarter stageof assembly work, and so on, in order to obtain a good understanding of thetotal assembly process. Following this, the worker would choose which of
the four stages to become more professional and specialized in, in terms of
quality and productivity.
The main point here is that the learning content was greater than the work
content after learning. This strategy ensured co-operation between the different phases of the production of the car.
External consultants (Engström and Nilsson) helped the workers to create
illustrations, to group materials and tools and to implement general learning
strategies. All efforts were organised so as to support a holistic view of thework and the competence to master a greater part of the total work.
82

Those who had learned the techniques became ‘instructors’ for novice
workers. This was much like the comprehensive training of the old apprentice-journeymen relationship in the guild system. However, nobody spent
the entire working day in the teaching position. The short time between
being in the learning position and in the teaching position made it possible
to remember what was important from the learners’ point of view. It created a willingness to explain how to do the assembly work and and why.
We then worked on improving the ‘inner monologue’ as a tool for creatinga professional identity.
During the first phase the workers’ competence increased dramatically as
realistic plans were carried out for future developments. This phase was themost successful I have seen during twenty years as a researcher and teacher
in the vocational field. During this phase the learning followed the strategy
developed during the spring of 1986.
The second phase began with an additive view of learning and assembly
work. Technicians from the Volvo Torslanda plant took control over production and learning. They created an administrative division between parts of
the assembly work. The total assembly work was looked upon as consistingof seven to nine parts. Every person who worked with assembly had to learn
his or her part. As a consequence very few had the competence to help otherworkers due to a lack of competence outside their own working area. Manyof the problems previously encountered in line production reappeared.
The competence achieved during this period by the new recruits did notreach the level achieved by those who had come during the first phase. Nor
did the production of the cars reach the expected level. This was not due toa failure of the learning strategies for the plant. It was a consequence of thefact that the people who had the power over production and learning at thattime did not use the strategies created to build competencies.
All the resulting problems which occurred during this phase were predicted by the external consultant, but those in power were not interested
in listening and acting in order to reduce the problems needed to reach theefficiency of the new production and learning concepts.
During this phase another extremely important event occurred. At thistime the discussion at Volvo was whether the traditional Volvo Torslanda
plant should be reorganised in the direction of the Uddevalla plant or if itshould be organised in relation to lean production and become something
like a ‘Toyota-city’. The problems at the Uddevalla plant contributed to thefact that few wanted to create an ‘Uddevalla model’ at Torslanda.
The actions from those in power over production and learning at the Uddevalla plant during this phase contributed to the dissolution of the plant
some years later. After some time many of them left for the Torslanda
plant.
83

During the third phase which was to become the last, a very constructive
renewal of learning and organisation of production was started. Now the new
management tried to return to the original learning concept and to minimize
the negative effects of the previous administrative division.
The quality and the productivity increased to a very good level. For thelast 1.5 years the amount of hours required for the production of cars decreased. A very constructive situation existed in the autumn of 1992 when
Volvo decided to close the plant.
There had been a dramatic increase in the efficiency at the Uddevalla plant
during the spring of 1992, until the decision to close reached the plant. Thisefficiency had possibly been achieved 2–3 years earlier if those in charge
at the time had followed the strategies developed to create competences forlong-cycle assembly work.
The main feature of the new production and learning concept is thus thatworkers have the competence and responsibility over a rather large part of
the assembly process of the car.
All the criteria that one had expected the plant to meet were fulfilled:
1.
2.
3.
4.
5.
6.

The efficiency in car production was very good regarding work quality,
productivity and flexibility.
It had achieved dignity in terms of professional identity and humanconditions for its workers.
The technical equipment had been adjusted to the workers and theirgrowing competence.
It was a working place for both men and women of varying ages.
It had a very low rate of absenteeism and turnover.
New learning strategies to support long-cycle assembly work, neworganic and holistic descriptions for materials handling and assembly
work as well as, new technical strategies for parallellized work places
had been developed.

However, the total capacity of the concept was never realised at the Uddevalla plant. For example, the plant did not work in close relation to theconsumer which would have reduced the total costs and created qualitatively
new relations to the market.

The arguments from Volvo for closing the Uddevalla plant
The closing of the Uddevalla plant is officially based on two arguments. The
first is based on the argument that the three different plants for assembly
work in Sweden, Torslanda, Uddevalla and Kalmar, were seen as equal interms of efficiency. This is untrue.
84

The second argument was that the costs of production at the Uddevalla
plant was seen as much higher than the costs at the Torslands plant. Thisis also untrue. The official economic description is not correct. Both thesepublicly made arguments for closing the Uddevalla plant are based on false
assumptions.
Volvo opted to close the two new and future oriented plants. The closureof Uddevalla (spring 1993) and Kalmar (spring 1994) took place during avery unstable economic period for both Volvo and Sweden.
Volvo opted to continue with the old and big Torslanda plant in order tocreate a plant with centralised complete production. The decreased sales ofcars supported the reasons to close the other plants. The alternative was todrastically decrease the production of cars during this period, while preserving the plants.
If the lack of competence among some of the leaders at the Uddevalla
plant had not been allowed to influence the production and learning processes during a certain time, the Uddevalla concept would have displayed its
multifactored strength at an earlier time. Most probably, as a result of this,
it would have won over the stepwise change of traditionalism from Taylor
via Ford and MTM to large-scale industrial plants with a lean-production
orientation. This is the tragedy of the Swedish Volvo plants.
The concepts for production and learning developed as a consequenceof the intentions of the Uddevalla plant, by the researchers involved in thework called ‘reflective production’ has survived and will become a model
for working life in the future. Unfortunately the Volvo Uddevalla plant in
its tragic premature closure will not be able to demonstrate the success of
this model.

85References
Ellegård, K, Engström, T. and Nilsson, L. (1992), Reforming Industrial work
– principles and realities, The Swedish Work Environment Fund, Stockholm.
Ellegård, K. et al., (1992) Reflektiv produktion – industriell verksamhet i förändring, AB Volvo Media, Förlagsgruppen, Göteborg.
Engström, T. (1992a), ‘The reorganization of the technical and administrative
conditions for assembly work’ in Ellegård, K, Engström, T and Nilsson, L(1992).
— (1992b), ‘Effektivitetsproblem i den storindustriella modellens fabriker’(‘Efficiency problems in the factories of the large-scale industry model’) in
Ellegård et al. (1992).
Engström, T. and Nilsson, L. (1992), ‘ The encounter between holistic learning
principles and the reorganization of materials handling and assembly work’in Ellegård, Engström and Nilsson (1992).
Nilsson, L. (1985), Naturligt arbete och industriellt lärande (Natural work andindustrial learning). Paper at the Göteborg University, Dept. of Educationand Educational Learning.
— (1986), Utbildningsstrategi för blivande bilbyggare (A strategy for learning inorder to create car building competence), Paper at the Göteborg University,
Dept. of Education and Educational Learning.
— (1992a), ‘Förändring av lärandet’ (‘Change of learning) in Ellegård et al.
(1992).
— (1992b), ‘Lärandeprinciper som främjar långcykliskt arbete’ (‘Principles forlearning in order to support long-cycle work’) in Ellegård et al. (1992)— (1992c), ‘The form and orientation of learning’ in Ellegård, Engström andNilsson(1992).

86

Volvo Kalmar – twice a pioneer
Thomas Sandberg

In 1974, Volvo’s new Kalmar plant became the first assembly plant in theworld to break with the Fordist concept. With a new work organizationand production layout, which attracted tremendous international attention,
Kalmar in a few years became Volvo’s best assembly plant. Yet there weremany built-in weaknesses in the Kalmar concept.
Towards the end of the 1980s several processes of change began, which
promoted even further development of the original concept. In turn, as wellas this lead to dramatic economy improvements as well as in terms of working conditions. Once again, Kalmar in many aspects became Volvo’s best
assembly plant. In spite of this, and although its production was needed,
Volvo closed down the Kalmar plant in 1994.

1. The original Kalmar concept
1.1 The breakthrough of a new work organization and production layout
Behind the design of the new plant was the ambition to avoid the troubles,that beset the Torslanda plant in Gothenburg, by improving working conditions and thus reducing absenteeism and employee turnover. Instead oftaking job fragmentation and predetermination even further, the organization
strategy in Kalmar aimed at independent assembly teams, each assembling a(functional) part of the car. The work content was 15–40 minutes long bothalong the line, where assemblers followed the car between various stations,and in the docks, which were a kind of side track (cf Agurén et al, 1976;
Agurén et al, 1984; Berggren, 1993a, pp 119–29; Sandberg, 1982, ch 11 forfurther information on the original Kalmar concept).
To achieve this, a substantial renewal of the production strategy was
required. The clover-shaped, two-levelled building contributed in creating87‘the small factory within the big’ in as much as each department had its
own, relatively separate area with its own entrance and personnel space. Asa replacement for the assembly line an autocarrier was developed, i.e. an
individually moving, centrally controlled low platform following magnetic
tracks in the floor throughout the factory. Between the departments werebuffers in order to create a certain independence. The autocarrier was not
only a means of transport, but also the platform on which the assemblers
did their job. In that way they could begin assembling ahead of a station orin the incoming buffer, thereby gaining a time buffer and increasing theirautonomy. In some departments assembly was done in docks, which made it
possible to move the car from the line and assemble on stationary objects.
During the 1960s Torslanda was increasingly manned with employees
who held a weak position on the labour market. The localization of a newplant in Kalmar can be seen as a continuation of that personnel strategy.
The Kalmar area is a region with a relatively weak labour market, making
it a bit of a green site. At the same time, the aim to improve work content
to achieve a greater work satisfaction meant a modification of the purely
instrumental relation between employees and company.
The Kalmar plant did not imply any new orientation concerning the business strategy, e.g. regarding product programs or customer relations. The
new plant was simply a capacity enhancement.
1.2 Structures and actors behind the new concept
With the new assembly plant, Volvo appeared internationally as a pioneer,and not only within the automobile industry. Compared to other Swedishcompanies, however, Volvo Kalmar did not emerge very early. Saab’s newengine plant in Södertälje, which began in 1972, also overturned traditionalorganization and production strategies. In other areas of industry there
were many companies which began reorientation as early as the late 1960s.
Around 1970 these experiments grew to many hundreds, not only in theindustrial but also in the public and service sector (cf Sandberg, 1982, chs
9–11 for further information on the Swedish situation).
The background of the extensive attempts in work organization were theincreasingly serious problems facing companies during the1960s as a resultof the rapid rationalization, carrying job fragmentation and predetermination
to its extreme. The economic consequences of the production problems became manifested in balance and system losses, long lead times, high capital
investment, and insufficient flexibility. It also became evident in work force
behaviour as the traditional groups of industrial workers no longer accepted
the increasingly monotonous wear-out jobs and, thanks to the welfare development and the decreasing unemployment, received other alternatives.
Companies then started to employ new groups. The female employment rate88increased, regional migration expanded and labour immigration increased
drastically in the 1960s.
At Volvo, the situation was even worse. Work studies were intense, a
new version of MTM was brought forward. The new Torslanda plant, initially used in 1964, was at the height of this development. Five years later,
personnel problems in Gothenburg were so serious that manning the plant
was difficult. There were departments without any Swedish employee. Nor
were there any remaining Finnish immigrants. The danger of the situation
was underlined by a number of wildcat strikes in 1969–71. Few other companies had such serious personnel problems. The fact that the managementin view of all this did not rebuild Torslanda indicates how dominating theFordist concept was.
Despite the experiments in other companies, growing research and an
intensive public debate, it was far from obvious that the new plant in Kalmar was to differ from all other plants. The first project plan was rather
conventional. Progress was made only after Volvo’s new president P G Gyllenhammar in 1971 replaced the project group and gave the project worka new direction. He played a central role in the emergence of the Kalmar
concept by being a connection between, on one hand, insights about the
problems of industrial production and their possible solutions, and on theother hand, the resources and competence that existed at Volvo.
His starting point was the necessity of being able to offer people decent
working conditions: ‘Thus, in order to satisfy justified demands for work satisfaction, production technology and work organization need to be changed
without impeding economic growth.’ The ‘most important change(was) a
shift from individual, monotonous work to work in a group.’ As the perhaps
most critical factor he considered a replacement for the assembly line (Gyllenhammar, 1973, pp 102–3,106; cf also Gyllenhammar, 1977).
A first evaluation of the Kalmar plant in 1976 showed that production
efficiency was in line with Torslanda and that many of the intended improvements of working conditions had been reached. Another evaluation from1984 showed clear improvements in assembly time per car (which now
was 25% lower than Torslanda), level of quality, efficiency, and assembly
costs. At the same time working conditions had changed in various ways,
e.g. work intensity had increased, and some ergonomic problems had beenadjusted (Agurén et al, 1976; Agurén et al, 1984).

2. An unused potential in the original Kalmar concept
In the beginning, Kalmar was met by huge expectations, which were to alarge extent redeemed. However, the limitations and contradictions in the89

organization and production strategies prevented full use of the potentialof the original concept.
Production layout has been singled out as a key factor. To increase theassemblers’ work content and autonomy some of the assembly was done in
the docks next to the line. Since the carriers remained tied to a serial flow
controlled by a central computer, with demand for a strict sequential order,
dock assembly did not give assemblers or the working team the desiredautonomy. The comparatively long work cycle in the dock also made it difficult to know whether you were on schedule when the carrier would startmoving and thus the work had to be finished. The increasingly complex
material supply, caused by the growing number of variants, also made useof the docks difficult. After subsequent restrictions the docks were abolishedin 1984 (to reenter the scene some years later).
Another vital part was the individually moving carriers. However, theirflexibility compared to an assembly line, for several reasons, could not bemade full use of. They were indeed individually controllable, but control
was central, a circumstance which furthermore was augmented during thefirst years. As a result the buffers between team areas never functioned asintended. This was further strengthened by the construction of the buffers,
which made it difficult to correct the sequence between carriers which had
shifted positions within a team area.
Thus, different parts of the production strategy limited the autonomy ofassemblers and work teams. But the organization strategy also had features
limiting the possibilities of assemblers and work teams to independently
plan, carry out, and evaluate their work. The assembly task in itself had asubstantially larger content than at a traditional assembly line, but in otheraspects work organization of the Kalmar plant was rather conventional. In
each work team there were several indirect positions, where no job rotation
between group members took place. The hierarchy within the work teamcorresponded to the situation in the factory as a whole, since managers only
to a small extent delegated responsibility and authority.
The latter also lead to changes being initiated and pursued from the top,
usually with lack of commitment and interest. Thus, until the second halfof the 1980s, no further development of the original Kalmar concept took
place. On the contrary, some of the original ideas, which had proven no towork well, were abolished. The changes that took place were traditional cost
rationalizations, limited measures mainly focused on production technology.
Yet the Kalmar plant performed well. In the 1984 evaluation of the first ten
years was stated that ‘the Volvo Kalmar plant is a technically, socially, andeconomically effective production unit.’ (Agurén et al, 1984, p 13)

90

3. After 15 years a radical renewal of the Kalmar concept
began
Even though the Kalmar plant in the mid-80s was successful, there wereseveral challenges, first internal and later external. When these challenges
were faced, rather fumbling at first but gradually more and more systematic,
much of the weaknesses in the original concept were overcome in a seriesof developmental steps. We shall examine this development briefly andproceed to study it in greater detail in three parts of the plant. The section
is based on field studies in Kalmar 1993/94.
3.1 Many processes of change in the last years
Changes in the product line and production volume naturally took place
during what was to become the last years of the Kalmar plant. Worth noting is the shift to the 760 model in 1987 and on to the 960 model in 1990,
two steps towards an increasingly qualified product and, greater work andmaterial content. Also remarkable is the introduction of the 940 model inthe fall of 1992, which reached world class quality half a year later.
More interesting in this context are the projects which gradually joined in
one single powerful process, focused on developing the production process:in the early 1988 team area development was initiated, towards the end of
1989 Dialogue followed, and in 1991 came KLE.
When team area development started in 1988 the work force had grown
during a couple of years while at the same time the labour market was becoming more and more overheated. To the Kalmar plant this meant a significant
rise in absenteeism and employee turnover. The Kalmar concept proved
inadequate to handle the personnel problems. The main focus for the teamarea development was to enrich the assemblers’ work content with manyof the side tasks which constituted separate positions: materials handling,
control and adjustment, instruction, some tasks concerning production engineering, as well as, some maintenance work. As a first step three team areas
participated in the project, but other areas also carried out part of it.
During 1989 team area development transformed into the Dialogue
project, which was announced in the Volvo Group in 1985 but not appliedin Kalmar. The purpose was to increase employee involvement and commitment in work. Attitude surveys, to get opinions on what had to be tackled,
was one tool. At first not much happened, and decision-making was once
again centralized in connection with the problems caused by the introduction to the 960 model. In 1991 development was accelerated, no doubt
influenced by the increasingly critical situation of Volvo Car Corporation.
A new strategy for Volvo’s Swedish car production was formulated, and acommittee was appointed to analyse plant structure (that committee in the91

fall of 1992 suggested the closing down of Kalmar and Uddevalla). The
principal goal of the new strategy was that the three Swedish assembly units
in the summer of 1993 were to be on the peak in Europe, thus matching the
Volvo assembly plant in Gent, Belgium.
From 1991 the Dialogue project, under the name of process development,
came to be a new and very powerful way to promote change. The aim was tofree, focus and sustain the commitment of all co-workers, in order to continuously be able to improve and expand operation towards customer-oriented
goals of strategic importance. The basis was trust and faith in the capability
and will of the assembly workers to assume responsibility for developing
their part of the operation. The organization was flattened and a substantial
delegation of authority took place. Operation was divided into 80 groups,
2–3 in each team area. The groups each with its own measurable goals,
prepared operational plans which were then carried out and followed up. In
the most active team area 60 changes were made in a year; in the plant as awhole the number was 900. This process of change engaged the personnel
at large and resulted in a great number of modifications which developed
the operation from an economic as well as human standpoint.
The undertaking of changes were aimed at improving the process, or theflow. This way of proceeding, directed at the flow, was well in line with thecustomer-oriented strategy which Volvo’s Swedish car producers adhered
to since 1991 when the KLE quality strategy (Quality, Delivery precision,
Economy) was launched. The focus on quality, i.e., a spirit of ‘doing it rightthe first time’, resulted in dramatic improvements in quality and largely as
a consequence of this, in delivery precision (‘create flexible systems freefrom interference’) and economy (‘a complete overhaul of the structure andresources of the production system’).
Through a number of circumstances these projects reinforced each otherin a positive circle, while at the same time they benefited from and contributed to the basic idea of Kalmar: independent work teams with committed
and skilled assemblers. The new customer- and quality-focused businessstrategy required the kind of organization strategy employed at Kalmar, also
strengthening it through its demand for responsibility and competence inindividual work. The same was true for the new way of undertaking changes.
Furthermore, the new business strategy focused the change process in a
direction which turned out to be a winner: quality. This fruitful interchange
between business, organization, and change strategy in turn made possible
a thorough development of the production strategy.
In the following sections we will examine the changes in three team areas since 1987. To a large extent, the changes are part of the processes justmentioned, but there are other factors behind them as well.
92

Before that, however, it should be stated that all these changes in the
Kalmar plant together resulted in large economic improvements. In the
beginning of 1993, the company reported that in about two years quality
had improved by 40%, lead time by 25%, and assembly time by 30%. The
chapter by Christian Berggren mainly considers Uddevalla but also statesthat Kalmar was the most competitive plant. In his more detailed report(Berggren, 1993b) not only the good results concerning assembly time andquality are apparent, but also how far Kalmar reached regarding flexibility
when shifting to new models, collaboration with production engineering,customer orientation, and cooperation with suppliers.
Kalmar’s final touch was when the plant in 1993 shared the first positionin J. D. Powers’ initial quality study of the customers’ appreciation of the1993 940 model.
3.2 Development of the organization strategy
When Kalmar in 1987 was to begin assembling the 760 model, the plant had
to be expanded since the new model had a larger material and work content.
One of the new departments was team area 4/5. Several (parts of) functions
were assembled there: brake pipes, booster, ABS unit, pedal arrangement,
climat unit, cable harness etc. Brake pipes, booster and climat unit werepre-assembled (as were some minor components).
The production strategy was, in all important aspects, the original one in
the Kalmar concept. Assembly was done on carriers, successively moving
through the department between the incoming buffer of four and the outgoing buffer of three carriers. Control was centralized and speed dependent
on production volume. The components were stored along the line. This
production strategy was constant during the period with the exception of aremake of the materials handling.
The organization strategy, on the other hand, underwent stepwise alterations. When the department started in 1987 the direct assembly was very
conventionally organized, and hardly reached the original intentions. Alongthe line were twelve stations, each manned by two persons assembling at the
car’s left and right side, respectively. Station time was around four minutes,
after which the car proceeded to the next station. Besides the pre-assembly
there was materials handling, instruction, and controls/adjustments along
the line. All three were operated by two persons not involved in any job
rotation. The department was headed by a foreman.
After a few months, work content were prolonged by letting the assemblers
follow the same car between stations. In this way, balancing losses werereduced and the autonomy of the assemblers increased. In 1989 the work
cycle had expanded to about 30 minutes.
93

The team area development project, when it started in 1988, affected
team area 4/5 mainly by bringing the indirect positions into job rotation.
The persons who had formerly been assigned these tasks began, somewhat
resistantly, to work about half their time on the line. At the same time many of
the assemblers were educated for materials handling, instruction, or control
and adjustment. Also, a group leader position was created, designed partly
to replace the production leader, who in turn received wider responsibilities
when the production manager at the next level was removed.
In team area 4/5 changes continued, outlined by the Dialogue project andthen the process development. First, assembly was broadened to incorporate
the whole line in the department; assemblers still worked two and two. The
deciding step was taken in 1992 when each assembler began to assemble thedepartment’s part of the car by himself, with a work content of approximately
65 minutes (variations in models and variants not accounted for). Throughthe shift to a long line, balance losses were eliminated. The shift to one assembler per car meant that the system losses and irritation, caused by thetwo assemblers seldom working at the same pace, disappeared. Every day
six hours of assembly on the line was followed by two hours of pre-assembly(the latter with rotation between three major tasks).
Simultaneously with the shift to one assembler/car, the designated station
for control and adjustment was abolished. Each assembler assumed responsibility for leaving a satisfactory work, and time for this was assigned in
the balance. As a result, defect frequency decreased by 90% and the crew
could be reduced without causing a higher work pace.
In parallel with these steps the indirect positions were fully integrated into
the rotation order. 13 of the employees, meaning roughly half of them, tookturns in being group leader, instructor and materials handler during half aweek to a week with two–three weeks in-between (each individual rotatedon just one of these three positions).
Thus, within the frame of the existing production strategy, a far-reachingdevelopment of the organization strategy took place stepwise. Work content
increased radically, as did autonomy. A prerequisite for this was a notable
increase in competence. There was no longer the often irritating dependence on a co-worker, and the collective responsibility for the production
was significantly larger. Another aspect was that balance and system losses
were reduced, and, hence, productivity increased. The quality level rose
dramatically, which contributed to crew cuts not only in this particular team
area, but also in the final control and adjustment areas of the plant.
If Kalmar had been allowed to continue, there were ready-made plans
within the team area on how to further develop the processes in the area.
The number one goal was to have the car immobilized in a dock duringassembly. The shift to dock assembly would take place in connection with94

the 1974 carriers being replaced by ‘taxicarriers’. In the investment plan
this was scheduled for 1995/96. It is likely that simultaneously several teamareas would have been joined, meaning increased work content. Furthermore
there were plans to take over most of the production engineering work, aswell as some supplier and perhaps also customer contacts.
3.3 A new production strategy needed to further develop the organization
strategy
The first thing that took place once the body had been lifted to the second
floor was removing the doors. While the body on its carrier went throughthe entire upper level loop, the doors were assembled to be remounted on
the car before it went down to the marriage point. The door assembly was
divided into left and right door assembly. Also the first thorough electric
function inspection belonged to team area 17/40.
Whereas the doors were removed and remounted on the line as was theelectric function inspection, doors were assembled off the line. The separate
door assembly meant a freedom in the choice of production layout, relative
to the rest of the factory. From the start this resulted in a more conventionallayout for the door assembly than for the departments along the line. The
doors were transported from station to station by a conveyor. Work content
was limited to 3–4 minutes, job injuries were noticeable, and balance andsystem losses great. In order to tackle these drawbacks work organization
was changed, so that assemblers went from station to station, thereby assembling the whole door. However, job injuries (and losses) continued ona high level. The new work mode added a dependence on the pace of theco-workers and consequently an irritation in the group. In addition to thedirect work there was materials handling, instruction, and control/adjustment, positions which continuously were held by the same persons.
The already strong incitements for a change were markedly enhanced
when absenteeism and personnel turnover rose sharply during 1988 and1989. As the Dialogue project was launched in the plant in the course of
1989 it gave the door assembly unit a possibility to develop a new production layout and work organization. In a first step there was in 1990 a shift
from the old serial grouping along a line to a parallel grouping in individual
docks (this concerned only the door assembly in itself, not the removing
and remounting). When the doors had been taken off, they were collectedfour and four on carriages, placed in an incoming buffer. There they were
gradually picked up by the assembly workers, who also picked up the material that was to be assembled. Assembly took place in a newly constructed
fixture, where it was possible to raise, lower, and also tilt the door. Froman ergonomic point of view this was a major step forward in production
technology. To get the material and assemble the four doors took around95

60 minutes. The doors were then left in an outgoing buffer, waiting to beremounted on the car.
Through the shift to individual assembly in parallel stations the dependence between the assemblers, and thus the system losses and irritation, waseliminated. Even more important was that the new conditions did not cause
one single new job injury. On the contrary, assemblers who had previously
been injured could be rehabilitated and returned to work.
In 1992 the time had come for the next step, which meant that the indirecttasks were distributed so that all employees in the team area could take partin them. The designated positions for control and adjustment were abolishedsince each assembler was to do his own quality checks. Some of the materials handling, as has already been seen, was assigned to those assembling
the doors. The rest of the materials handling, the instruction job, and the
new group leader position were rotated. However, not everyone wanted toparticipate in this rotation, despite persuasion attempts.
To the door assembly, the new production layout was a necessary condition
to the new way of organizing the assembly work and thus to the improved
working conditions; the new production technology also had an importantrole. In the second step, only the organization strategy changed. Taken together, these measures lead to reduced losses and, hence, increased productivity, a defect frequency reduction of more than 80%, and increased work
content and autonomy whereas physical and mental stress were reduced
enough to eliminate job injuries.
Still, there was plenty left to develop further, had the Kalmar plant notbeen closed in 1994. The team area was divided into three groups, where
the first assembled the right doors, the second the left doors, and the third
removed and remounted the doors as well as handled the electric function
inspection. Only as an exception did the employees rotate between thesethree groups. A next step could have been shifting to two groups, both removing, remounting and assembling the doors. The small number of assemblers
who shifted between the reversed assembly of right and left doors could,
presumably, also have shifted between these two groups.
3.4 A radically new production strategy, which also made possible a neworganization strategy
After the bodies had descended from the upper level they were, in the same
step, married to the chassis. This was the start of an extensive work to join
the various parts of the driveline to the components which had been assembled on the upper level. The singe biggest project during the last yearsof the Kalmar plant took place in this area and a total amount of 30 million
SEK was invested.
When Kalmar started in 1974, the assemblers installed the driveline to a96

large extent working above the head under a special ‘high carrier’. Such awork position is extremely demanding. Muscular strain and injuries soon
became a big problem. The situation did not improve much by a shift fromfixed station balances of 3–5 minutes to the assemblers following the highcarrier from station to station, meaning a work cycle of 15–20 minutes. The
already problematic situation got much worse in 1987, when ‘unsuccessful constructions increased the frequency of operations uncomfortable ordamaging to the human body ’. Job injuries became more numerous, andthe combination of poor working conditions and a more overheated labour
market made absenteeism and employee turnover rise further and forced
the radical transformation that was made in 1990.
The change of the driveline instalment process consisted of a number ofimportant components. In terms of production layout there was a shift fromserially grouped stations, where assembly was done on a moving object,
to nine double docks grouped in parallel, where the objects were not moving (a tenth dock was used for instruction and in case of job injuries). The
outgoing buffer was placed next to the line, similar to docks. This made it
possible to change and restore the car sequence in a simple way. A central
material inventory for the whole area was arranged, where the assemblers
picked the material themselves. The role of centralized production control
in the area was reduced. The production technology changed through theaddition of a taxi carrier, which transported the cars from the marriage point
to the docks, and from there to the outgoing buffer. A tilting equipment for
dock assembly was presented. Work organization developed inasmuch as
the assemblers worked two and two in the docks, each pair not dependingon any other. The indirect work was divided among the assemblers (a few
years later than had been planned).
The change must be regarded as a big success. The new production layout
eliminated not only a large part of the traditional balance losses, but also
those which were the result of the increasing number of car and engine variants. Owing to that, the crew could be reduced. The new production layout,
the new buffers, and the new carriers, all in combination with the new workorganization, meant a greater flexibility and thus a better ability to handle
both disruptions and changes in the production.
For the assemblers work content increased markedly. The assembly cycle
lasted about an hour. To this must be added materials handling, control andadjustment, pre-assembly, some maintenance work as well as some production engineering. Autonomy increased, not only due to the larger work
content, but also to the independence between the docks, the more flexible
equipment, and the less centralized production control. All this required
substantially more competence, and the need for education was underestimated in the beginning of the project.
97The most notable consequence was the strong reduction in physical andmental stress. The shift from work above the head on a moving object toassembly on a stationary object with tilting possibilities was revolutiona-ry,
and job injuries almost disappeared entirely.

4. The new Kalmar concept in comparison to new Japanese assembly plants
From the very beginning the Kalmar plant was a break from the Fordist
tradition. Despite the built-in weaknesses in the Kalmar concept, Kalmar
rapidly established itself as Volvo’s foremost assembly plant. In 1987/88
began what was to become a powerful renewal and development of theoriginal concept. At the time of the close-down in 1994, Kalmar appeared
as a factory of international calibre.
These improvements were a fact in the fall of 1992, when Volvo decided toclose the factory. Kalmar had reached even further accomplishments when it
was time to close in summer 1994. Furthermore, at that time, Volvo’s sales
had increased so rapidly since the end of 1993 that the Kalmar plant would
have been needed to manage the deliveries.
In connection with the continued renewal of Volvo Car Corporation’s
only remaining assembly unit in Sweden, the Torslanda plant in Gothenburg(which has a very traditional layout and organization), the Japanese production philosophy seems to be a model to the management, probably muchdue to the cooperation with Mitsubishi in the joint plant in the Netherlands.
Should the closing of Kalmar (and Uddevalla) be seen as a sign that thetriumph of the Japanese car producers has provided the traditionalists inthe management of Volvo Car Corporation (and the metal workers’ unionin Torslanda) with the deciding argument to get rid of assembly concepts
that were never really accepted?
Interesting enough, scientists (Nomura, 1993; Shinoda, 1993; Berggren,1993c) have pointed out the connection points between Volvo Kalmar andthe new assembly plants in Kyushu and Tahara, which Toyota has put into
operation in the 1990s. These new units differ in many ways from Toyota’s
older plants and, hence, also from the picture sketched in the well-noted MIT
study (Womack et al, 1990. There would be much to say about that picture
and about what is said of Kalmar and Uddevalla, but I refrain).
A striking similarity is that behind Toyota’s new approach in the newest
plants was the increasing resentment of the workers to accept the more andmore impoverished and strongly predetermined tasks; exactly the same
situation that 20 years earlier made Volvo launch a new concept. The goalof the Kalmar plant was that the employees should be able to find ‘meaningand satisfaction in their work… without neglecting efficiency and economic
98results…’ (Gyllenhammar cited in Agurén et al, 1976,pp 5–6; Agurén et al,
1984, p 18). To achieve this, work was organized in independent work teams.
However, the organization around these teams remained rather traditional.
In a paradoxical way, the focus on work organization seems to have counteracted its purpose. Things didn’t get moving until around 1990, when workorganization was no longer viewed as an isolated goal in itself, but was put
in relation to the development of the whole operation.
In several team areas a radical development of the work organization took
place. Work cycles in the assembly task itself expanded to around an hour.
Indirect tasks such as materials supply, quality control and adjustment, wasmerged with the assembly work. Job rotation between the extended balances
was also enhanced. Production and personnel planning were, to a large
extent, delegated to the groups as was part of production engineering. All
this required a considerable competence growth among all employees. The
development during the last years can be seen as another breakthrough foran economically and socially better work organization.
When it comes to organization strategy none of Toyota’s new factories
come even close to the original Kalmar concept. In the assembly work along
the line, work content is limited to one or a few minutes, to be comparedwith the 15–40 minutes which Kalmar had from the beginning, and whichin the last years became around an hour in large parts of the factory. The
indirect work off the line does not compensate for the job fragmentation
along the line. The functional and hierarchical differentiation in the otherparts of the Japanese plants is taken much further, which partly can be
explained by the fact that they are so much larger. Taking Uddevalla into
consideration, it must be said to represent another step ahead compared toKalmar, since the assemblers were able to assemble the entire car (although
only a minority did so).
In terms of production layout, Kyushu and Tahara resemble the original
Kalmar concept through their serial flow divided by buffers. However, inthe last years development in Kalmar proceeded further inasmuch as partsof the factory were equipped with taxi carriers. In connection with this dockassembly returned, this time with (still) more work content. In these areas
production control was decentralized and the buffers placed next to the line,
so that it was possible to use them to restore the sequence between the cars,
when this for various reasons was disrupted within a team area. Together
these measures meant a parallelization of the assembly within each team
area, a step which was also taken by door and engine pre-assembly. The
result was greater work content, autonomy, efficiency, and flexibility. In
terms of production layout, Uddevalla once again represents a step ahead
by its complete parallelization, which made possible assembly not only on
non-moving objects but on entire cars.
99

Toyota’s ambition to develop ergonomically better equipment for handling, assembly, and transports, also resembles the corresponding strive at
the start of the Kalmar plant and the big push in that direction during thelast years. The latter also resulted in that areas earlier under heavy stress
did not cause any new job injuries.
The strive towards a greater work content at the start of the Kalmar plantdiffered from the Fordist personnel strategy. The increasing involvement
and commitment in the last years meant a continuing reorientation. Here,again, Toyota’s strategy in the new plants resembles the original Kalmar
concept. There are, however, no similarities regarding relations between
employees and the company outside of working hours, even though Toyota
now seems to put less emphasis on this condition, so distinctive to theJapanese labour market.
What has just been said can largely also be applied to the change strategy,
which in Kalmar was traditional up to the last years, when possibilities
for a much wider participation from many of the employees were created.
Without the compulsion, which seems to be connected with the Japanese
use of ‘kaizen’, Kalmar got very far in terms of constant improvements. In
this respect, Toyota also seems to have reduced the pressure on employees
to participate.
Such a short comparison with Toyota’s Kyushu and Tahara plants could
easily be misleading. To make up for that, I would like to point out that
there is much indication of the superiority of the Japanese plants concerning
the development of constructions easy to assemble, the successive automation of parts of the assembly, and generally the finding of new solutions in
production engineering.
Volvo’s now resigned president P. G. Gyllenhammar (1991, s 238–42) does
not perceive a contradiction between the Kalmar plant and lean production.
With special regard to the competition with the Japanese car industry hesays that ‘the production philosophy which has grown out of the Kalmar
concept is not a disadvantage’.
The influences between Japan and Volvo form a paradoxical pattern.
Whereas Toyota’s latest factories show notable similarities with the conceptthat Volvo developed in Kalmar in the 1970s, what Volvo now is introducing
in Torslanda resembles the concept that Toyota stood for during the 1980s.
The Volvo management does not seem to understand that the Kalmar plant inmany ways had gone much further in the direction Toyota now is headed.

100References
Agurén, S et al (1976), Volvo Kalmarverken, Rationaliseringsrådet SAF-LO,
Stockholm.
— (1984), Volvo Kalmar revisited: Ten years of experience. Efficiency and participation development council SAF-LO-PTK, Stockholm.
Berggren, C (1993a), The Volvo experience. Alternatives to lean production,
Macmillan, London.
— (1993b), Mästarprestationer eller mardrömsfabriker?, Royal Institute of Technology, Stockholm.
— (1993c), Toward normalization?, Paper presented at the Industrial Relations
Research Association workshop on ‘Industrial transformation and labor relations in Asia’, Boston 3-5.1 1994.
Gyllenhammar, P G (1973), Jag tror på Sverige, Askild&Kärnekull, Stockholm.
— (1977), People at work, Addison-Wesley, Reading, Mass.
— (1991), Även med känsla, Bonniers, Stockhom.
Nomura, M (1993), The end of Toyotism?, Okayama University, Tsushima,
Okayama.
Sandberg, T (1982), Work organization and autonomous groups, Malmö: Liber.
Shinoda, T (1993), Japanese capitalism and ‘Toyotism’ – is it a new model ofpost-Fordism?, University of Ritsumeikan, Kyoto.
Womack, J et al (1990), The machine that changed the world, Rawson Associates,
New York.

101

Part II

The performanceof the Uddevalla plantin a comparative perspective

The fate of the branch plants– performance versus power
Christian Berggren

Volvo has become a byword for advanced thinking in work design, in
new forms of production, in collaborative implementation, in worker
participation and satisfaction … When practitioners, be they management, trade union or academic have to give shape to possible new futures, alternatives to Taylorism or examples of best practice then it is tothe plants such as Vara, Kalmar and later Uddevalla that they turn.
Peter Cressey (1993), Kalmar and Uddevalla: The demise of Volvo asa European Icon.
Kalmar and Uddevalla are the best known symbols of the Volvo trajectoryin production design and work organization in the 1970s and 1980s. This
chapter will evaluate their performance, scrutinize the official justificationof the closure decision and discuss factors more fundamental in this context
than assembly hours – product policy and organizational power. Finally,
the experience of Uddevalla will be analysed in the context of learning.
Developments at the plant are confronted with the recurring notion thatstandardized and highly fragmented job structures are a precondition fororganizational learning in labour-intensive production.1
The Kalmar plant, which began production in 1974, represented the firstimportant step in the search for viable alternatives to the assembly line andits Taylorized jobs. Its most noticeable innovation was the individuallycontrolled carriers, which replaced the mechanically paced conveyor belt.
The total assembly was divided into twenty different sections, and withinsome of these sections, it was possible to dock the carriers into parallel
stations, thus increasing the work cycle to 20–30 minutes. With the help ofbuffers between adjacent sections, workers had some opportunity to vary
their work pace independently of the main flow. In addition, the carrier technology made ergonomic changes possible, through so-called tilting of thecar bodies. One of the purposes of the plant design and division of the line
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into distinct sections was to foster in responsibility and team spirit. Kalmar
was a small operation, with a capacity of 30,000 cars per year per shift; but
Volvo planned to build another factory of the same type in the United Stateswith the capacity to make 100,000 cars a year. Three years after Kalmar
started production, Volvo’s profits fell drastically. As a result, plans for the
U.S. plant were shelved and the climate within Volvo became much moreconservative. By this time, Kalmar had been broken in with disappointing
results. Workers appreciated the team-based work organization, the possibility of varying the work pace, and the physical work environment. However,assembly time per vehicle was the same as at the main plant, Torslanda in
Gothenburg, and adjustment work was as extensive. As a result of Volvo’s
problems in the late 1970s, a comprehensive rationalization programme
was launched at Kalmar. In 1984, ten years after the factory had opened,
Kalmar’s performance was much better. Assembly hours per car were 25
per cent lower than at Torslanda (a difference which has since persisted),
quality was high, and overhead costs were very competitive.
A short time after this evaluation the planning of the Uddevalla plant
started. Unemployment was again very low in Sweden (less than 3 per cent)and automakers had a lot of difficulties in recruiting and keeping workers
in traditional industrial jobs. At the same time, the increased demands forflexibility and high quality made firms dependent on a stable and committed
workforce. Creating new production systems adapted to human demands
was seen as a strategic necessity for coping with personnel problems during
the 1990s. In this situation, the influence of the unions in the companies’
planning and investment decisions also increased. The result was the boldnew design of the Uddevalla plant, a radical continuation of the process
started 15 years earlier.

Workers’ utopia or neo-craft cul-de-sac?
The plant immediately aroused a lot of international interest and soon
became the host of impressed visitors. Some very influential automotive
researchers were deeply suspicious, however. In the book The Machine That
Changed The World Womack, Roos and Jones from Massachusetts Instituteof Technology (1990:101) disparaged both Kalmar and Uddevalla as ‘neocraft nostalgia’, arguing that ‘… productivity of the Uddevalla system isalmost certain to be uncompetitive even with mass production, much lesslean production’. In an interview in The New York Times (July 7, 1991)
Womack’s criticism was even more trenchant, asserting that ‘Uddevalla is
not in the ballpark … It’s not even in the outer parking lot of the stadium.
Frankly it’s a dead horse’.
The decision to close the two plants raises an important question. Was
106the Volvo trajectory a cul-de-sac, a temporary adjustment to an ‘abnormal’labour market (no unemployment, strong unions, comprehensive social
welfare), easily dispensed of in these Swedish times of capitalist normalization? Were the two innovative assembly plants just noble experiments,
doomed to fail in the competition of the 1990s? The answer is no. In terms
of productive and commercial performance Uddevalla displayed a remarkable potential and in terms of engineering competence and quality Kalmar
was an irrefutable success, certainly one of the European auto plants withthe best quality record. This chapter will focus on Uddevalla, the mostcontroversial of the two plants, but I will also summarize Kalmar’s achievements. In October 1992, Uddevalla was thoroughly evaluated against theline assembly plant Torslanda in Gothenburg. By this time, the Uddevalla
plant had only been in operation for three years, but nonetheless, matched
the Gothenburg plant’s productivity, surpassed its quality and emerged as
Volvo’ internal benchmark in terms of market responsiveness and customer
orientation. Let me first summarize the achievements of the plant, before
they are presented in detail.
1.

2.

3.

4.

Productivity: A 50 per cent improvement 1990–1992.
After a slow start Uddevalla took off and in 1991 reached the level ofthe Gothenburg mass-production plant. From the last quarter of 1990 to
the last quarter of 1992 Uddevalla cut the assembly time at an averagerate of one hour per month.
Quality: A clear edge in customer satisfaction.
In the early 1990s, both Gothenburg and Uddevalla improved their
quality records considerably, but according to American customer
evaluations, surveyed by J D Power, Uddevalla was clearly ahead of
Gothenburg. In the autumn of 1992, the rate of improvement was particularly rapid at Uddevalla.
High flexibility:50 per cent lower tool and training costs at the annualmodel changes.
At Uddevalla, flexible production design and highly skilled teams rendered the yearly model conversions much easier than at line assemblyplants. For the three years 1990-1992 this resulted in very substantial
cost savings in both tools and training. The time required to return tonormal productivity after an annual model change was half the timeneeded on the lines at the Gothenburg plant.
Combining customer order assembly and short delivery times.
In the autumn of 1992, Uddevalla started building all cars for Europe
according to customer orders only. As a result, dealers could offer customers individually specified cars within 4 weeks, instead of persuading
buyers to accept prespecified ‘plan cars’. The total lead-time was cut
from two months in 1991 to one month in 1992, and further reductions
107

were planned for 1993. The savings in finished product stock equaled
the value of the entire assembly time! Moreover, since ‘plan cars’ mustbe heavily discounted in flat markets, every custom ordered car also
implied a significant commercial savings. Many of these points fly inthe face of conventional wisdom, so let me explain them somewhat
more carefully.

Rapid productivity improvement
One of the most widespread performance indicators in car production isassembly hours, in spite of the fact that assembly only represents a minor
fraction of total manufacturing costs. During its first year of operation final
assembly time per car at Uddevalla averaged 70 hours, including materials
handling, maintenance and other indirect activities, not including salaried
positions. This high level was anticipated, however, since the plant focusedon training new teams, expanding its product range and bringing new assembly shops on stream. Late in 1990 Uddevalla started to improve rapidly.
The last quarter of that year the plant scored 59 hours/car, and from thenon assembly time per car was reduced by one hour every month on average. The second half of October 1992 the figure was down to 36 hours!
(It must be noted that this and subsequent figures are not comparable withthe assembly time that MIT researcher John Krafcik and his colleagues
calculated at various car plants. The aim of the MIT study was to compare
data across plants and countries. Thus they only registered a standardized
sub-sample of assembly activities at each plant and did not compute total
assembly times.)
According to the MIT-study, Uddevalla would never reach the productivityof a line plant. Nevertheless, in mid-1991 Uddevalla’s performance equalled
Gothenburg’s assembly line. Admittedly, at this time the Gothenburg plant
was not very productive in European terms, a main reason being the drastic
decline in Volvo’s sales and volumes. As a result, the plant was operating ona very low capacity level. Inspired by Japanese methods, a new management
eliminated the overstaffing and launched a comprehensive productivity programme, that strongly focussed on process quality. As a result, Gothenburg
overtook Uddevalla in early 1992, but in the second half of that year, Uddevalla accelerated. In the month prior to the shut-down decision, the twoplants competed neck-to-neck, but Uddevalla had a steeper learning curve.
Interestingly, within Uddevalla there were no significant differences between assembly teams working in long cycles (1.5 hours) and teams working
in very long cycles (3.5 hours). Shorter cycle times were somewhat easierto learn, but the assembly task in these teams required a more elaborate
form of group interaction. In fact, one of the most consistently productive
108

units was a mini-group of two female assemblers who, working as a pair
produced one car per day on regular basis.
Uddevalla had abundant potential for further rapid improvement. None ofits managers doubted that the plant could reach the target of 25 hours per
car in the middle of 1993. In fact, most were absolutely confident that Uddevalla would beat the line plants in straightforward productivity terms. Ifthey were correct in their assumptions, Uddevalla’s critics would obviously
be proven wrong. I will return to the issue of productivity performance andorganizational learning later in this chapter.

A quality edge
Quality is the second general performance measure of Volvo’s assembly
operations. In 1991, Volvo’s three assembly plants in Sweden were roughly
equal. Kalmar was the first plant to introduce and train all operators in arigourous system for quality assurance, from error detection, problem analysis and application of countermeasures, to follow up. Originally, Volvo had
expected Uddevalla’s highly skilled and motivated teams to attain superior
quality more or less automatically. Only in 1992, a new plant management
started to approach quality in the same rigorous way as Kalmar. New forms ofteam-based self-inspection was introduced, for example that workers should
always check each other’s work when shifting positions within the teams.
The result was a marked enhancement of the plant’s quality performance.
According to surveys carried out by J D Power for the model year of 1992,
Uddevalla built cars of the 900-model had 124 complaints per 100 vehicles
within ninety days of purchase, whereas Gothenburg cars scored 144. The
average for European cars in the United States was 158 for this year. During
1992, Volvo improved its quality ratings markedly. When the figures forthe model year of 1993 were released from J D Power, Volvo had advanced
more than any other automaker. The 940-model improved from 132 to 87
complaints – with the the two small-scale plants, Uddevalla and Kalmar,
improving most rapidly of all.

Superior flexibility in changing models
High flexibility was a third import advantage of Uddevalla’s parallel teamassembly and broad worker competence. One indication was the low effort
needed to introduce annual model changes at the plant. The three modelchanges between 1990–1992 were introduced at lower costs per car, between
25% and 50%, compared with the Gothenburg plant. Uddevalla needed lessinvestment in tools and training, and returned to normal productivity inonly half the time Torslanda did after a model change. Normally, Volvo’s
109

annual changes are quite insignificant. That was the case in 1992. That year
the best Uddevalla teams needed to build only 2–3 cars (approximately oneday) before resuming 95 per cent of the normal production pace. The least
efficient teams needed 5–6 cars, or two days. One of the advantages of theparallel team system was that support staff could concentrate solely on helping those teams that were in most need. On the line at the Gothenburg plant,
there is normally one day’s gap between the old and new annual models.
During that time industrial engineers and subforemen relocate materials,
adjust equipment and provide new tools. Assembly workers are informed
about the changes, but seldom participate very actively. By contrast, theassembly teams at Uddevalla themselves implemented the changes, theystudied the new instructions and rearranged their workplaces. The system
of materials provision, the kits, were by themselves an important means to
help assemblers learn the new annual model.
The head of the plant’s industrial engineering department emphaticallystressed:It’s a myth that our parallel and long-cycled assembly requires more
tools and longer time for training when changes are introduced. Our costfor training and preparing people for new models has been only half thatof the Gothenburg plant. The main reason is the enormous competence
and skills of the assembly workers and materials handlers.
Parallel assembly at Uddevalla meant that cars were built in many places
simultaneously. Before the plant came on stream, it was generally expectedthat this would result in considerably higher tool costs. An evaluation of themodel changes between 1990–92 showed that the opposite was true. One
reason was the plant’s deliberate low-tech strategy for the assembly process.
Simple, flexible tools were substituted for complex dedicated equipment.
As a result, existing tools could be modified instead of replaced when a
new model year commenced. At Volvo’s other plants, process engineers
had always accepted the product designers assembly specifications. At Uddevalla, engineers required designers to standardize and modify technicalrequirements in order to minimize the need for extra tools. In that way theannual model change became a much more interactive process than it used
to be, resulting in considerable cost savings.

A car dealer’s dream:customized assembly, short delivery times
In Volvo, as in many other car companies, efforts to improve efficiency andproductivity have focussed on the industrial system, the components supply,
and above all, the assembly hours. Much less attention has been devoted to110the efficiency in the commercial and distributional systems. The MIT book
The Machine That Changed The World is a good example of this narrowproduction focus. The book abounds in assembly hour statistics from various plants, but there is not one statistic which compares lead times from
customer order to delivery between different manufacturers. At Uddevalla,
there was an early awareness of the importance of fostering close contacts
with the market. Volvo’s system for plant evaluation, however, concentrated
narrowly on parameters such as assembly hours and quality indices. In thecompany’s strongly departmentalized organization, production was strictly
separated from product design and marketing. Uddevalla had to focus on
improving its assembly performance, and nothing else. In 1991, though,when productivity had reached the Gothenburg standard, it was possible towiden the focus. A large sample of cars was selected for a detailed studyof lead times, which revealed that if a customer ordered a particular car,the average time from order to delivery in Sweden was two months, with arange from one to four months. Many factors served to increase the delivery
times: the rigid planning system, the functional specialization with high barriers between production and marketing divisions, and the complex productstructure with its high option content. At this time, only 20 per cent of Uddevalla’s volume was custom-ordered. The overwhelming majority of thecars were assembled according to the company’s central scheduling system.
For these plan cars total cycle time was even worse – on average they took
twelve weeks after production to be sold and delivered. The depressed auto
market, where dealers had to work hard to get the cars moving, contributed
to the excessive lead times. This situation made it all the more importantfor Volvo to overhaul its ordering and delivery system.
Uddevalla took the lead and established direct communication with all
Swedish dealers. The plant also pioneered direct deliveries from the factory
to selected dealers. Soon Volvo’s car plants in Gothenburg and Ghent also
started to reorganize their relations with dealers and to compress delivery
times. Beginning on October 1, 1992, Uddevalla took another and mostimportant step. The plant abandoned the central scheduling system thatspecified the car mix seven weeks prior to production. Instead Uddevalla
started to assemble all cars for the Swedish market on customer orders
only. One month later this principle was extended to the whole European
market. Uddevalla told dealers in Europe that the plant would not promise
any specific delivery times for cars that had been scheduled by the central
planning system, on the basis of market forecasts. By contrast, they would
guarantee delivery within four weeks of any custom-ordered car. Basically,
Volvo Uddevalla now did the same as Toyota rather unsuccessfully had
tried to initiate ten years earlier, when its sales subsidiary was merged withthe manufacturing arm, and direct links between sales people and factory111scheduling was established. Uddevalla planners had to do an enormous
amount of manual rescheduling to adapt materials supply and production
planning to the customer orders, but did so happily since the response from
European importers was overwhelming.
The customer orientation at Uddevalla built on the strength of its flexible
production system. To remain productive, the many parallel teams and materials handlers did not need any specific sequencing of cars with different option contents (for example, every second car a turbo, every third an automatictransmission, every fourth a 16-valve engine, etc.). Rather, the introductionof customer order-planning provided an additional motivational advantage
for the teams. Now the teams knew that the cars were not to be stored in awarehouse somewhere, but delivered directly to individual customers. The
plant took a pride in taking on difficult requests. Once, for example, theplant received an enquiry from a journalist living in Britain. He was goingto Stockholm in one week and wanted a car with highly unusual equipment
to be delivered at the time of his arrival. The marketing department in
Gothenburg considered the request impossible, but Uddevalla and the local
dealer managed to get the car ready in less than one week. By contrast toGothenburg, such requests were not seen as ‘disturbances’ but as inspiring
challenges by white collar staff as well as assembly workers.
In 1991, when the programme to compress lead times started, 20 per centof the assembled cars were custom-ordered and the rest were plan cars. In
November 1992, on the eve of the shutdown decision, 70 per cent of the cars
were specified by individual customers. The corresponding figure at Volvo
Gothenburg was 35 per cent. In one year, Uddevalla had reduced the total
lead time by half, from 60 to 30 days. The plan was to cut it by half again,
to 14 days, in the next few years. The move to custom-order assembly was
Uddevalla’s single most important economic contribution. By ceasing tobuild cars scheduled by the central planning system, the plant reduced thetime from factory to customer by ten weeks (from twelve to two weeks) andfurther improvements were in the pipeline. With an estimated capital costof 100 kronor per car and day, this saving matched the total cost of final
assembly (35 hours times 200 kronor an hour)! Moreover, in the depressedmarket of the early 1990s, Volvo dealers normally had to grant customers
a discount of 3000–4000 kronor on every ‘plan car’. By contrast, customordered cars could be sold at the full price.
All in all, the change to customer ordered assembly with short delivery
times, represented cost savings of a magnitude unparalleled by any programme directed at reducing assembly hours, the favourite object of media
interest and managerial effort. The beauty of Uddevalla’s production system
was its ability to offer customer order assembly and short delivery times
without compromising productivity and quality. To quote one of its manag112

ers: ‘This plant was poised to become the most efficient plant for customer
order assembly in the world!’
Uddevalla’s aggressive move to custom-order assembly forced the Gothenburg plant to rethink its traditional ways of relating to the market. Since
October 1992, significant progress has been made in Gothenburg, increasing
the share of customer ordered cars of the plant’s output. In a truly customized system, however, work load will be very uneven. A stream of highly
specified and labour intensive cars might be succeeded in unpredictableways by cars which have a low option content. Such variations is difficult
to accept at a conventional plant, lean or not. In order to maintain a steadywork flow on the long assembly lines, it is vital to sequence and even out
production. Thus, it is very difficult for the Gothenburg plant to accomplish
a complete custom-order assembly in the way Uddevalla did, without seriously impeding productivity and jeopardizing its targets for reduction ofassembly hours.
The difference between Uddevalla and Gothenburg did not only pertain to
the degree, but also to the span of customization. When planners at Torslanda
started to customize its production schedules, they were content to compress
the time elapsed from the reception of the order to the shipment to the dealer.
For car buyers, and for the company’s cash flow, however, it is the total cycle
time, from customer order to customer delivery that makes a difference. In
contrast to Torslanda, Uddevalla set out to measure, monitor and integrate
this total process. Most Volvo cars are sold with a lot of ‘extras’, for example radios, telephones, tow hooks, etc., that are installed by the dealers.
That helps them keep workshops busy and provides an additional revenue
stream. To customers, though, this division of labour between plants anddealers means high costs, less reliable quality and extra delays. Uddevalla’s
flexible assembly would have no problem producing fully equipped cars,
including all features traditionally handled by dealers. Such an integration
would result in substantial advantages: lower installation cost, reduced
handling and warehousing, higher and more consistent quality, shorter leadtimes. For example, it is much more efficient to mount a tow hook, including necessary wire connections, when the car is being assembled, than it
is to do it after-wards when several components must first be dismantled.
This dismantling entails the risk of damaging other components, and quality procedures in dealer shops are seldom of the same calibre as the factory
standards. According to a preliminary study, Uddevalla could install the tow
hook in a third of the time taken by the dealer shops, and the reduction of
the lead time was equally impressive. Beginning in mid-1993, Uddevalla’s
market and delivery planners had advanced plans to integrate almost all of
this traditional dealer installations in the factory process, and as a result beable to produce cars that could be delivered directly to the customers. At
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Torslanda, there were no such plans – for good reasons. Its assembly lines
could not cope with additional variation.

A noble experiment that did not failIn 1989, management had viewed Uddevalla as a strategic investment tomeet the demanding labour market of the 1990s. Three years later these
considerations were forgotten. Sweden was in deep recession and unemployment on a sharp rise. In the midst of down-sizing, Volvo had no needto recruit new workers and no problems with labour turnover, not even in
Gothenburg. Uddevalla’s achievements in humanizing assembly work, inconstructing new tools and developing new forms of work, did not play anyrole for the Volvo managers who decided to lay the plant idle. Unfortunately,that testifies to a very short-term perspective in the present Volvo leadership.
When the economy picks up again Uddevalla’s new design and organization would have been very competitive in terms of personnel costs. At theGothenburg plant, on the other hand, the current labour stability is deceptive. According to 30 years of experience, labour turnover at this plant willrise as soon as unemployment falls. This will not only increase personnel
costs, but also jeopardize the future of the programmes for continuous productivity and quality improvement at the plant. The enhanced performanceat Gothenburg remains fragile, since none of the fundamental problems ofassembly work have been solved.
In the Swedish debate, Uddevalla’s performance has been establishedbeyond doubt. The plant was not a noble experiment that failed. Quite thecontrary, it was a fundamentally viable model. During the autumn of 1992,
a new plant management and managerial structure resulted in an accelerated
pace of improvements. If the plant had been allowed to operate another year,
it would have been very difficult to close it.
When the plant began operation, it was greeted with high expectations
as well as strong apprehensions. Some of the expectations were not realized, but in most cases, the results were beyond all expectations. In Table
1, expectations/apprehensions are summarized and compared with the realoutcomes.

Kalmar – the number 1 plant
All three Swedish plants improved rapidly from 1990 to 1992. Comparedwith Gothenburg, Uddevalla had a clear edge, but Kalmar was the mostcompetitive. The plant had been in operation since 1974 and had been able tofine-tune its technical system, develop a high level of technical competence
and a genuinely participative management. In 1989, a broad programme for114

continuous process improvement was launched. When the new 900-model
was introduced the following year, there were so many problems that management retreated to a traditional command-and-control mood, declareda state of emergency and centralized all decision-making. Soon Kalmar
was back on track, however, and by 1993 the programme had become very
effective. There were teams for process improvement at all levels in theorganization, including the management committee. The teams themselves
were responsible for setting their own targets, design and implement actionplans, evaluate the results, and take corrective actions. In two years someteams reduced the number of defects from one per car to 0.02 per car. Fromearly 1991 to early 1993, the plant reduced the average number of defects per
car by 50 per cent. The corresponding improvement rate in Gothenburg was
25 per cent. According to J D Power’s statistics for the year model of 1993,
Kalmar cars of the 940-model reported only 54 complaints per 100 cars.
That was close to the Lexus level (the figures are not exactly comparable,
since Lexus owners are presumably more demanding and picky). 940-carsfrom Gothenburg scored 90 complaints per 100 automobiles.
Kalmar’s high in-process quality resulted in superior productivity, too.
The plant produced both the 940-model and the highly specified 960-model.
No separate assembly figures for the two models have been released, but according to informed estimates, Kalmar needed 5 assembly hours less for the
940-model than Gothenburg. Another advantage of Kalmar was the technicalcompetence of its engineers and operators and their ability to cooperate withproduct engineers from Volvo’s design departments in a very productive way.
The central Gothenburg department that was responsible for preparing newmodels for manufacturing, collaborated with all Volvo’s assembly plants,
Gothenburg, Uddevalla, Kalmar as well as Ghent (Belgium) and Halifax(Canada). According to engineers at this department, Kalmar was the bestof these five plants, by all measures. A representative comment is the following quote (from interviews in April 1993):
Kalmar is superior. They are outstanding. Their entire attitude is quite
wonderful. Nothing is impossible, only a bit difficult maybe. There is
an atmosphere that is hard to describe. They always want to improveand become better. When we tested new complicated components lastsummer, everybody participated and supported us. Technicians, maintenance people, operators, everybody displayed the same commitment.
Most of the factors listed above were recognized by top management (albeit
too late). That only means that the initial question remains, now even morepuzzling. Why did Volvo decide to shut such productive operations?

115

Table 1.
Volvo Uddevalla. Forecasts and results
Expectations / apprehensions

Outcomes

It will never meet production
targets. High efficiency requires
an assembly line.

On par with the line in Gothenburg
in 1991.

20 minutes cycle time is theabsolute maximum for highproductivity and quality

Whole car assemblers built complete
cars in 10 hours.

Impossible to sustain continuous improvement because of thelack of minute standardization.

A dream plant for Kaizen.
An enormous response in the assembly teams when given adequate
engineering support

Absenteeism much lower thanat a conventional plant.

Absenteeism lower than in
Gothenburg but the difference notvery significant.

Very stable personnel.

High labour turnover the first year.
In 1992 only 4 per cent, but then adeep recession.

Superior quality because of highUnstable quality in the first years.
motivation and effective feedback. World class quality also requires
rigorous routines and total management commitment.
Expensive to change models
since every team must have acomplete set of tools.

25 per cent less tooling cost per carcompared with Gothenburg.

Expensive to change models
60 per cent less training cost per car
since the long cycle times willcompared with Gothenburg.
necessitate excessive training costs.

The spurious cost savings
Volvo’s official answer referred to depressed markets, heavy losses and low
capacity utilization. Indeed, the automaker was in deep trouble on its mainmarkets. In only three years, from 1989 to 1992, Volvo’s total sales of largecars (the 200, 700/900 and the new 800 series) dropped by 30 per cent, from
280,000 to 200,000. The Swedish market, Volvo’s second most important,virtually collapsed. Total automobile registrations plummeted from 344,000
116

in 1988 to 155,000 in 1992, the worst figure in more than 30 years. 1993
was projected to become even worse. For two years, the result was in thered. In 1992, the Group’s operating loss was approximately 300 million dollars of which Volvo Car accounted for more than half. Management became
preoccupied with immediate measures to reduce capacity and cut costs. In
this situation of disastrous capacity utilization, Uddevalla’s and Kalmar’s
character of being small and incomplete plants (only final assembly, no bodyor paint shops), was a fatal disadvantage. According to the official figure,presented in 1992, Volvo Car will save 350 million kronor (45 million dollars) annually by consolidating its Swedish operations in Gothenburg. This
figure has been seriously disputed, however, and for good reasons. I will
look at the data in more detail before proceeding to a more important issue– corporate politics and power.
First, 100 million kronor of the total 350 million is a fictitious capitalsaving, resulting from accounting transactions. Instead of annual depreciations, the investments at Uddevalla and Kalmar are written off at one stroke
as part of the restructuring costs for the fiscal year 1992. This is of course
not a real saving, but it is politically important for the new CEO, Sören
Gyll, who was appointed in 1992. In this way he was able to demonstrate
improvements and claim that he has turned the company around.
Second, Volvo argues that the company will save 250 million kronor in operating costs by closing down the two small plants. I will focus on Uddevalla
here (The calculated savings of closing Kalmar, the most productive of all
Swedish plants, are even more spurious). One of the entries on the company’s
list of cost savings is the expected staff rationalization. By consolidatingproduction in Gothenburg, all staff positions at Uddevalla are eliminated.
In theory, costs are reduced by 30–35 million kronor. This estimation assumes that there will be no increase in salaried positions in Gothenburg asa result of the added volume. Unfortunately, this presumption is impossible
to check after the fact. There may be excess overheads in Gothenburg before
the transferral, or new staff positions that are in fact volume-induced may
be created under new names or motivated by model changes.
Even more dubious are the ways in which the Gothenburg economists treat
the anticipated costs in plant and equipment when the 900 series will be
replaced by a new platform in 1997–98. This future investment in dedicatedequipment is counted backwards, put on top of Uddevalla’s operating costs
in 1992 and, hey presto, another 15 million kronor is saved by closing theplant now. The obvious counter-argument is of course that the plant could
be operated for another five years, and then closed down in 1997 instead,without incurring any of these costs.
Uddevalla is a pure final assembly plant. This structure was a decisive
political disadvantage in the power game preceding the closure decision.
117

The fact that car bodies had to be shipped 100 kilometers from Gothenburg’s
paint shop was cited as a very significant cost penalty for Uddevalla. In thefirst calculations it was estimated to be 25 million kronor per year. But if
the total logistics of Uddevalla is analyzed, the costs are very close to thoseat the Gothenburg plant. The additional expense of shipping car bodies
was to a large extent compensated for by less expensive deliveries of otherparts, since Uddevalla was much closer than Gothenburg to several Swedish suppliers of volume components, such as bumpers and seats. As soon as
the new paint shop in Gothenburg had solved its breaking-in problems andcould deliver bodies at an even pace, the cost difference would decrease
even further. If Uddevalla was allowed to deliver one third of its volume
direct to the dealers, its total logistical cost disadvantage compared with
Gothenburg would only be between 4 and 7 million kronor per annum, lessthan 1 milion dollars.
In this way, basically all of the entries on the list of calculated cost savings
could be questioned. Closing the production warehouse in Uddevalla, forexample, was expected to reduce costs by approximately 10 million kronor
yearly. The assumption was that the production warehouse in Gothenburg
would remain the same, but this was by no means proven. Further, thistheoretical reduction is not compared with the very real reduction in finishedproduct stock Uddevalla could achieve by building fully equipped custom
made cars. That omission is symptomatic of the whole exercise. Only thecosts and none of the revenues of operating Uddevalla or Kalmar are listed.
Uddevalla’s capability to assemble specialty vehicles in a very efficient way
was not mentioned, and Kalmar’s quality advantage was neutralized by theassumption that Gothenburg would be able to produce the same quality.
The Uddevalla participants in the company’s study team presented avery different calculation. Accordingly, Volvo would save only 50 million
kronor per annum by closing the plant. This exercise did not include any
revenues because of the particular advantages of Uddevalla. Irrespective of
the exact evaluation of individual items in these exercises it is clear that theoperational savings of shutting the plant are insignificant. The plot thickens– why did Volvo make this decision?

An unholy labour-management alliance
Towards the end of the 1980s, when sales had already started to fall, Volvo
expanded production capacity in Belgium and commissioned the new plantin Uddevalla. Theoretically the two plants in Ghent and Gothenburg alone
have the capacity of producing 300,000 cars, which is 50 percent in excess
of current sales. In 1992, the Volvo executive came under increasing pressure
from the then company’s major shareholder, the French state-owned Renault
118corporation. The Renault managers demanded that Volvo implement radical
measures to stem the red ink and eliminate excess capacity. The Renault
CEO, Louis Schweitzer, publicly criticized Volvo’s production structure
in general and its small-scale plants in particular. Compared with Volvo’s
option range, Renault’s best selling Clio is a much more standardized car
concept, relying on tightly scheduled mass-production plants. Renault managers could see no particular advantage in Uddevalla’s flexible capabilityof building highly individualized cars. The pressure from Renault boosted
the position of a strong traditionalist faction within Volvo. Those managers strongly believed in economies of scale and had proposed the closureof the smaller Swedish plants years before. In the internecine struggle forsurvival between the Swedish plants, the powerful unions in Gothenburg
sided decisively with this management faction to save local jobs, at the expense of the branch plants. From 1988, total employment at the Torslanda
works had been reduced from 10,000 to 5,500 and its labour organizations
were not prepared to take any more. Only a few years earlier the Swedish
Metal Workers’ Union had been heavily involved in the development of the
Uddevalla concept. The plant was seen as a model of labour-management
cooperation and a proof that the Metal Workers’ demand for a fundamental
renewal of manufacturing was not wishful thinking. At two consecutive
congresses this was the main policy line, spelt out in several documents
advocating a ‘Solidaristic work policy’ (see ‘Rewarding Work’, Stockholm1987). At the time of the show-down within Volvo all this union commitment
came to naught. The Gothenburg unions were not interested in defending
any innovative and humanized jobs, if they were not available to its own
members in Gothenburg. The union consultant that was involved reported
to the Gothenburg union and persuaded other local unions within the Volvo
Group that Kalmar and Uddevalla had to be laid idle. At the decisive meeting, the labour representatives on Volvo’s board supported the management
decision to close Uddevalla and Kalmar!
Volvo’s president, P. G. Gyllenhammar, was conspicuously absent at thepress conference announcing the decision. There were many indications thathe opposed it. Historically he has played an important role as an advocateof ‘humanistic manufacturing’. His overall impact on Volvo was highly
ambiguous, however. While promoting work reforms and decentralization of
authority to the shop-floor his own management style became increasingly
elitist and autocratic, thereby alienating the most able senior executives.
As a result, Volvo’s top management team was weak in terms of industry
experience and product expertise; there was a conspicuous absence of ‘carguys’ in the leading echelons. Gyllenhammar’s penchant for grand deals,
acquisitions, mergers and far-flung diversification (to energy, drugs and foodbusinesses), diverted managerial attention away from the core business and119created illusions that Volvo could survive without continuously up-grading
process and product. Despite his lack of detailed knowledge of the auto
business, Gyllenhammar repeatedly interfered with the sensitive product development, adding extra delay to an already inefficient process. In 1992, his
position had been seriously undermined because of a recent strategic failure,
the aborted merger with a Swedish state-owned food company, Procordia.
This gave the new CEO, Sören Gyll, a strong position. To Gyll, Volvo’s
production structure was a matter of a very simple logic not warranting close
examination; one big consolidated plant must be better than one big plant
plus two small plants. When Gyll visited Uddevalla, shortly before the closing was announced, he was genuinely impressed by the plant’s productivity
improvement, as well as its responsiveness to customer demands and dealer
requests. But his conclusion was: ‘Thank you, you have done a damn goodjob. Now Gothenburg will have to do the same.’ That comment summarizes
Uddevalla’s predicament. First the plant had to prove its performance andmatch Gothenburg beyond any doubt. Secondly, when Uddevalla took thelead and developed a number of innovative features, management took for
granted that Gothenburg could do the same.
The crucial problem: new plant, old cars
Volvo’s fundamental problem was not oversupply of capacity, but undersupply of new models. The 850 model, introduced in Europe in 1991 and in
the US one year later, is a high-performance family car that offers a numberof new safety features. The problem was that Volvo needed ten years forthe development process. After the introduction of the sedan, Volvo had
to spend another two years to get the station wagon ready for the market.
When General Motors launched its Saturn operation, this venture combined
a green-field production site, an innovative manufacturing system, andmost importantly, a brand new product line. By contrast, Uddevalla had tostart with an eight year old product with no relief in sight for another eight
years! (The 800 cars were built in Belgium). This mismatch sealed the fateof the plant.

Uddevalla and NUMMI:
individual versus organizational learning?
After this overview of Uddevalla’s achievements and the reasons for the
closure, let us now analyse its capacity for learning in more detail. Paul
Adler and Robert Cole have argued that Uddevalla was not in ‘striking
difference’ of the productivity of Toyota’s Californian joint-venture with
General Motors, NUMMI (New United Motor Manufacturing Inc.). This
alleged performance gap is attributed to the Swedish plant’s emphasis on120

individual, as opposed to organizational, learning. Workers at Uddevalla,
Adler/Cole contend, lacked both the motives and the mechanisms for focusing and capturing ‘the kinds of microscopic kaizen opportunities that drive
NUMMI performance’ (Adler and Cole 1993: 89). Now, if we want to analyse organizational learning, it is essential to distinguish between absoluteperformance and rate of improvement. Adler and Cole are quite correct when
they report that the NUMMI plant consumes much less assembly hours tobuild a car than Uddevalla, or any other Volvo plant. The problem is thenext step, their attempt to establish a direct link between this performance
gap and the capabilities of organizational learning at the two plants. As
emphasized by Williams et. al. (1992), it is very difficult to compare productivity data between plants belonging to different companies, producing
different products, using different component suppliers, etc.. The problem
is not to establish the number of assembly hours required, the difficult task
is to interpret the differences. In the case of NUMMI and Uddevalla, theperformance gap is influenced by a number of factors outside the controlof the final assembly process.
First, there is an important difference in product characteristics and product manufacturability. NUMMI workers would certainly appear much lessproductive if they had to assemble Volvo cars.
Second, the quality of the components supplied are by no means the same.
This is not only true for external deliveries, but also for components supplied
by previous processes within the company. For example, according to internal Volvo studies carried out in 1990, the precision of Volvo’s and Toyota’s
body components differed in a highly significant way (Karlsson, 1991). This,of course, affected productivity in final assembly in a substantial way.
Third, as Williams et. al. have demonstrated, capacity utilization must
be included in any serious comparison of plant productivity. This factor isconsistently overlooked by Womack et.al., and the same holds true for Adler
and Cole. Since Uddevalla only utilized 50 per cent of its one-shift capacity
in 1991–92, whereas NUMMI operated much closer to optimal efficiency,
Volvo’s plant is again at a disadvantage.
Fourth, the two plants are differently positioned on their respective
learning curves. NUMMI adopted a mature, fine-tuned concept, developed
for decades in Japan. Uddevalla on the other hand, had just established its
learning curve for a qualitatively novel concept, and needed much moreexperience for synchronizing assembly design, materials control, worker
training, management organization, information systems and so forth.
For all these reasons, I will concentrate my discussion on Uddevalla’s rateof improvement, rather than its absolute productivity. Figure 1 illustrates
productivity development at the plant from January to November 1992, as
measured by worker hours per car. A look at this graph makes it difficult to121maintain that Uddevalla did not have a significant capacity for systematic,
organizational learning. Moreover, the accelerated productivity progressin the autumn of 1992, was combined with a 20 per cent improvement inquality and with an almost complete conversion to custom-order assembly.
In fact, the plant had never made as broad progress as it did during thisperiod. The reason for this acceleration is very important and highlights aserious flaw in Adler &Cole’s analysis. They emphasis the importance oforganizational learning, but analyse the organization of the two plants in avery simplistic way. Thus, under the heading ‘organizational design’ there
is only a description of the assembly teams at Uddevalla. For students ofmanagement and administration, it should be obvious that plant management and administrative hierarchies have some impact on productivity, andcannot be identified with shop-floor structures.

<Figure 1, Page 122, Part II, Berggren>

Figure 1
By focusing squarely on the shop floor level, Adler and Cole miss an important and paradoxical aspect of the Uddevalla story. The plant’s advanced
structure of assembly teams co-existed for a long time with a basicallytraditional management apparatus, located in an office building, the detached and secluded character of which was underscored by its architecturaldesign. During the first years, the plant developed in spite of this anomaly,
but in early 1992 there were clear signs of stagnation. The plant could not
develop only on the strength of its team systems, a congenial plant organization and managerial structure was urgently needed. In mid-1992, after
a difficult period of soul-searching, a different and very process-orientedorganization was put into place, headed by a new plant manager. He had
122

previously been extremely successful in reorganizing the pilot plants belonging to Volvo’s development and product engineering departments. In
Uddevalla’s new structure there was only two hierarchical levels, shop andplant management.
As before, the assembly and materials shops (on average comprising 70
workers) were organized in teams with rotating, hourly team leaders. They
communicated directly with the shop managers, who in turn made up the bulkof the plant’s new management committee. This participation of first-line
managers in Uddevalla’s central governing body reflected the very strongemphasis on process and process development (including organizational
learning!) in the new organizational design. For the new plant manager, theflattening of the hierarchy was only the first step. Next, he planned to empty
the office building completely, and relocate all managers and administrative
officers to facilities directly adjacent to the production process.
‘Some of the functional heads did not believe me’, he admitted wheninterviewed about this plans, ‘but I intended to move first, and then theothers would have no choice but to follow suit.’
A third aspect of this focus on the process was a series of initiatives toinvolve salaried employees in direct production activities in order to build an
intimate knowledge of manufacturing problem across the plant. To gain firsthand experience, the new managers of the assembly shops started to learn
how to assemble, not complete cars (that was in most cases too daunting atask), but at least fairly complex sub-assemblies. The remaining industrial
engineers, who had been relocated from the office to the assembly andmaterials shops, were expected to spend half of their time building cars in
the assembly teams. To bridge the still existing gap between white and blue
collar workers, the head of manufacturing assigned other managerial staff,
such as accountants and systems analysts, to assist the teams for a shorter
period (normally one week). Initially, this program encountered vehement
opposition, but in the end the reactions were very positive.
These initiatives were no cultural exercises but served well-defined purposes, one of the most important being to develop, adopt and diffuse bestpractice methods plant-wide. Aggressive performance demands provided
the impetus, the presence and participation of the support staff (engineers,etc.), the opportunity to elaborate and spread best-practice procedures
swiftly. As a part of this drive there was a very successful introduction of aplant-wide Kaizen programme in the autumn of 1992. The advanced teamstructure turned out to be ideally suited for sustaining continuous improvement activities. ‘Previously’, team members recalled during interviews in
1993,‘we had only felt the pressure from management to reach our targets.
Now, we really got the support, and did a lot of things, often small improvements, we had never bothered to do before.’123Adler and Cole quite correctly emphasize that both concepts, both NUMMI and Uddevalla, are capable of learning and evolution. Nonetheless, theytend to interpret their impressions from the 1991 visit to Sweden in a very
static way, as the essence of the Uddevalla concept.
‘At Uddevalla’, they write, ‘work teams were left to their own devices.
In the very early days of Uddevalla, managers gave workers the procedure
documents from the Torslanda plant. But these procedures were not very
well designed … as a result, the Uddevalla workers quickly discarded them,and, along with them, the very idea of detailed methods and standards …
this management philosophy sounds more like abandonment than empowerment.’ (Adler and Cole 1993:90). It is true that there was an interregnumat Uddevalla, when the traditional standards did not work and the new
methods had not yet been developed. This interregnum was not an inherent
feature of the Uddevalla concept, however. In fact, at the time when Adler
and Cole visited the plant (mid-1991), this period was coming to a close,
new pro-cedure documents had almost been completed and introduction in
the assembly teams started.
The problem of finding effective means for diffusing methods and practices from high-performance teams to lesser performing units, that is,organizational learning, had been a management preoccupation since thestart of the plant. Thus, Adler and Cole are wrong when they argue that a‘a third assumption built into the Uddevalla approach… is that an increase
in individual learning automatically leads to an increase in organizational
learning. This is a fundamental fallacy’ (1993:92). Uddevalla had no
problem in acknowledging the need for organizational learning, that was
self-evident. The challenge was to organize it in effective and congenial
ways. In 1991 and early 1992, the managerial answer was to strengthen
the hierarchy and expand the role of the technical expertise. The new process-driven organization represented a very different solution, combining
radical decentralization, participative management and strong performanceorientation. The Kaizen programme was one approach to develop and diffuse
best-practices. To further increase the process of knowledge transfer, theplant manager envisioned a comprehensive system of personnel exchange,
within and between assembly shops, and eventually between the assembly
department and the materials handling. According to managers interviewed
as part of my evaluation study, it was only in 1992, three years after its
inauguration, that Uddevalla had acquired an overall organizational form
that fitted the team structure and production design. As the plant’s former
personnel head, a shop manager in the new organization, pointed out in aninterview in April, 1993:
We had to learn so many things from scratch, starting with a process of
un-learning, getting rid of previous conceptions and behavior. Only in124

September 1992 we found an organization suited to our production concept. We also introduced a new programme for leadership development,
which was essential for all shop managers, and the new management
board. The first session of the programme took place in November, on
the same day as the close-down decision was announced.
For all those interested in the development of competitive humanistic manufacturing, the shut-down of Uddevalla is a sad and disheartening event, but
the evaluation of the plant’s performance is a consolation. This ‘experiment’
was not only a bold step in creating humane work, but a potential success ina wide range of performance measures. Rapidly improving productivity andquality was combined with superior flexibility, low cost tooling, unparalleled customer orientation and a unique responsiveness to market demands.
Volvo has abdicated from its pioneering position, but the invaluable experience is there for anyone interested in making use of it.

Note
1.

Some of the arguments have been presented elsewhere (see Berggren, 1993 a;
Berggren and Rehder, 1993). These contributions were based on a preliminary
evaluation, whereas this chapter draws on the comprehensive assessment of
Uddevalla and Kalmar presented in September 1993 (Berggren, 1993b).

125

References
Adler, Paul (1992), ‘The “Learning Bureaucracy”. New United Motor Manufacturing, Inc.’ In Barry Staw and Larry Cummings (eds.), Research in Organizational Behavior, JAI Press, Greenwich, CT.
— (1993), ‘Time-and-Motion Regained’. Harvard Business Review, January–February.
Adler, Paul and Robert Cole (1993). ‘A Tale of Two Plants’. Sloan Management
Review, Spring 1993.
Anomymous (1989), ‘Volvo’s radical new assembly plant: “The death of the assembly line”?’Business Week August 28.
Anonymous (1992), ‘En dumhet att lägga ned Volvo Uddevalla’, Arbetsmiljö No.
13, p 5.
Berggren, Christian (1992), Alternatives to Lean Production. Work Organizationin the Swedish Auto Industry. Cornell ILR Press. Ithaca— (1993a), Ende einer Traumfabrik, Die Mitbestimmung, No. 9— (1993b), Mästarprestationer eller mardrömsfabriker? En utvärdering av Volvos småskaliga monteringsfabriker i Uddevalla och Kalmar. (Excellence ordisaster? An evaluation of Volvo’s assembly plants in Uddevalla and Kalmar.), Royal Institute of Technology, Dept. of Work Science.
Berggren, Christian and Robert Rehder (1993), ‘Uddevalla and Saturn. The Quest
for Competitive and Humanistic Organization.’, Forthcoming in The International Executive.
Chandler, Alfred (1990), Scale and Scope. The Dynamics of Industrial Capitalism., The Belknap Press of Harvard University Press, Cambridge, Mass.
Ekström, Brita-Lena (1993), ‘Kolsvart år för bilbranschen’, Dagens Nyheter,
January 5.
Ellegård, Kajsa, Tomas Engström and Lennart Nilsson (1991), Reforming Industrial Work – Principles and Realities in the Planning of Volvo’s Car Assembly
Plant in Uddevalla., The Swedish Work Environment Fund, Stockholm.
Engström,Tomas, Bertil Johansson and Lars Medbo, (1992), ‘Materialflödesmönster och effektivitet vid serieproduktion – förutsättningar för utveckling av
det svenska monteringsarbetet.’, Arbete människa miljö nr 4, pp 197–208.
Gyllenhammar, Pehr G (1973), Jag tror på Sverige.(I believe in Sweden)., Askild& Kärnekull, Örebro.
Larsson, Gerhard (1992), ‘Volvos överlevnad’, Dagens Industri, October 9.
— (1992), ‘Torslanda-fabriken upp i Europa-toppen’, Dagens Industri, December
4.
Mosén, Gunilla (1993), ‘Miraklet i Uddevalla. Strax före beslutet nådde fabriken
rekordresultat.’, Bohuslänningen, January 19.
New York Times (1991), ‘Edges Fray on Volvo’s Brave New Humanistic World’.,
July 7.
Swedish Metal Workers’ Union (1987), Rewarding work., Stockholm.
Womack, James P., Daniel T. Jones and Daniel Roos (1990), The Machine that
Changed the World., Rawson Associates/MacMillan, New York.

126

Assembly skills, process engineeringand engineering design
An example from the Volvo Uddevalla plant
Henrik Blomgren and Bo Karlson

Introduction
This article discusses the skills possessed by car assembly personnel. Morespecifically, it concentrates on skills which are valuable as input for design
engineers during the product development process.
We will argue that the skill of the assembly personnel in Uddevalla isvaluable for the design engineers. This difference, inherent in the Uddevalla
concept, provides a potential to improve the ease of assembly of the product,a potential which seems to be absent in a traditional assembly concept, likethe one in the Torslanda plant.1

1. An example: the fuel pipe of model 7402
An example of the kind of feed-back that the assemblers in the group based
assembly concept in Uddevalla were able to provide Engineering design,
is a modification of the fuel system that was introduced on the 1992 modelof three of the 740-versions.
During production in the summer of 1991, the Uddevalla assemblers discovered a problem, namely, that one of the fuel pipes after being assembled
would touch the plastic fuel tank, with the risk of subsequently rubbing ahole in it. When the matter was investigated by the design engineers, it turned
out that neither the assemblers, nor the process engineers at the Torslanda
plant were aware of this danger.
Both in Uddevalla and Torslanda, a few components were preassembled
on the fuel tank before the whole unit was assembled in the car. Amongthese components was a short fuel pipe, which was later to be connected toa longer pipe which led the fuel from the tank to the engine. The longer pipe
was assembled on the body of the car. The problem occurred when thesetwo pipes were connected to each other. The coupling had to be securely
127tightened in order to prevent leakage and the torque caused the short pipe tobend until it came to touch the surface of the tank. In order to avoid directcontact, the assemblers had to manually bend the pipe when the coupling
had been tightened. This did not only mean that an additional operation had
to be performed, but it also involved a risk for future cracks developing in
the pipe.
One of Uddevalla’s process engineers analysed the problem and worked
out a temporary solution.3 The solution involved putting a rubber bushingaround the pipe in order to prevent it from touching the tank. He sent the suggestion to the department for engineering change planning in Gothenburg.4
The problem was analysed, and among other things, the design engineers
in Gothenburg contacted the assemblers in Torslanda. As was mentioned
above, the answer they received was that they had not found a solution to
the problem. Indeed, neither the process engineers, nor the assemblers hadeven discovered the problem.
After some persuasion, the process engineer convinced the design engineers from Gothenburg to visit the Uddevalla plant and investigate theproblem on location. The problem was finally accepted and the proposedsolution was immediately introduced on the remaining cars to be produced
as 1991 models, that is, on both the vehicles assembled in Uddevalla and in
Torslanda. For the 1992 model, the design of the coupling between the fuelpipes was modified and the problem was permanently solved.
Why was this problem discovered in Uddevalla but not in Torslanda? Dueto the way the assembly work was organised and the division of individualtasks, it was considerably more likely to be discovered in Uddevalla thanin Torslanda. In Uddevalla, one single person assembled the preassembled
fuel tank in the car, assembled the fuel pipe to the body, and connected andtightened the coupling between the two pipes. This assembler immediately
noticed what happened to the pipe on the fuel tank when the coupling wastightened. In Torslanda, the assembly process was divided into three separate
tasks, performed by three different assemblers. One person preassembled
the pipe on the tank. A second person assembled the fuel pipe to the bodyof the car; while a third person assembled the tank in the car and tightened
the coupling between the two pipes. These operations were carried out atdifferent stations of the assembly line and the third person did not noticewhat happened when the pipes were tightened. Indeed, he/she was not even
instructed or encouraged to check the result of tasks carried out at otherstations.5
It should be made clear that the intention here is not to argue that thisproblem might never have been discovered by an assembler at the Torslanda
plant.6 The main point is instead that it was discovered in Uddevalla and notin Torslanda (or in any other plant). Since we will focus on the potential of128the Uddevalla system, this example provides a platform for a deeper discussion on the links between different assembly concepts and the productdevelopment process.

2. The need for design for assembly
The concepts of ‘Design for assembly’ (DFA) and ‘Design for manufacturing’ (DFM) have been widely discussed during the past years.7 Scholars
as well as practitioners, seem to agree, that it is important and sometimes
even crucial, that products are designed in a way that make them easy andinexpensive to assemble.
Fundamentally, much of the discussion about how to design products
which are easy to assemble is framed as a question of managing interfaces,
most commonly between the functions where the product is designed and thefunctions where it is manufactured and assembled. These interfaces are usually assumed to coincide with organisational boundaries between functional
units, in our case engineering design (Gothenburg), process engineering (atGothenburg, Uddevalla and Torslanda), process engineering (Uddevalla andTorslanda), and assembly (Uddevalla and Torslanda).
Now, let us return to the question raised earlier about why it is important
to design a product, in this case a car, which is easy to assemble. According
to Williams & Haslam (1992), as little as 15 per cent or less of the labour
input in a car is accounted for by the three final manufacturing steps: welding, painting, and final assembly. Consequently, even less is accounted forby final assembly. Why, then is it interesting to put efforts into designing a
car which is easy to assemble?
Clark & Fujimoto (1991), have shown that ‘manufacturing productivity’correlates to both ‘development productivity’ and to short development leadtimes. In other words, a company which is strong in manufacturing and assembly also tends to develop cars cheaply and rapidly. Studies at Volvo Car(Nermo, 1990; Karlson, 1992), and elsewhere (Aniander & Blomgren, 1989;
Karlson, 1989, 1993:b), have demonstrated that late engineering changes
can be very costly, that is, for example if the car can be designed correctlyfrom the beginning, both time and effort will be saved. To return to theexample, if the potential problem with the fuel pipe had been discovered
during the design stage, it would have been cheaper to correct and it would
have created less of a disturbance for the parties involved.

3. Engineering design at Volvo Car
The most common way, at Volvo Car and in general, to develop a productwhich is easy to assemble, is to find ways to feed back knowledge about the129

assembly process to the design engineers during the product development
process. This knowledge is traditionally provided by process engineeringand sometimes, actually rarely according to our experience, from assembly personnel directly. However, the example shows that there is, in the
Uddevalla system, a potential to provide the design engineers with betterfeed-back directly from the assemblers.
The normal feed-back channel when an assembler discovers a way to
improve the product design is to request an engineering change. As was illustrated in the fuel pipe example, this process is formalized, which meansthat the assembler, most commonly through his superior, sends the request to
the plant’s department for process engineering. The request is then analysed
and transmitted to a department in Gothenburg (engineering change planning) were the request is administered. Through this function, the engineering
design department, the process engineers located in Gothenburg, styling andother manufacturing plants etc., become involved in the process of change.
The request is checked from a number of perspectives, not least by other plants
where the same vehicle is produced. An engineering change has to be acceptedby all the parties involved, before it is implemented (see figure 1).

Figure 1. Formal communication channels at Volvo car
This mode of coordination is mainly used ‘after the fact’, for example, tocorrect errors, to improve the product design, or to improve the assembly
process. Of course, many activities are also carried out during the processof developing a new product. Normally however, the assemblers do not takepart at these early stages.
130During the product development process at Volvo Car, special groups are
created to facilitate the coordination of the various functional specialists
involved in developing the different systems of the car.8 These multi-functional groups are usually managed by the head of the engineering design
department responsible for the system in question. The group meets regularly
during the development process and usually consists of personnel from engineering design, styling, procurement, process engineering, and assembly.
The assembly plants are usually represented by one of the process engineers
located in Gothenburg, not by an assembler or a process engineer from oneof the plants. Before a new component or system can be released, it has tobe approved by the departments involved.
Every new car and yearly model of an older car is produced in at least one
try-out-run in the plant where it is going to be assembled. In Uddevalla, one
experienced assembler from each assembly group is selected to participate ina ‘pre-try-out-run’ of the new model, after which they actively participate inworking out the assembly instructions to be used by their colleagues whenfull scale production begins. At the Torslanda plant, a similar role is playedby half a dozen experienced assemblers who represent the whole line. The
difference is that the Uddevalla assemblers have more experience in working
with the complete vehicle than their colleagues in Torslanda.
During the try-out-run, the assemblers are expected to point out thosecomponents which are difficult, or indeed, impossible to assemble. This is
however, really the first time that they are given the opportunity to provide
constructive feed-back on the product design.
The conflicting demands made from all the specialised functions involved
in designing a car are probably especially accentuated when two different
assembly concepts are used side by side in the same company, like in the
Uddevalla and Torslanda plants. Most certainly, the demands on the design
put forward by the different assembly plants differ from each other. Whatis efficient in Uddevalla might not be efficient in Torslanda. The issue isfurther complicated by the difference in relative importance between theplants. Since the Uddevalla plant was much smaller than the Torslanda plant,
one might expect that the demands put forward by the personnel at Torslanda
would carry more weight. To fully utilize a particular assembly concept, thecar should be designed with that in mind. In Volvo’s case, this would havebeen a crucial challenge in order to fully utilize the Uddevalla concept.

4. Assembly work and skills:
differences between Uddevalla and Torslanda
It might seem obvious that the type of work experience a person possesses,
mirrors the task he or she is performing.9 Different tasks give different ex131

periences and hence different skills. This, however, highlights a problem.
With different experiences, based on performing different tasks, different
perceptions of which problems are important and how these should be solved
are formed. In other words, different perspectives are developed.10 A design
engineer for example, views the world as composed of design problems
while, the assembler views it as assembly problems. Karlson (1993:a),discusses among other things, differences in skills, status, and focus of thework between a design engineer and a process engineer at Volvo Car. We
might even go as far as to say that they have developed different languages.
This is the fundamental reason why it is important for design engineers tolearn from the skills of the assemblers.
When saying that it is important that the design engineers cooperate withthe assembly personnel, it is implicitly assumed that the right to identify
and formulate the problems, at least in part, is moved from the designers to
the assemblers. This is of course, not a trivial problem and if this privilege
was moved, assuming that it would be possible, conflicts most certainly
would arise.
The simple fact that different types of work, results in different types ofexperiences poses an interesting question. The assembly work at the Uddevalla plant is unique in the sense that, the individual assemblers workwith whole vehicles, or at least with large parts of the vehicles. As the fuelpipe example shows, the assemblers in Uddevalla possess skills which theircolleagues in Gothenburg lack. However, it probably would be assuming
too much to say that they possess all the skills that the ‘part vehicle assemblers’ possess.
The following ‘theoretical’ example illustrates that assemblers who perform different tasks can provide different feed-back to engineering design.
It is ‘theoretical’ in the sense that, it is designed in order to illustrate thedifferences in skills between the assemblers in Uddevalla and the assemblers
in Torslanda. Of course, this is not to say that it is unrealistic.
Let us imagine two assemblers, one in Torslanda and one in Uddevalla.
Both of whom assembles a specific component in the car, for example, adoor or the dashboard. The Torslanda assembler repeats his or her specifictask, approximately 100 times every day, since this is the only task he or
she performs. The colleague in Uddevalla performs the task only six times
every day because this task is only a small part of assembling the wholevehicle. It is probably very disturbing for the Torslanda assembler if, let us
say, six different types of screws are needed to assemble the component,
since this involves changing screwdriver or bit hundreds of times everyday. The assembler in Uddevalla repeats the same task so seldom that he or
she probably is more inclined to accept that half a dozen different screws
are needed for that particular component. At the same time, an assembler132

in Uddevalla is able to notice how many different types of screws are usedin the whole vehicle. This is impossible for an assembler at the line in
Torslanda. In order to get this information, every single assembly station
has to be analysed.
To sum up, the example shows that the information that can be provided
to the design engineers from the assemblers in the two plants, is likely to bedifferent. In Torslanda, the assembler focuses on specific details of the vehicle whereas, the Uddevalla assembler focuses on the vehicle as a whole.

5. Conclusions
There is a difference between the assembly concepts in Uddevalla andTorslanda, which creates a difference in the skills that the assemblers in
the two plants possess. More specifically, the fuel pipe example shows that
the Uddevalla assemblers discovered a problem that their colleagues in
Torslanda did not, and they were able to provide engineering design withinformation to correct it. Thus, both the ease of assembly and the functionof the car were improved.
Our example indicates that some of the tasks traditionally performed byprocess engineers were performed by the assemblers in the Uddevalla plant.
For example they actively worked with finding ways to improve the assembly process. This task is mainly performed by process engineers in Torslanda,
which partly explains why this problem was discovered in Uddevalla but
not in Torslanda. The focus of this article was on the skills possessed byassemblers. It seems clear however, that the two assembly concepts create
a need for process engineers with two different sets of skills.
The fuel pipe example, indicates that the information that assemblers canprovide to engineering design is important. In this case, the information
was provided ‘after the fact’, that is, when regular assembly was runningin Uddevalla. An interesting topic is whether it also means that informationfrom the assemblers is valuable to engineering design during the productdevelopment process and if this varies between different assembly concepts.
We believe that this is the case. We also believe that this potential, inherent
in the Uddevalla concept, never was fully realized.
A longer version of this article is published in a series of papers at the
Department of Industrial Economics & Management, Royal Institute ofTechnology, Stockholm October, 1993.

133

Notes
1 . The article does not describe, neither Volvo Car, nor the Uddevalla plant indetail. Volvo and the Swedish automotive industry have been described in detail in Berggren (1990). The development of the Uddevalla plant is thoroughly
discussed in Ellegård (1989).
2 . Model 740, the cheaper of the two cars in the 700 family, was introduced in
1984. The 700 family was gradually replaced by the more expensive 900 family
and model 1992 was the last 740 model produced. In 1991, 47,800 740s were
produced of which 3,000 were assembled in Uddevalla, 1,000 in Torslanda(Gothenburg), and 41,400 in Gent (Belgium). The rest were assembled in
Halifax (Canada), Indonesia, and Malaysia. In the same year, the total amountof cars assembled in Uddevalla was 19,100, in Torslanda 73 ,900, and in Gent
69,500. (Source: Official statistics provided by Volvo´s Information department.)
3 . There are two kinds of process engineers at Volvo Car, one group located at
the head-quarters in Gothenburg and one group located at each of the assembly plants. These groups are organisationally as well as physically separated.
The process engineers in Gothenburg are responsible for making sure that newcomponents and systems are easy to manufacture and assemble. They cooperate
extensively with the design engineers. The process engineers at the plants, usually a relatively small number, are responsible for manufacturing and assembly
equipment, production planning and methods, and to some extent to make surethat the components and systems can be easily and cheaply manufactured andassembled.
4 . This is an administrative function which, among other things, handles the administrative work involved in making design changes.
5 . The fuel pipe example deals with Uddevalla and Torslanda. However, since
the majority of the 740s produced in 1991 were assembled in Gent, it should
be pointed out that this specific problem was not discovered in Gent either.
Indeed, when the process engineers in Gent were asked to comment on thesuggestion from Uddevalla, they gave the same answer as the process engineers
at Torslanda. Consequently, the same argument can be made for the plant inGent, even though this has not been specifically investigated.
6 . This is actually an example of a philosophical issue, discussed for example by
the philosopher Karl Popper.
7 . See for example, Womack, Jones & Roos (1990), Clark & Fujimoto (1991), andSusman (1992). It is also worth noting that the discussion is not new. An example
of a much older discussion of the same topic is found in Hesselman (1948). The
author, a very successful Swedish engineer, writes about the improvement of
the Diesel engine during the first decades of this century. On many occasions
in the book, he points out the importance of designing the product so that it iseasy and cheap to manufacture.

134

8 . So called ‘Process groups’ or ‘Beredningsgrupper’ in using Volvo terminology.
9 . This is thoroughly discussed by Göranzon (1992).
10 . The concept of perspectives is thoroughly discussed in Danielsson (1983).

References
Aniander, Magnus and Henrik Blomgren (1989), Minskad ändringsvolym – Atlas
Copco MCT, M. Sc. Thesis, Department of Industrial Economics & Management, Royal Institute of Technology, Stockholm
Berggren, Christian (1990), Det nya bilarbetet, Konkurrensen mellan olika
produktionskoncept i svensk bilindustri 1970–1990, Arkiv avhandlingsserie,
Lund
Clark, Kim B. and Takahiro Fujimoto (1991), Product Development Performance: Strategy, Organization, and Management in the World Auto Industry,
Harvard Business School Press, Boston
Danielsson, Albert (1983), Företagsekonomi – en översikt, Studentlitteratur, Lund
Ellegård, Kajsa (1989),Akrobatik i tidens väv, Department of Human and Economic Geography, School of Economics and Legal Science, University ofGothenburg, Gothenburg
Göranzon, Bo (1992), The Practical Intellect: Computers and Skills, SpringerVerlag, London
Hesselman, Jonas (1948), Teknik och Tanke, Sohlmans, Stockholm
Karlson, Bo (1993 a), ‘Teoretikern möter praktikern: Yrkeskunnande hos konstruktörer och beredare’, Dialoger, nr. 27–28, August— (1993 b), Ritningsändringar – orsaker, konsekvenser och åtgärder, Associationof Swedish Engineering Industries, Faktarapport Konstruktion nr. 2, August— (1992), Rätt eller Fel? En studie av konstruktionsarbete på Volvo PV, Department of Industrial Economics & Management, Royal Institute of Technology,
Stockholm— (1989), ‘Consequences of Errors During the Process of Product Design andDevelopment: Three Case Studies from the Swedish Engineering Industry’,
Proceedings from NORD-NET 89, Nordic Congress on Quality and ProjectManagement, Imatra
Nermo, Anders (1990), Orsaker till sena ritningsändringar under produktframtagning, Fallstudie utförd på Volvo PV, Department of Industrial Economics & Management, Royal Institute of Technology, Stockholm
Susman, Gerald I. (1992), Integrating Design and Manufacturing for Competitive
Advantage, Oxford University Press, Oxford
Williams, Karel and Colin Haslam (1992), ‘Against Lean Production’, Economy
and Society, August
Womack, James P., Daniel T. Jones and Daniel Roos, (1990) The Machine that
Changed the World, Rawson Ass., New York

135

Building for new production concepts
Colin Clipson, Jesper Steen, Anders Törnqvist & Peter Ullmark

The Kalmar and Uddevalla buildings have been used consciously and effectively as symbols of Volvo’s new production concepts. Pictures showing thedistinct hexagon form of Kalmar and the clover-leaf pavilions in Uddevalla
have been spread over the world to illustrate Volvo’s ambitions. Now thepictures have been used again to convey the sad message that those pioneer
industrial plants have been closed down.
What can we learn from these plants? Did the buildings as such contribute to the realization of new production concepts? What is the relationshipbetween functional and symbolic values? How important are buildings inindustrial production?

The language of buildings
Corporate buildings always tell us something about the company. Intentionally or not, they reflect how the employer regards his employees andthe work they do. Distinct architectural forms and durable materials also
testify to the aesthetic and cultural ambitions of the client. Anonymous,budget-priced sheds make a corresponding statement in that respect. Usually architectural quality and intentional corporate symbolism are reservedfor headquarters and other important office buildings. Expressing a positiveand clear company philosophy in buildings for industrial production is notvery common. And perhaps not very easy either.
When Gunter and Margaret Blase approached the young and prominent
British architect Nicholas Grimshaw to design a factory for their familybusiness, Igus GmBH, they described their company as a solar system; thecentre of the company’s sphere of operation should be the client (the sun),while company departments (planets) should revolve directly around theclients. Department managers (moons) may be close to the department as thesituation demands, and the managing director (comet) passes by everyone,137

maintaining a close relationship with all. Grimshaw and Partners designed
a skilfully crafted, refined product; a clear, square span of 33.75 meters inboth directions with the roof suspended from vertical braced tubular masts.
This flexible, interchangeable factory/office space does not give any clues
to the expressed company philosophy. The task of translating the private
culture of the enterprise, the public culture of the workplace and reconcilingthem with a responsibility to the rest of the synthetic and natural world is
not an easy one. Perhaps the architect in reality had few options other thanemphasizing the need for flexibility above all.

Were the Kalmar and Uddevalla factories too special?
In the Volvo case, the unusual forms of the Kalmar and the Uddevalla factories were specifically chosen to demonstrate that working methods in thesebuildings were unique. One reason for the unions to support the layout of the
Uddevalla plant was reportedly that it made it impossible to reintroduce themechanical assembly line. Everybody involved in the two projects seemed
to agree that the new buildings were important for the realization of the
production concepts.
Even without the complications of strong demands for flexibility, the best
design for an industrial building is not obvious. Functional requirements
can be met in several ways, there are choices regarding the proper symbolic
expression of the building. There are sometimes difficult contradictory demands to handle. When investing in a new production plant, there is the needon one hand to emphasize the benefits that a new, different and efficientdesign will give. This is necessary to justify the expenditure of time, moneyand energy that the change will require. On the other hand there must be inmany cases a possibility to see the continuity between the old and the new
in order to build consensus and team spirit. Everyone involved should havea chance to find support in the new design for his or her particular values
and ambitions.
The current planning and design process, dominated by a technicalrationality, has problems in handling these contradictions. The technicalrationality, according to Schön (1983), separates planning from use, management from execution of work tasks, thinking from doing and theory frompractice. A tacit assumption is that it is in fact possible to design systems
that will work exactly as the designers, planners and systems engineers,
have intended. But small attention is usually given to how future users willconceive the system and to the possibilities to use it in ways other than thoseplanned for. Inevitable starting-up and running-in problems are witness tothis. In some cases a lack of fit between goals and performance also gives
the system unforeseen adaptability.
138

In this perspective, flexibility could be used by the employees to find theirown solutions and continue to develop the production system. Flexibility ofthe total production system could be a conscious corporate strategy, not only
a way to handle uncertainty caused by technical advances and the vagariesof the market place. Buildings with a usually long-life and great degree of
freedom as technical systems are a good illustration of how more robust
artefacts can be designed. Some lessons could perhaps be learned frombuilding design that could be applied to the general problems of designingorganizations and large production systems.
The Kalmar and Uddevalla cases give unique possibilities to discuss thisclassic dilemma of efficiency in the short term versus adaptability in thelong term. To what extent did the special building design of these plants
successfully express, promote and establish the new production concepts?
How did the buildings make ‘good work’ possible? In Uddevalla there wasan effort to avoid rigid technical systems with heavy mechanical equipment,
which would hamper future development. But was this effort matched by
the final building design? Is there a risk that the design was too specialized,
too tied functionally and symbolically to a particular production system tosurvive a changing corporate environment? Is a new type of design processneeded?

Innovative form and production change
in the Kalmar factory
The Kalmar factory was built in 1974 after a dramatic development process. The recently appointed President Pehr G Gyllenhammar rejected thefirst plans. In just a few weeks a radically new alternative was developedby the ‘Ultra’ group.
According to this new, distinct vision, the factory was divided into small
workshops with teams of 15–20 people taking care of 4–5 assembly stations
along the line. Each team had their own foreman and their own entrance,
lockerrooms and coffee lounges. The teams should function as small enterprises, competing with each other to improve productivity and quality.
Automated carriers, controlled by a central computer system, permitted thiskind of work organization as well as a more flexible layout.
This opened up new ways of organizing the building. The traditional
rectangular hall was neither necessary nor appropriate. The demand fornatural lighting along the assembly-lines, together with the large volume ofassembly parts to be supplied, gave rise to the hexagonal form of the buildings. The hexagon affords greater area and circumference in relation to the
distance to the centre, compared to a square or a rectangle. Two assemblylevels wrapped around the central storage area, serviced by high reaching139

<Figure 1, Page 140, Part II, Clipson (diapositive)>

Figure 1. The Volvo Kalmar factoryfork-lift trucks, produced a concentrated and efficient layout. As a form
found in beehives and other natural phenomena, the hexagon strongly conveys an impression of busy work and efficient use of materials.
The assembly-team areas along the outer walls are both well-lit and human in scale. By means of the angled walls, with the office and service
areas at the pivotal corner, the architect has succeeded in skilfully solving
the con-flicting demands for both separation and contact between different
work teams. (Fig 2) The service units projecting from the main face of thebuilding con-tain the staff entrances, foremen’s offices, locker rooms andcoffee lounges for each assembly team. They embody important featuresof the work organization.
The strong symbolic effect is obvious when looking at the often publishedaerial photos. But from a close range the building looks much like an ordinary industrial building. The building volumes as such are bluntly planted on
the vast, flat ground. A small fringe of greenery at the building perimeter is
not quite enough to give a human scale to the important sector where building
meets site. Taking his cue from Habermas’ distinction between purposefulrational action and symbolic interaction, the architectural critic Kenneth
Frampton wrote in his analysis of the Volvo plants (1976):
The disproportion of emphasis accorded to these two forms of rationalisation in advanced industrial society finds its direct reflection in the built
environment as a whole and while at Kalmar the team work-shop func140

tions adequately for free discourse within the limited ground provided
by the technostructure, the somewhat restricted personnel or coffee
break rooms on the perimeter of the building, far from serving as avenue
for symbolic interaction are clearly only intended to function, like thesaunas in the wash-rooms, to restore the will to work. It is surely no
accident that these rooms are inadequately represented in architectural
terms, both inside and out, and that their windows open not to pleasuregardens but to the industrial amnesiac landscape of the megalo-politan
strip, that no man’s land of boring commutation by automobile thateven here Europe all too often serves to suspend the worker in time andspace between the reality of industrial production and the compensatory
pleasures of the suburban home.
According to Gerhard Goehle, the architect who planned and designed thefactory together with the late Owe V. Svärd, there was originally no plan
for a physical extension. Expansion was to take place by means of doubling
the work shifts. In 1987, however, a steadily increasing number of parts
to be assembled forced an extension by a fourth hexagon. It has also beendifficult to keep team-areas within the length of each edge in the hexagon
and the clear correspondence between work organization and physical form
has been muddled.
As in all multi-faceted symmetrical buildings, orientation is somethingof a problem. The different team areas gain their individual identity fromthe parts being assembled – wheels, seats, dashboards. It should also bementioned that some ground floor assembly-team areas for the preassemblyof chassis parts are less well defined and have no contact with daylight.
People working at Kalmar have witnessed that they often feel ‘just like alittle cog in an anonymous machinery’. As Kenneth Frampton (1976) pointed
out, the panoptic aspects of the production shed have been replaced by acomputerized production system as a far more efficient control mechanism.
Just as the small angular deviations of the exterior walls must ultimately
add up to the exact hexagonal form, the flexible work cycle and the varying production buffers must also in the end produce a prescribed numberof faultlessly assembled cars.

Saturn – an American example of sociotechnical production
In the United States, the Saturn company (now producing a highly successful, high quality automobile), stands out as one example of an enterprise
influenced from its very beginning by the Swedish sociotechnical model. In
the 1980s, the dramatic business decline of General Motors forced its board
and shareholders to plan a new and separate manufacturing and assemblyorganization, with a new approach to the planning of work organization,141

a new car design, a new company name, and a location far away from thetraditional core of automotive production: Detroit.
In many ways the Saturn operation and complex is an example of American pragmatism and know-how at its best. Early research and planningof the new enterprise closely followed the most successful production
concepts from both Europe and Japan, as well as North America. Benchmarking studies identified key companies and their production strategies:
Toyota, Honda, Volvo, Mercedes, Ford, Nissan and so on. Working within
the confines of a stifling bureaucracy and tradition, it is surprising that theSaturn concept of teams and semi-autonomous business groups pulled as
far away from the parent company as it did. Not as far away as Uddevalla
from Torslanda in Gothenburg, but nevertheless, a definite break with thetradition was made.
Early benchmarking studies by Saturn clearly document the influence ofVolvo on Saturn’s development of self-directed teams, team centred worklayouts, training, and team and group facilities. The plant itself is architecturally bland but configured with what Kenneth Frampton (1976) has
called ‘compensatory spaces and amenities’: restaurants with access to the
outdoors, a fitness centre, family centre. Set in a green-field rural site, theSpringhill plant houses its diverse functions in a series of low profile blue,
grey and terracotta sheds, well landscaped and almost out of sight to passing highway motorists; the absolute antithesis of the Ypsilanti or Sterling
Heights assembly plants or the factories of the Rouge River in Detroit. Evidently there has been a clear ambition to express the various socio-technicalfeatures of the production plant, training centres as well as compensatory
spaces, and articulate its relations with the physical and social environment
in a sensitive way. In these respects the Saturn complex seems to represent adevelopment when compared with the compact and closed Kalmar factory,
bluntly placed on a flat and tarmac-covered industrial site.

International star architect designed the Uddevalla plant
With the Uddevalla assembly plant, Volvo took a decisive step further indeveloping assembly methods. Compared with Kalmar the teams are smaller
and more independent of each other and consequently, there has been lessneed to integrate the workshops into a single building.
Volvo’s decision to let American architect Romaldo Giurgola design the
new Uddevalla factory had symbolic significance. Giurgola had designed
the luxurious new headquarters for the Volvo group in Gothenburg a few
years earlier. Volvo’s CEO, Pehr Gyllenhammar apparently wanted assembly workers to enjoy an environment of comparable quality.
142<Figure 2, Page 143, Part II, Clipson>

Figure 2. Master Plan of the Uddevalla Factory
In spite of architectural qualities still rare in industry, the result was open
to critical discussion. The layout of the buildings clearly and elegantly
displayed the new work organization with car building teams in separate
production workshops. (Fig 2) The workshops provided a pleasant work
environment but over time have proved to be somewhat too small. Because143

of the strong visual form, there seemed to be few possibilities for change
and extension. Closer scrutiny revealed interesting but dubious architecturalstatements.
The symmetrical administrative building had a prominent central position,suggesting an Italian villa in the midst of surrounding agricultural buildingsof larger and less elaborate volumes. The building could be seen as a potential
meeting place for several actors involved in future automobile production,
including customers, marketing experts and production employees, but at thetime this strong expression of hierarchy seemed overstated. Production was
in fact mainly controlled from Gothenburg. The interior of the administrative building was much less pretentious than the exterior, almost egalitarian,with small, uniform office cubicles for all white-collar personnel, including
the local manager. Of course, there was still real distance, physically andsocially, between the local administration and the production. A computerized production system made both distance and control possible.
Physical and organizational distance existed also between the assembly
workshops and the materials centre in an existing, large L-shaped building,acting as a dark blue backdrop for the low workshops buildings. In the materials centre preassembly and kitting of parts for each car took place, a lessdemanding and more monotonous work than assembling at least one fourthof the car. Through the computer systems the assembly teams coordinatedmaterial flow, therefore making social contact between the two types ofwork-teams neither necessary nor facilitated.
In a recent evaluation of the Kalmar and Uddevalla plants by Berggren(1993), these critical observations have received striking confirmation.
Berggren describes the radical organization changes initiated in September 1992 to further develop the potential of the new producation system.
Middle management was reduced and engineers and top level managers
worked directly with the teams out in the workshops, themselves trying
their hand at assembly work for short periods. A final step, that of emptying
the administration building completely and moving the management to thematerials centre unfortunately was not made, because of the closing-down
decision, but would have been the logical conclusion of a very promisingdevelopment. The responsible manager, Peder Elison, remarked: ‘At first
there was no big discussion, probably because some people thought I was
not serious. But as soon as we had established an office in the materials
centre I would have been the first to move out. And the others would havefollowed. I don’t understand how one could build a plant like this. Aesthetics dominated completely over function.’
The formalistic layout of the Volvo Uddevalla plant led to further inequalities. Many of the ‘combines’, apse-like protuberances, containing the office
and recreation areas of the work teams, enjoyed a sea view, but because144

of the symmetrical plan some teams looked out on parking lots and cliff
walls. Landscaping did not improve the qualities of the site. In this harshcoastal climate the need is greater for protective mouldings and barriers
than for flat lawns and straight lines of trees connecting the shore with theoffice entrance. No outdoor recreational spaces adjacent to the workshops
were provided.
However, in view of later events a more important question is whether theformalistic, symmetrical plan could have made future changes and adaptations more difficult, functionally and symbolically.

In search of the flexible factory
At present we work in a world where two forms of manufacturing are rivals– ‘where elements of Henry Ford production and Peter Faberge craftsmanship coexist’, as a writer in The Economist expressed it. Automation isdriven further at the same time as dependence increases on the skills andpersonal responsibility of autonomous work-teams. Manufacturing facilities must provide work environments that fulfil both human needs, the needfor technical change and development of the work organization. The large,
all-purpose production shed has serious problems from an environmental
point of view, problems that are ominous in a situation where production
is becom-ing increasingly dependant on workers’ skill, commitment andversatility. The tailor-made factory, formed around a specific production
concept is not an alternative when fluctuating market demands and stiffcompetition make flexibility, automation and new forms of work organization imperative.
It is clear that the turbulent economies and social climates of today (andtomorrow) can best be addressed through flexible organizational behaviors, supported by those tools and production facilities that are themselves
adaptive to change and turbulent conditions. Kalmar and Uddevalla were
designed to provide adaptive workplace conditions for the new ways ofworking developed at Volvo for more than twenty years. Over that periodof time Volvo made steady, incremental departures from its traditional waysof assembling at Torslanda. Over an even longer period of time, Japanesecompanies were gradually/incrementally perfecting the just-in-time and lean
production approach to manufacturing.
The spatial cultures of Kalmar and Uddevalla represent the two milestones
in Volvo’s development of its flexible process of automobile production. In
principle, both facilities provide the process, tools, materials handling andinventory systems to make other kinds of consumer products. In the caseof Uddevalla, the vast sheds of the materials workshop and its computer
system, the geographically separated product assembly workshops, each145with 80–100 skilled workers, provide small group assembly potentials that
could be developed.
It may be that in its own way, Uddevalla is more adaptive to the demandsof changing market forces than the parent company and its strategic planners and market researchers. Of the two facilities, perhaps Uddevalla offers
more possibilities for production alternatives because of its more distributed,
radiating plan, compared with Kalmar’s closed hexagons. On the other hand,
Uddevalla’s site and ‘customized’ configuration places limitations on reuseas a traditional assembly plant. Pysical and social distances have also proved
to be a disadvantage of the Uddevalla layout. It could be possible, however,to extend the potentials of production flexibility, not only to varied productlines, but also to occupancy by multiple owners and small companies or
incubators. This is not the case with Kalmar, or some of the single umbrellaor shed designs of the conventional production facility, despite the processline flexibility these may offer in their uninterrupted floor space.
In its relatively short life span, Uddevalla has demonstrated a new way ofworking, with the radical and primary objective of building the whole car.
Earlier experimentation with team built subassemblies at Kalmar made thelater development comprehensible and feasible. Yet one may aski, did the
Volvo company go far enough in its own strategic thinking about the global
marketplace and competition that it would face in the 1990s? Slow to react
to the new product needs of the marketplace and slow to adapt to volatilebusiness conditions, Volvo now finds itself reverting to a more traditional
form of production. Why? A loss of corporate nerve? Powerful outside
influence and events? A fear of having gone too far in its pioneering new
ways of manufacturing?
Just how flexible and how broad in function the factory of the future mustbe, has been outlined by Chase and Garvin (1989) in their article The Service Factory. Flexible factories offer flexible and changing services and areadaptive to new customers’ needs. These factories offer customers timely
feedback on the manufacturing of new products; they produce prototypes
rapidly, and involve customers in evaluating new products. Factories of
the new kind often act as demonstration devices that promote new andmore effective ways of making products, pulling potential customers into
the factory and making them an important part of the process. This type of
production facility can act as a laboratory for new ideas suggested by end
users. Such a facility links up with the after market service and life of the
product produced to make sure that changing needs are addressed.
3M Medical Electronics Systems Manufacturing Division is a current
example of this type of factory. The 3M factory provides a full scale
simulation complex and classrooms in the plant where surgical teams from
hospitals around the country are invited to simulate and devise new types
146

of equipment for new procedures. 3M staff and customers codesign new
products with medical professionals who take these new products back to
the hospitals for trial. Staff and users watch and critique the codesigningfrom adjacent classrooms. 3M is a leader in adapting its manufacturing tomeet its users’ needs.
The service factory of the future involves all employees in generating highquality products. As Peter Drucker has pointed out, knowledge work in thefactory of the future will allow workers to interact in all stages of productdevelopment from the design concept to the servicing the product in use.
Did Kalmar and Uddevalla, as the most progressive components of the
Volvo culture have this potential? Perhaps. But not without more progressive product strategies and market know-how. Do such production cultures
exist, or are they merely aspirations? According to Chase and Garvin (1989),
many companies are on the way to realizing these potentials, namely Hewlett
Packard, Allen Bradley and Caterpillar. It may well be that the most progressive cultures for such development are not to be found in the auto-mobile
industry at all. In a study of over 200 factories by the IBM Consulting Group,
researchers rated factories according to the best available international
standards for such criteria as product quality, logistics and manufacturing,lean production and state of the art tools and facilities. Those scoring over
80% on the resulting scale were defined as world class. The best performing industries were those of electronics, information technologies and food
manufacturing. The worst performers were those manufacturing automobiles and aerospace components.
There is little doubt that automobile industries around the world are ata critical stage in their evolution, of which the choices between modes of
production, as well as the role of machines and the role of people are central issues. Uddevalla is closed at the precise moment when the Japanesemanufacturers are seriously reconsidering the culture of their way of working, and the negative effects this work culture is having on the attitudes ofJapan’s younger generation.

Urban metaphors in factory design
inspired by service industry buildings
In consequence with the trend toward more knowledge-based and customized production, it is no surprise that the first attempts to optimize social andtechnical needs were made in buildings for the service industries. Herman
Hertzberger’s Centraal Beheer in the Hague, Holland, built in 1974, houses
the thousand employees of an insurance business. A top lit central street
runs through stacks of pyramidal decks, each floor connected by bridges.
Top down lighting, open decks and staircases, combined with lush interior
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Figure 3. Perspective drawing of SAAB-Scania assembly plant in Malmö148

vegetation of plants and trees, creates an indoor city with open air quality
in the labyrinth of space. Perhaps its strongest break with the traditions ofoffice and particularly the open plan office, was its sense of freedom tochoose and move. The blend of work and social space were more reminiscentof an urban neighborhood than of a dedicated workspace.
Designed by Niels Torp in 1988, (though masterminded by the visionary
SAS CEO Jan Carlzon) the SAS headquarters is one of the most wellknown
examples of the workplace as urban form with its descending street linedwith not only seven office floors, but cafés, cinema, shops, bank and swimming pool, in short, all the amenities of city life. Finally, in the recently built
London Ark at the Hammersmith flyover in London, by Ralph Erskine, aBritish architect, (domiciled in Sweden), the town metaphor is pronounced
again. Rising layers of offices and meeting spaces wrap around a lofty,
spectacular atrium with restaurants, meeting lounges and bridges.
The urban metaphors could also be found in a new assembly plant, built
in Malmö, by the other Swedish automaker, SAAB Scania. Not long after
the Volvo Uddevalla factory was built in 1988, SAAB made a similar moveand took over parts of an abandoned shipyard site in central Malmö. A hugebuilding used for welding iron plates into sections of ships was converted
into a modern car assembly plant. Like the Uddevalla plant it too wasclosed down after an even shorter period of operation. But it is interesting
to compare the two plants from other viewpoints as well.
The interior central street, 250 metres long, 20 metres wide and 12 metres
high, is the indisputable centre of the SAAB building. (Fig 3) As such itis surprisingly successful, in receiving generous natural light from several
directions. Inspired by modern office buildings, notably the SAS airline
headquarters in Stockholm, this street nevertheless has a distinct industrial
flavour through the heavy roof constructions and thick bundles of technicalinstallations freely penetrating the open space.
Through this central street an overview of the total plant is possible. The
main entrance is used by everyone. Walking among hundreds of peoplechoosing routes on different levels to reach their work area, it is possible toget an understanding of how their tasks all contribute to the common goal,that of producing a certain number of quality cars. The recreation spaces are
not definitely assigned to a certain production area as in the Volvo Uddevalla
factory. One can choose different routes to several areas.
The SAAB Malmö and the Volvo Uddevalla factories can be seen to illustrate different principles, which can be used to overcome the lack of meeting
places in the traditional factory building. The labels to describe them could
be called ‘The Main Street’ and ‘The Family Flat’. In Uddevalla, Volvo chose‘The Family Flat’ solution, where a team of car builders formed a sociallytightly knit unit with their own distinct spaces for work and rest. This gave
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identity and strength within the ‘family’ but also a risk of strong pressure
to conform within the group and aloofness towards other groups. One got
the impression that in Uddevalla, the assembly workers were the ones who
actually built the car. The material handlers performed a less qualified andmore monotonous service function. Those who started working there might
not have gotten the natural contact with the assembly work and a chancelater to try their hand at other tasks.
SAAB did not go as far as Volvo in letting the workers build the wholecar. But the work cycle became considerably longer than the customary 2–3
minutes. Car builders and material handlers were part of a larger team andswitched tasks to provide variety and broaden skills. The need for identity
and contact was not met through a close-knit ‘family’ as in Volvo, but
through the more varied social life of the factory street. But in spite of thelarge ‘urban’ scale, the public character of the SAAB street was limited. The
foremen’s offices were obtrusively juxtaposed with the recreation spaces,
contact with the exterior natural and urban environment was obscured.
Is it really necessary to choose between the SAAB and Volvo solutions?
Might it not be possible to have both the larger integrated groups and thechallenge of building the whole car? Another physical configuration of the
Volvo plant was discussed at an earlier stage. The production workshops
were then placed as ‘bubbles’ around the Materials Centre. Perhaps that idea
could have been developed further so as to integrate assembly work andmaterials handling. It would seem that evaluations of alternatives and possibilities of this kind need more developed concepts and tools of analysis.

Analysis of spatial cultures
A retrospective view might suggest that in the transition and course ofindustrial events, automobile production facilities have had to deal withboth the maturation of mass production and the emergence of new formsof customization of products and flexible manufacturing. Much of thisdevelopment has been in the hands and minds of production designers andtechnical innovators. Exploration of more progressive building forms has
primarily originated in other industries – electronics, computers and communications.
Little research has been done on the dynamics of spatial cultures inworkplaces. However, the work that has been done, by Hillier & Hanson(1984), Peponis (1985), and others, suggest that the design of space (e.g.
for the factory) has strategic effects on the culture of workplaces. Some
types of behavior are made possible, others impossible. Below the detailsof architectural styles and decorations there are spatial patterns establishedand controlled by the brief that the client gives the designer. It is aimed at150

preserving existing patterns of power distribution and behavior (Markus
1993). Research to date suggests that there are basic concepts used in spacesyntax analysis which may lead to a more general understanding of the social
properties of layout and in fact offer a more reliable way of comparing one
layout design with another. As yet there are really no quantitative techniques
for evaluating and comparing the social effects of different spatial layouts.
In contrast a great deal of work exists on the technical layout of machineryand the effects of such layouts on assembly cycle times, materials handlingand other production engineering issues. Perhaps this methodological imbalance as much as anything else, thwarts the attempts of the designer ofinterior space in factories to balance social with technical needs.

Concepts for a new design process
We have seen that in spite of strong architectural expression, which communicate both corporate ambition and new forms of work organization,
both the Kalmar and Uddevalla factories suffer from weaknesses as building designs.
Physical demarcations, expressing autonomy for work teams, also help tostructure the overall space and improve readability and understanding of thebuilding as whole. But demarcations on the other hand can be excessive ifthey obfuscate coherencies and weaken the plant’s social integration. In spiteof the relatively small size of the Kalmar factory, its regular and symmetricalform, the dominant materials storage in the central part of the building andthe separate entrances for the work teams, orientation and overview in thebuilding are difficult.
In Uddevalla, the lack of overall coherency, despite a superficial architectural symmetry and elegance, is even more prominent and seems to have
kept social integration of different personnel groups at a minimum.
Other deficiencies common to both plants concern the poor adaptation
to the site and difficulties to extend and change the factory buildings while
keeping the distinctive visual form of the original layout. In retrospect, it
is easy to find fault with the basic architectural concepts. One could searchfor other design solutions that would reconcile conflicting requirements
better. However, extreme time constraints and insufficient awareness ofthe necessary phases of the design process seem to be the primary reasons
för the difficulties.
First it should be recognized that time constraints as such are not always
inimical to creative design. On the contrary, as knowledge of the different
aspects of a design problem increases, new and radically different concepts
may develop late in the decision process, even if the financial and organizational constraints have tightened (Steen & Ullmark, 1992). The Kalmar
151‘Ultra’ concept is an example of this. In spite of the short time, it seems that
effective project management and a cooperative spirit between the parties
involved ascertained that the basic requirements concerning the physicalwork environment were met, both in Kalmar and Uddevalla.
However, there seems to have been insufficient time and motivation for
an important phase in the design process, where primary concepts and detailed design work are consolidated into a final product. (Lundeqvist & Ullmark, 1993) In an introductory conceptual phase, primary design concepts,
sometimes expressed in powerful metaphors, help to build consensus andguide future work. In a second constituent phase, the detailed testing andresolution of conflicting requirements are worked out. Three outcomes ofthis phase are theoretically possible. If the interests behind the first primaryconcepts are strong, such as when using a skilful and influential architector production engineer, these concepts prevail and other important requirements are modified or abandoned to fit in. In a second type of outcome,strong partial interests can deform the primary concepts to produce a bland
compromise.
Examples of the third, successful type of outcome can often be foundamong old buildings, which through first-rate professional work and sufficient time for careful design, have managed to stay remarkably beautiful,durable and useful over a long period oftime. For example, the Luma lightbulb factory in Stockholm, designed by Arthur von Schmalensee and Eskil
Sundahl in 1929–30, is a case in question. We interpret the success to be dueto thorough functional analysis on one hand, which has given the building
character and identity, and an endeavor for simplicity and elegance on theother hand. All important requirements have been met, while an extensive
brief has passed through a process of consolidation. The form has beencultivated and clarified to a simple and distinct structure, which can beextended and used for other purposes also.
The repetitive, iterative character of the process must be emphasized.
Each design passes through the conceptual, constituent and consolidatory
phases several times. It is easy to neglect any of these three phases, each
representing are important lessons to be learned. Architects often like tothink that their primary concepts are new and unique instead of borrowed
and assimilated from a vast repertoire of historical examples. In the second
phase the involvement of a broad array of various interests and competencies
is important. Technical experts, employees, community interests – must all
be given a say. The complexity of this calls for a structured process, similar
to the urban planning process, in which interaction takes place at different,
wellchosen points in time, where the decision problems are sufficiently
complex to stimulate creativity but not so entangled as to be unmanageable(Törnqvist, 1992).
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This interaction should be seen not only as a negotiation process withwell-known alternative outcomes, but as a learning process, where creativeand new solutions are possible (Clipson & Kornbluh, 1993) Recently new
insights have been gained concerning how this enabling and learning processof interaction could be reinforced. Shared practical and sensory experiencesof the concrete design object is important in order to facilitate understanding through a common language. As Ehn (1988, 1992) and Granath (1991)
have shown, even simple cardboard models of possible artefact designs arehelpful to promote a common understanding.

The role of metaphors
Symbols express values, which make associations with history or with anindustrial activity, for example, the adornment of the smoke chimney wasseen as a sign of power. Symbols could be likened to words and simple
phrases. To create richer language games a formal syntax and more complex
metaphors are needed. A Greek temple or a Roman basilica are characterized
not only by certain details but also by a syntax, which determines how toproportion and combine these details.
Metaphors are motifs and form-generating ideas capable of creating a clear
Gestalt out of a complex aggregate, borrowed from nature or social situations– such as the factory as prison (Foucault, 1975), school or castle. The designof a complex building is often inspired by a combination of metaphors, forexample when the Volvo Uddevalla plant brings reminiscences of both theformer ship-building plant and an Italian manorial farm. Metaphors are more
concrete and suggestive than verbal guidelines, but less precise than drawings. They fulfil the contradictory roles of embodying the radically new andallowing room for old continuities and incremental future adaptations, bothof which are important conditions for change in large organizations.
Metaphors play an important part in all three phases of the design process. Primary concepts are often metaphors, facilitating interaction between
vari-ous interests in the constituent phase. But in the third phase, a criticalview of established metaphors is necessary and the generating of new ones
should be encouraged. The extreme closedness and technical efficiency ofthe ‘beehive’ hexagon at Kalmar should have given rise to doubt concerning its openness and ability to accommodate future production changes.
The mixture of ship-yard sheds and Italian farm buildings, while visuallyeffective may not be a robust or appropriate combination of metaphors.
Genuine conflicts between strong opposing interests can not be hidden forlong behind harmonious and symmetrical exteriors but should be expressed
appropriately. Metaphors more related to the local surroundings, to the genius loci at both Kalmar and Uddevalla, probably would have been better.
153

Today the visually distinctive Volvo buildings now stand as graphic signsof a dynamic but unfortunately short period of technological, organizational
and architectural development.

Conclusion
Much like the General Motors Saturn plant, the Volvo factories at Kalmar
and Uddevalla have made their more progressive tendencies less irksome
to the parent organization. The godchild as satellite producer may neverrival the parent in size or product share without running the risk of more
corporate control and limiting initiative. Uddevalla and Kalmar, despite
their pioneering examples and productive value have fallen out of favourof the traditional parent, and therefore have been banished. A distinctive
architectural design probably helped to promote and establish the pioneer
spirit that made the plants successful in the short run. The designers also
made use of the possibilities to create an excellent physical work environment with small-scale, well organized work team areas, amply provided withdaylight and social spaces. But a planning process with too little attention
to a collaborative choice of suitable design metaphors led to weaknesses
in more subtle and long-term qualities. Although Uddevalla in particular
seems to have adaptive possibilities for other production, one is tempted tothink that the conspicuous form and strong symbolism of both the Kalmar
and Uddevalla buildings contributed to the ostracism they suffered.

154

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Berggren, C. (1993), Mästarprestationer eller mardrömsfabriker? En utvärdering av Volvos småskaliga monteringsfabriker i Uddevalla och Kalmar. (First
class performances or nightmare factories? An evaluation of Volvo’s small
scale assembly plants at Uddevalla and Kalmar), Working paper, Sept 1993,
Department of Work Science, Royal Institute of Technology, Stockholm.
Chase R. B. and Garvin D. A, (1989), ‘The Service Factory’, in Harvard Business
Review, July/August.
Clipson, C. and Kornbluh, H. (1993), ‘Designing and Learning: Toward a Redefinition of Participatory Workplace Design Process’, in Törnqvist & Ullmark(ed.), Appropriate Architecture, Workplace Design in Post-Industrial Society,Industrial Planning and Architecture, Chalmers University of Technology,
Gothenburg, and Industrial Planning, The Royal Institute of Technology,
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Clipson, C., Törnqvist, A. and Ullmark, P. (1993), ‘New Paradigms for Production Environment – Examples from the Automobile Industry’, in Törnqvist& Ullmark (ed.), Appropriate Architecture, Workplace Design in Post-Industrial Society, Industrial Planning and Architecture, Chalmers Universityof Technology, Gothenburg, and Industrial Planning, The Royal Institute ofTechnology, Stockholm.
Ehn, P. (1988), Work Oriented Design of Computer Artefacts, Almqvist & Wiksell, Stockholm.
— (1992), ‘Setting the Stage for Design as Action, Artefacts for Participatory Design in Theory and Practice’, in Kazemian, R, (ed.), Proceedings of the International Conference on Theories and Methods of Design, 13–15 May 1992,
Gothenburg, Sweden, Royal Institute of Technology, Stockholm, Chalmers
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Foucault, M. (1975), Discipline and Punish, The Birth of the Prison, London.
Frampton, K. (1976), ‘The Volvo Case’, Lotus International.
Granath, J-Å. (1991), Architecture, Technology and Human Factors, Design in a
Socio-technical Context, (Diss), Industrial Architecture and Planning, Chalmers University of Technology, Gothenburg.
Hillier, W., and Hanson, J. (1984), The Social Logic of Space, Cambridge.
Kazemian, R. (ed.), (1992), Proceedings of the International Conference on Theories and Methods of Design, Göteborg, Sweden, 13–15 May, 1992, The RoyalInstitute of Technology, Chalmers University of Technology.
Lundeqvist, J. and Ullmark, P. (1993), ‘Conceptual, Constituent and Consolidatory Phases – New Concepts for the Design of Industrial Buildings’, inTörnqvist & Ullmark, (ed.), Appropriate Architecture, Workplace Designin Post-Industrial Society, Industrial Planning and Architecture, Chalmers
University of Technology, Gothenburg, and Industrial Planning, The RoyalInstitute of Technology, Stockholm.
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Gothenburg, and Industrial Planning, The Royal Institute of Technology,
Stockholm.
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156

Designed for learning:a tale of two auto plants
Paul S. Adler and Robert E. Cole

A consensus is emerging that the hallmark of tomorrow’s most effective
organizations will be their capacity to learn. To survive in the competitive
turbulence that is engulfing a growing number of industries, firms willneed to pinpoint innovative practices rapidly, to communicate them to theiremployees and suppliers, and to stimulate further innovation.
However, there are two very different views on the organizational design
most effective to support learning, particularly in more labor-intensive
pro-duction of relatively standardized products.1 Proponents of the Japanese-inspired ‘lean production model’, such as the MIT researchers who
contributed to The Machine That Changed The World, argue that organizational learning will be maximized in a system based on specialized worktasks supplemented by modest doses of job rotation and great discipline in
the definition and implementation of detailed work procedures.2 By contrast, European managers, union officials, and academics are engaged in a
lively discussion on the possibility of a German-Scandinavian alternative.3
Proponents of this ‘human-centered model’ argue that organizational adaptability and learning is best served by greatly lengthened work cycles and a
return to craft-like work forms that give teams substantial latitude in how
they perform their tasks and authority over what have traditionally been
higher-level management decisions.
Toyota is often credited with pioneering the key elements of the lean
production model. In the United States, the best documented of Toyota’s
plants is the Toyota General Motors (GM) joint venture, the New United
Motor Manufacturing, Inc. (NUMMI) plant in California. Volvo’s Uddevalla
plant exemplifies the human-centered alternative. It is one of Volvo’s mostinnovative plants, radically extending the long cycle and team autonomy
concepts that shaped the famous Kalmar plant.4
In November 1992, Volvo announced that it would close the Uddevalla
and Kalmar plants, but these plant closings should not close the debate over157

the significance of their innovations. The two plants are not being shut down
due to poor performance. In fact, Kalmar operated at productivity and quality
levels higher than those at Volvo’s main Torslanda plant, and Uddevalla wasalready matching Torslanda in productivity. However, Volvo was operating
at very low capacity utilization levels, and managers believed that shutting
down the two smaller plants was an effective way to reduce total overhead.
Although Volvo’s innovations in work organization will continue in someof its truck and component plants, the closing of these two plants will end
a remarkable twenty-five year period in which Volvo’s efforts to humanize
and democratize work inspired managers, union officials, and academics
around the world. The concept of self-managing teams so popular in the
United States today owes much to these two plants, as does the design ofG.M.’s Saturn plant. Whether the advocates of work reorganization within
Volvo will be able to refocus their efforts on reforming Volvo’s other facilities remains to be seen. Whatever the case, there is much to be learned fromthe Kalmar and Uddevalla experience.
Between us, we have studied firsthand a number of Toyota’s Japaneseplants, the NUMMI facility, and several Volvo facilities, including Uddevalla. In this article, we assess the relative merits of NUMMI and Uddevalla as organizations designed to support learning. In brief, we argue that
although elements of the Uddevalla approach do indeed promise a higher
potential for individual learning, NUMMI is the more effective model forencouraging organizational learning. The NUMMI model thus assures ahigher growth rate for productivity and manufacturing quality. Proponentsof the Uddevalla model argue that the NUMMI model’s purported technical strengths will be overshadowed by its lack of opportunities for personal
development and that its regimentation will undercut worker motivation.
We believe that this critique is misconceived and that the intense discipline
created by NUMMI’s job design creates not only world class performancebut also a highly motivating work environment.
First, we describe some of the key aspects of the two plants’ organizational
designs. Then we compare their performance results and identify sometechnical factors that may contribute to these results. Finally, we closely
examine the social factors and critique some popular misapprehensions
about the sources of motivation and of organizational learning.

Comparing two organizational designs
NUMMI and Uddevalla are similar in several important respects. They areboth truly committed to treating employees as their most important assets
and to providing opportunities for employee growth. For both plants, governance is accomplished by a relatively strong partnership between union158

and management. They are also similar in the relatively strong partnership
between union and management. Finally, they are both organized aroundproduction teams.
But the similarities give way to important differences when we examine
the internal organization more closely. The NUMMI and Uddevalla production teams are very different. At NUMMI, teams are composed of four orfive workers under a team leader, and both team members and team leaders
are hourly workers. Each team member performs a work cycle of about sixty
seconds. In the final assembly department, the teams are linked in series,
in the traditional ‘Fordist’ assembly line pattern. Toyota’s just-in-time inventory system ensures that this interdependence is very taut. Teams takeon responsibilities not normally the province of line workers in U.S. auto
plants, in particular for quality assurance, preventive maintenance, and internal job rotation schedules. They also define work methods and standards,
but must satisfy managers and engineers that these methods and standards
are optimal and that they are implemented identically across workers andshifts. Although such worker involvement in defining methods violatesFrederick Taylor’s principles of ‘scientific management’, the resulting job
designs are very Tayloristic in their narrow scope and gesture-by-gestureregimentation.
At Uddevalla, the break with Taylorism and Fordism was deliberate andradical. The plant’s model evolved at a time when Volvo was experiencing
a production capacity bottleneck in a protected market with no efficientJapanese competitors for its niche. In the mid-1980s, Volvo was selling everything it could make, and lack of productive capacity was the problem. The
major constraint in breaking the capacity bottleneck was the tight Swedish
labor market. The design of the Uddevalla plant was labor-market driven,
not product-market driven. As one of the key managers involved in the plantdesign expressed it, ‘The problem we had was how could we make the plant
attractive for Swedish workers to want to work in it.’In the newly designed plant, each of eight production teams took full
responsibility for assembling the vehicle from the subsystems up – a work
cycle of about two hours. The plant abolished the assembly line, as the eightteams worked in parallel. The teams were larger, ten people as opposed tofour or five at NUMMI. Because the work cycle was so long, Uddevalla
teams paid much less attention than NUMMI’s teams to the detailed, gesture-by-gesture standardization and instead focused on the more aggregatedbalance of tasks within the whole assembly cycle. Not only did Uddevalla
teams decide job rotation schedules, they also selected their own hires anddecided on their own overtime schedules. At NUMMI, union representatives
and managers jointly select team leaders based on objective tests, whereas
at Uddevalla, teams selected their own leaders and often rotated the role.
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Both organizations put great stock in worker training. NUMMI has invested considerable time and effort in training workers in the principles andtechniques of its production system, but it offers no pay premium for theaccumulation of new skills. At Uddevalla, team members’ pay increased
with the accumulation of proved expertise.

Comparing performance results
NUMMI took over the old GM plant in Fremont and hired about 85% of its
workforce from the ranks of laid-off GM-Fremont workers. Pilot production
began in December 1984, and by 1986, NUMMI was almost as productive
as its sister Toyota plant in Takaoka and more productive than any other GM
plant. Total hourly and salaried hours per vehicle averaged 20.8 at NUMMI
in 1986, as opposed to 18.0 in Takaoka, 40.7 in the relatively comparable
GM-Framingham plant, and 43.1 at the old GM-Fremont plant in 1978. Inventory levels averaged two days, which was significantly below U.S. auto
industry averages, but still above the two hour level prevailing in Takaoka,
primarily due to difficulties in running true just-in-time inventory with suppliers from Japan and the U.S. Midwest.5
More recent data indicate that this extraordinary performance was not
merely a honeymoon phenomenon. According to a J.D. Power and Associates study of the number of problems per 100 vehicles experienced by customers within 90 days of purchase, NUMMI scored 116 in 1989, compared
to an industry average of 148 for all cars sold in the United States. The
number of problems went up in 1990 with the introduction of Geo Prizm
and new domestic suppliers but then decreased to 93 in 1991 and to 83 in
1992 (when the industry average was 125 for all cars sold in the UnitedStates and the average for Asian nameplates was 105; for U.S. nameplates,
136; and for Europeans, 158).6
What of NUMMI’s quality of worklife? Here, too, the indicators are very
impressive:•••

Absenteeism has held steady at about 3 percent.
Participation in the suggestion program had increased to over 90 percent by 1991, and workers made over 10,000 suggestions that year, anaverage of about 5 suggestions per worker. The implementation rate forthese suggestions was over 80 percent, which reflects as much or more
on NUMMI’s policy of encouraging involvement as on the quality ofthe suggestions themselves.
Internal surveys of worker attitudes showed that the overall proportionof people describing themselves as satisfied or very satisfied with theirjob at NUMMI had increased from 76 pecent in 1987 to 85 percent in1989 and to 90 percent in 1991
160

How does this compare with the Uddevalla plant? Unfortunately, the data
here are sketchy:
•

•

•

•

According to a New York Times article, it took fifty hours to assemble avehicle at Uddevalla as opposed to an average of twenty-two hours forJapanese plants in the United States.7 When we visited the plant in thesummer of 1991, the plant manager claimed that these data were oldand that the plant had already reached the productivity of the Torslanda
plant, which this Times article estimated at forty hours per vehicle. Even
adjusting for the larger size of the vehicles produced at Uddevalla, theproductivity differential would be substantial. (Unfortunately, we haveno comparable quality data on Uddevalla’s output).
Although absenteeism was half that of Volvo’s main plant at Torslanda,
it was still very high: sick leave absences averaged about 12 percent in1990 and long-term disability about 10 percent for a total of about 22
percent – compared to 3 percent absenteeism at NUMMI. Uddevalla
workers benefited from much more generous sick leave provisions, and
it is possible that NUMMI’s strictness on absenteeism does not allow
workers sufficient flexibility to balance work- and non-worklife. It isnevertheless clear that Uddevalla’s worklife did not provide sufficient
intrinsic satisfaction to overcome the long-standing Swedish traditionof high absenteeism rates.
Turnover was high during Uddevalla’s startup because some workers
without industrial work experience did not accommodate to the pressures of the very demanding work in auto assembly. However, turnover
had settled at about 6 percent by 1991. This figure is comparable to
NUMMI’s, but turnover, like absenteeism, is influenced by many factors
outside the plant’s control.
More telling, perhaps, was a 1992 survey of worker satisfaction across
Volvo’s plants, which revealed that Uddevalla scored in a similar range
to the very traditional Torslanda plant. This was a big disappointment
to management, which could only argue that it was the reflection of theworkers’ high expectations. This argument has some merit, but such ascore also suggests that craft-style production may have been idealized
by Uddevalla’s designers and oversold as a cure to the ills of modern
labor.

Perhaps we too have succumbed to this idealized view, because we thinkthat Uddevalla, not NUMMI, would be the more desirable place to work.
Uddevalla offered a much less regimented environment, more task variety,more autonomy, and a lot more team self-management. However, there islittle doubt as to which production system is capable of delivering the greatest efficiency and quality: it is NUMMI.8 In fact, one Volvo executive we161interviewed stated flatly that Uddevalla would not have been built under
today’s circumstances, and it would be hard to find others at Volvo who
would disagree. The context that produced Uddevalla has changed. The laborbottleneck has disappeared and efficient Japanese competitors are hurting
Volvo in its export markets.
The question remains: Is the technical and economic superiority of the
NUMMI system achieved at the expense of workers’ well-being?

Interpreting the results: Some methodological difficulties
Critics of the lean production system argue that it does not provide a viable
model for production organization. Two variants of the criticism have been
articulated:
One line of criticism argues that, in the lean system, workers are forced towork under excessive stress.9 As a result, their motivation to ensure worldclass quality and their participation in the kaizen (continuous improvement)
process will eventually taper off, and the potential benefits of standardized,
narrow jobs will be outweighed by the costs of worker disaffection. An
alternative hypothesis assumes that workers will continue to participate inkaizen efforts frequently enough to ensure its productive superiority, butthey do so out of fear of losing their jobs. Thus their bodies and minds areunder excessive stress, and many workers will quit their jobs exhausted aftera few years, leaving society to pay the costs of this premature depreciationof our human resources.
Some observers have presented prima facie evidence for one or other ofthese scenarios and jump to the conclusion that NUMMI’s production system is just a new way of further intensifying work effort, a form of ‘ultra
Taylorism’.10 Kamata’s description of his experience as a temporary worker
in Toyota City in the early 1970s and Fucini’s description of the Mazda Flat
Rock plant, for example, are cited as evidence supporting this characterization.11 Parker and Slaughter have compiled an impressive dossier on the
stress experienced by workers in some ‘team concept’ plants.12
But it is not easy to draw strong conclusions from the anecdotal evidence
available. Public debate and scholarly research both confront a number of
big methodological challenges in sorting out the relative merits of the alternative systems. First, many conceptions of the stressful, ergonomicallyunsound Japanese factory are based on old descriptions and images. In a
recent systematic comparison of the Japanese and American auto industries,
Richard Wokutch concluded that in spite of several significant weaknesses,
safety and health conditions and practices in large Japanese auto firms
were superior in many important respects to those in comparable American
firms.13
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Second, not all Japanese plants and transplants are identical. We should
not assume that a practice found at one can be extrapolated to all. We should
not asume that ‘good practices’ at NUMMI are necessarily representativeof all transplants or for that matter that they are even representative of all
Toyota plants. A good case can be made that the Japanese have been forced
to modify the harsher aspects of their production system to make them morecompatible with the expectations of Western workers. In this article, we
focus on the NUMMI version of the Japanese production model.
Third, problems observed at a plant at a given point in time may not be
inherent in the underlying model. For example, Uddevalla experienced ahigh rate of turnover during its startup, but this was for reasons that arelargely unrelated to the central debate. A fair assessment should assume thatboth approaches are capable of learning and evolution.
Fourth, it is important to avoid the frequent polemic device of shifting thepoint of comparison. From the workers’ perspective, production systems at
Japanese transplants like NUMMI are far from ideal, but the ideal is a rather
remote comparison point, and we need to use realistic comparison points tomake reasonable assessments.
Finally, if the debate is over the merits of alternative production systemdesigns, we should filter out as much as possible other, unrelated aspects ofmanagement. Some Japanese transplants, for example, have been criticizedfor discriminatory employment practices and for the difficult relations between U.S. managers and Japanese shadow managers.14 These management
problems are often real and serious, but an alternative explanation is thatthese problems are symptomatic of Japanese firms’ inexperience in international operations.15 Some of these practices do indeed appear racist, but
it is certainly racist to assume that they are inherent features of Japanesemanagement.

Interpreting the results: Technical aspects
To what then is NUMMI’s productive superiority due? In particular, should
this superiority be attributed to excessive stress imposed on workers? Our
research suggests that the primary factor is NUMMI’s effort to constantly
improve the details of the production process. Such constant improvement
is the key to productivity and quality in a product as standardized as an
automobile. This constant improvement effort creates a certain level ofstress, but as the worker attitude surveys show, the level is not so high as
to degenerate into strain and distress.
Workers at both NUMMI and Uddevalla were encouraged to seek out
improvements. And to help them, both groups received feedback on theirtask performance over their respective work cycles. But Toyota’s stand163

ardized work system makes this feedback far more effective in sustaining
improvement. At NUMMI, the work cycle is about sixty seconds long, andthe performance of that cycle is very standardized. Therefore, it is easy
to identify problems, define improvement opportunities, and implement
improved processes.
Uddevalla workers, too, had detailed information on their work cycle
performance, but as this cycle was some two hours long, they had no way
to track their task performance at a more detailed level. This problem wasexacerbated by the craft model of work organization that encouraged Uddevalla workers to believe that they should have considerable latitude in
how they performed each cycle.
Some proponents of the Uddevalla design principles argue that it offers
a way around the line-balancing problems that limit the efficiency of traditional sequential assembly lines.16 But NUMMI effectively resolves those
problems through a combination of modest doses of worker flexibility (farless extensive than Uddevalla’s) and aggressive efforts to reduce set-up
times. The standardization of detailed work methods facilitate efforts to
reduce set-up times. Moreover, as the variety of models produced in a given
plant increases, it becomes increasingly difficult for workers to recall theright procedure for each job, and shorter cycle times with well-defined methods help assure quality. As a result, NUMMI’s assembly-line can handle a
relatively broad range of product types with minimal disruption.
Could the semiautonomous work teams at Uddevalla have come to see
shorter work cycles and formalized methods as a better way and adopted
it autonomously? Although Uddevalla had a bonus system that encouraged
work teams to improve performance continually, the teams had neither thefocus on the kinds of microscopic kaizen opportunities that drive NUMMI
performance (because of Uddevalla’s long work cycle) nor the tools to capture these opportunities (because they lacked standardized work processes).
To the contrary, in fall 1991, we were informed that there were no detailed
documentation available to workers describing how to perform each worktask and specifying how long it should take. One of the Uddevalla workers
we interviewed argued, ‘You don’t really need all that detail because you
can feel it when the task isn’t going right, you can feel the sticking points
yourself.’ But workers at Uddevalla had no mechanism for identifying, testing, or diffusing the improvements that individual workers might make toeliminate these sticking points. The engineering staff from different work
areas met to share new ideas. But without a well-documented, standardized
process, it is hard to imagine how these people could have spotted improvement opportunities or shared them across the teams. You cannot sustain
continual improvement in the production of products as standardized as
automobiles without clear and detailed methods and standards.
164

Interpreting the results: Human aspects
The key points of contention in the debate over the human aspects of thecompeting models are work design and the broader plant governance process. Let us compare NUMMI and Uddevalla on these two key dimensions.
NUMMI’s work organization follows what we have called the ‘democratic
Taylorism’ model.17 As Frederick Taylor and modern industrial engineering
practice recommend, jobs are specialized and work processes are standardized to the extent justified by the repetitiveness of the production task.
But unlike traditional ‘despotic Taylorism,’ NUMMI’s prescribed methods
and standards are not designed to squeeze more work out of employeesthat management assumes are recalcitrant and irresponsible. Instead, thesemethods and standards are determined by work teams themselves: workers
are taught how to time their own jobs with a stop watch, compare alternative procedures to determine the most efficient one, document the standard
procedure to ensure that everyone can understand and implement it, andidentify and propose improvements in that procedure. At any given time,
the task of standardized work analysis might be delegated to a team leader
or a team member, but everyone understands the analysis process and canparticipate in it.
At Uddevalla, work teams were left to their own devices. In the very
early days of Uddevalla, managers gave workers the procedure documentsfrom the Torslanda plant. But these procedures were not very well designed,
as Torslanda is a traditional plant where workers play no role in defining
procedures. As a result, the Uddevalla workers quickly discarded them, andalong with them, the very idea of defining detailed methods and standards.
In auto assembly operations, where competitiveness hinges so greatly on
efficiency and manufacturing quality, this management philosophy sounds
to us more like abandonment than empowerment.
There is one aspect of work design where we believe Uddevalla had theedge over NUMMI: Uddevalla’s ‘pay for knowledge’ system provided substantial incentives for workers to build a deeper and broader knowledge.
The United Auto Workers (UAW) contract at NUMMI does not allow suchindividualized pay systems. But here NUMMI is behind the practices ofJapanese assembly plants, which have an elaborate system of skill grades aswell as individual merit evaluations.18 These evaluations (satei) have beencharacterized by critics as an essentially manipulative tool of management
control.19 Indeed, in the absence of a strong union, such manipulative use
seems likely, and there is indeed evidence of such use in Japan. But if management wants workers to contribute innovative ideas – to act as knowledge
workers – then reward systems will need to be redesigned to look more
like those used for knowledge workers, such as the skill-and-merit systems
typically used to reward engineers.20 Clearly, if these systems are to be suc165

cessful, they will need to be implemented with the careful attention to equity
that managers usually show in dealing with knowledge workers.
The second key dimension of comparison is at the plant governance level.
Uddevalla had a democratic form of plant governance in which the union
played a strong role in shaping the plant’s design and operating policies.21
NUMMI, too, has relatively democratic plant governance. The union actively participates in a broad range of policy decisions that were previously
closely guarded management prerogatives. Union and management representatives jointly investigate all problems; management has committed toadvance consultation with the union on layoffs, schedule changes, and major
investments; and management and the union jointly review any unusual or
mitigating circumstances before employees are discharged or suspended.
When workers objected to favoritism in the selection of team leaders, theunion negotiated a selection process with an explicit set of criteria and a
joint union-management selection committee.
Critics of NUMMI’s system argue that the absence of firm, explicit contract language and the extent of informal, cooperative problem solving at
NUMMI are symptomatic of a degeneration into ‘company unionism.’ Weargue, to the contrary, that any democratization of plant governance inevitably must draw the union into greater partnership, and the Local leadership’s
effectiveness in repesenting worker interests in this new setting depends on
management’s commitment to cooperation as well as on the Local leaders’skills, the level of internal Local democracy, and the resources and guidance
provided by the International. NUMMI’s record in these areas is certainly
not flawless, but nevertheless justifies strong optimism.22
But the critics’ concerns can then be restated: Can the NUMMI model,
with the corresponding UAW influence and involvement, be sustained? And
can it diffuse to other parts of U.S. industry? The critics can advance twoarguments for their skepticism. First, the pattern of industrial relations weobserve in Japanese industry might suggest that ‘company unionism’ is themore ‘natural’ counterpart to the Japanese-style production system. Second,the current industrial relations climate in the United States and the prevailing hostility to unions and to union-management cooperation put severepressure on cooperation at NUMMI and create barriers to the diffusion ofthis cooperative model.
Our hopes for the future of the NUMMI model are based on the evidence
suggesting that firms or regions that can sustain the more democratic variant of the lean model are well positioned to outcompete those that cannot.
While the evidence for both sides of this debate is sketchy, we believe thatit supports the argument that in the absence of strong, independent unions,
the Japanese-style production system risks sliding into a despotic and lessproductive mode:
166

•
•

•

The institutionalization of strong worker ‘voice’ seems to contributesignificantly to NUMMI’s world-class performance.23
By contrast, in Toyota plants in Japan, worker voice is more muted andmore often subordinated to corporate interests.24 This situation contributes to the maintenance of difficult working conditions reflected in poor
ergonomics, excessive overtime, and stressful pressures, especially insmall subcontract firms. These difficult working conditions relative toother industries make it difficult to recruit new workers, thus undermining the viability of the Japanese variant of the Toyota production
system.25
Strong worker voice is difficult to sustain in the absence of independent unions. In the United States, those nonunion plants that do afford
workers a real voice often appear to do so as part of a union-avoidance
strategy. Where these ‘progressive’ personnel policies are due insteadto the genuine humanism of the plant manager, the resulting employee
relations system is fragile since workers can easily conclude that theirinfluence is only accepted at the discretion of management and within
the limits circumscribed by management.

To summarize this section, then, if we ask whether NUMMI provides as muchscope as Uddevalla for the development of workers’ human potential, ouranswer remains, unfortunately, no. But does it create an oppressive, alienating, stultifying wok enironment? The answer must be, emphatically, no.
If Uddevalla’s productivity and quality potential were close to NUMMI’s, then its human advantages would tip the scale in Uddevalla’s favor. A
small gap in productivity and quality could be overcome easily by judicious
public policy support. The available evidence suggests, however, that: (1)Uddevalla was not within striking difference of NUMMI’s productivity andquality, and (2) NUMMI’s quality of worklife, although not ideal, is in the‘acceptable’ range as far as workers are concerned. We conclude that Uddevalla, if it had survived, would have had to evolve in dramatically new
directions in order to qualify as a viable option.

Challenging some underlying assumptions
The goal of Uddevalla’s work organization was to create a ‘new profession of car-builder’ based on ‘a model drawn from the system of craftsmen
and guilds, with apprentices, journeymen and masters’.26 The assumption
underlying this approach is that a work organization based on narrow tasks
and detailed standards is intrinsically dehumanizing. We believe that the
NUMMI case shows this assumption to be wrong. NUMMI’s approach to
standardized work shows that Tayloristic efforts to define the technically
optimal ‘one best way’ are not necessarily weapons used by management to167extract maximal effort from a recalcitrant workforce. In fact, there are three
ways that the knowledge required to make improvements can be used: (1)by management, coercively forcing ever-higher levels of work intensity; (2)by workers, covertly using that knowledge to reduce their own work effort(back to the ‘soldiering’ observed by Taylor!); and (3) by the joint efforts
of workers, managers, and engineers to fuel a continuous improvement ofefficiency and quality without intensifying work beyond workers’ capacities. We believe that the NUMMI case demonstrates that the third option ispossible. Practices in Japanese plants and in other ‘lean’ transplants probably vary considerably in this respect, but NUMMI shows that continuous
improvement does not have to be based on an escalating appropriation ofworkers’ know-how.
The contrast between Uddevalla and NUMMI also leads us to challenge asecond widely held assumption: that world-class performance can be based
only on very high intrinsic work satisfaction. It would be wonderful if we
lived in a world where every job could be an opportunity for Maslovian selfactualization. But when products are fairly standard and mass-produced,
and when automation is still not cheap enough to eliminate labour-intensive
methods of production, then efficiency requires narrowly specialized job
assignments and formalized standard methods – a form of work organization that precludes the very high intrinsic work satisfaction that would, forexample, stimulate workers to come in without pay on a day off to tackle a
production problem. Is this equation merely the result of ‘corporate greed’
as some critics contend? We think not: any community that needs suchstandardized goods will object to paying the exorbitant costs associatedwith an inefficient and poor quality production organization.
As we have argued, the quality of worklife in such industries can be much
improved by democratizing the work design process and business governance processes. Clearly these changes leave work in the category of ‘instrumental necessity’ rather than ‘self-actualization opportunity.’ NUMMI
shows us, however, that even when work has a basically instrumental function for workers, it can be organized to sustain both a moderately high levelof worker motivation and world-class performance.27
A third assumption built into the Uddevalla approach and one that underlies much of Western industry is that an increase in individual learning
automatically leads to an increase in organizational learning. This is afundamental fallacy. The Japanese model does not take organizational learning as a given; managers consciously work to create policies and practices
which facilitate it.28
Uddevalla designed an extremely impressive range of personal learning
opportunities for its employees. Workers spent the first sixteen months
developing basic skills, then progressively learned all of the jobs on their168

teams until they could build the entire car themselves. Then they went on
to develop teacher competence, team spokesperson competence, and skills
in other managerial and engineering areas. But this emphasis on individual
learning had no counterpart in organizational learning. Team autonomy anddecision decentralization were Uddevalla’s central design objectives. As aconsequence, little thought was given to how work groups might learn fromone another to facilitate continuous improvement. Indeed, in an interview
we conducted, the plant design project leader described how the planningteam ignored the need for cross-group organizational learning:’We didn’t
put much thought into how to learn from other groups. Our focus was onbuilding jobs bigger – to lengthen and widen the job; that was what wewere aiming for.’In contrast, the Japanese production model explicitly focuses on strategies for organizational learning. Standardization of work methods is aprecondition for achieving this end – you cannot identify the sources ofproblems in a process you have not standardized. Standardization captures
best practice and facilitates the diffusion of improvement ideas throughout
the organization – you cannot diffuse what you have not standardized. And
standardization stimulates improvement – every worker is now somethingof an industrial engineer. At NUMMI, the skill development strategies forindividual workers are managed as a component of this process, rather thanas a way of maximizing personal opportunities. As a result, training focuses
on developing deeper knowledge, not only of the relatively narrow jobs
but also of the logic of the production system, statistical process control,
and problem-solving processes. Understanding a broader range of jobs
– the focus of Uddevalla’s skill development approach – is recognized as
an important stimulus to kaizen efforts, but this broadening of skills builds
on, rather than replaces, the standardized work process and the deepeningof skills. Our study of NUMMI suggests that management may not be sufficiently attentive to the importance of planned skill broadening, but thesister Japanese plants systematically rotate workers through related departments over a period of years.

Conclusion
We have argued that NUMMI’s combination of technical-economic andquality-of-worklife strengths makes its production system the most appropriate type for relatively repetitive, labor-intensive activities like auto
assembly. It is worth asking whether this system will be undermined by the
progressive automation of these activities, by changing worker expectations,and by the shift toward volatile markets, lower volumes, and greater productvariety. Was Uddevalla simply ahead of its time?
169

At first sight, the recent innovations at Nissan’s new Kyushu plant seemto support such speculation. In response to labor market conditions – a tightJapanese labor market, the difficulty of attracting workers to auto assembly,
and the long-term projections of labor shortages – Nissan has eliminated theconveyer belt, has installed significantly more automation, and is using manyof the ergonomic job designs that characterized Uddevalla.29 Indeed, Japanese auto executives were among the most frequent visitors to Uddevalla.
But these new plant designs do not suggest that the Japanese are switching
to an Uddevalla model. First, ergonomic work task designs are a distinguishing feature not of the Swedish model but of enlightened management facedwith tight labor markets. Second, the work cycle has remained short andvery standardized. Third, with lower volumes and greater product variety,the natural learning curve effect is even less reliable, and these plants will
therefore pursue even more aggressive standardized work efforts to ensure
efficiency and quality.
The more appropriate lesson to draw is that both the lean production
system and the Uddevalla alternative have extensive room to evolve anddevelop. If Uddevalla had survived, it would have had to evolve in dramatically new ways to be competitive in productivity and quality. Whether it
would have done so quickly enough and whether it would have retained its
distinctive worker-oriented features is unclear.
In the case of the lean production system, we expect that it will evolve to be
more employee-oriented. In Japanese plants, managers will need to adjust to
the long-term prospects of labor shortage and to changes in workers’ expectations as Japanese seek to enjoy more of the rewards of their extraordinary
hard work. In Japanese production system plants outside Japan, the speedof this shift toward more employee orientation will depend on local factors.
But the combination of standardized work and more democratic management has proven potent at NUMMI in its ability to sustain both continuous
improvement and worker morale. It might well represent the model for the
next generation of labor-intensive, mass-production activities.
Our thanks to J.D. Power and Associates for permission to reproduce copyrighted data. Their unauthorized reproduction is prohibited.
Reprinted from Sloan Management Review, spring 1993, pp 85–94, bypermission of publisher. Copyright 1993 by the Sloan Management Review
Ass. All rights reserved.

170

Postscript: Uddevalla and the Japanese one more time
Christian Berggren begins his defense of Uddevalla1 and critique of theJapanese approach by dismissing productivity comparisons with somemethodological disclaimers showing the difficulty of comparing different
plants. To be sure, productivity comparisons are always difficult; we will
return to the methodological issues below. It is clear, however, that the
productivity advantage of the Japanese over European and American car
producers in the late 1980s and early 1990s was of such a magnitude, as toallow them to take market share almost at will, were it not for protectionist barriers or self-imposed restraints to avoid protectionist barriers. This
market test is decisive.
There is, however, something more to be said regarding the available
research data. First, notwithstanding his methodological hesitations, Berggren does himself offer some data in an effort to refute the claim by James
Womack that: ‘Uddevalla is not in the ballpark’.2 Unfortunately, these data
do little to reassure us that Uddevalla was even close to the productivity
or quality standards set by Japanese producers. Berggren tells us that in
September of 1992, Uddevalla was taking 36 hours to assemble a car andthat its mid-1993 target of 25 hours seemed within reach. These results canbe compared meaningfully, if only approximately, against the performanceof other producers. Berggren protests that the IMVP data only covers asubset of assembly activities, but with the generous assistance of John PaulMacDuffie, we have been able to make the appropriate adjustments to boththe IMVP averages and Berggren’s Uddevalla data.
The IMVP data needs to be adjusted to exclude salaried personnel, whichwere not included by Berggren, and welding and paint operations, whichwere not performed at Uddevalla. In the absence of further detailed information, we have adjusted the IMVP data by allocating indirect labor hours
to final assembly in proportion to the share of final assembly in the overallplant operations. The net result is that the IMVP averages must be reduced
by a factor of 54 percent figure.3
The Uddevalla data must in turn be adjusted for the presence of exhaust anddoor subassembly operations (which were excluded from the IMVP data),
for the Volvo 940’s relatively large size, and for its high option content.
These adjustments were based on our estimates of Volvo production and on
the worldwide IMVP sample averages. Together they reduce Uddevalla’s
hours per car by 3.6. Following the IMVP methodology, we have further
adjusted the Uddevalla data for total absenteeism, reducing their estimatedhours per vehicle by a further 20 percent.4 The net result is that the adjusted
Uddevalla hours per vehicle in September of 1992 was 25.9, and the target
for 1993 was 17.1. These can be compared against a Japanese luxury producer’s average of 16.9 hours deflated by 0.54, or 9.1 hours, and against
171the correspondingly deflated European luxury segment’s average of 30.8
hours and the European volume producer’s average of 19.2.5 One shouldnote that the IMVP data are for 1989, and the performance of the Japaneseand European competitors has certainly improved since then. While thecomparison with the Japanese luxury segment may be a little unfair, sincein 1989 it did not include cars as sophisticated as the Volvo 940, comparison
with the European luxury segment is probably overly generous. The European luxury segment, after all, included Daimler-Benz and Jaguar, while
Uddevalla’s product, in terms of product complexity, brought it closer tothe volume rather than the luxury segment.
A similar distributing gap appears in the quality results. Berggren reportsthat the J.D. Power rating for Uddevalla’s products was 124 problems per
100 vehicles in 1992. This can be compared to a score of 46 for the Lexus
LS400 (the top-ranked car), and 82 for the NUMMI Corolla (along with
the Toyota Corolla, the top ranked small car). In summary, we do not see
a basis for believing that when Uddevalla was shut down, it was close toapproaching the Japanese standard. (The Lexus LS400 further improved its
score in 1994 to just 32 problems per 100 cars.)
Much of Berggren’s argument hinges on the dramatic improvements in
productivity and quality that were achieved at Uddevalla since its opening
and especially in the year preceding its closure. Our own evaluation supports
this conclusion. The issue, however, is whether this impressive improvement was a temporary development or a prelude to sustained high rates ofgrowth in productivity and quality, based on rapid organizational learning.
Berggren assumes the latter; although we are not so sure. Any new plant,even under traditional management, undergoes rapid organizational learningand productivity improvement in its initial stages, as workers and managers
learn their jobs and routines and learn to work with one another. Uddevalla
represented a new way of building cars and was surrounded by publicity.
These circumstances were certain to have further accelerated these learning
processes. Moreover, prior to the closure decision, plant personnel knew thatthey had only a short time to prove themselves. Thus, an enormous amountof ‘crisis learning’ took place as managers and workers alike, sought toidentify and remove bottlenecks to productivity improvement. In talking
with a number of these people, we were impressed with their determinationand commitment to make Uddevalla work.
Strong initial start-up and crisis learning, however, do not insure thatthe organizational learning necessary for sustained productivity and quality improvement in day-to-day normal operations is in place. In a crisis,
people break normal routines to learn and diffuse best practices. But inmost organizations on a day-to-day basis, it is the normal work routine
which structures and modulates the learning process. We can not assume172

that Uddevalla could have sustained its rate of organizational learning andassociated productivity and quality improvements in a mature operation.
Indeed, it is just as plausible to argue that they would regress, since people
typically return to their ‘normal’ routines when crises subside. Many of thelearning activities in the design and start-up phase of Uddevalla were organized as independent projects staffed by personnel and external consultants
engaged on a temporary basis. As Ellegård and associates acknowledge,
hard-won knowledge can easily be subsequently lost to the organization inthis situation.6 Therefore, we need to examine whether the mechanisms had
been put in place to insure continued high rates of growth in productivity
and quality.
Our doubts in this regard are based primarily on two issues that we believe
were not sufficiently addressed by Christian Berggren. First, we continue
to believe that standardized work is a precondition for sustained efficiency
and quality improvement. One can not systematically improve, what one
has not standardized and measured. Standardization is about disseminating
best practices across units and levels. The Japanese contribution has been
to think about standardization in this novel fashion and to decentralize theprocess of standardization and make it the workers’ responsibility.
In Swedish and in American industry, the term and indeed the very ideaof standardization are stigmatized, as a result of the way it was used under
traditional Taylorism. For example, if one looks at the treatment of standardization by a set of scholars closely involved in the Uddevalla development, one sees it presented in a most negative light.7 Berggren addresses
our concerns about the absence of standardized work by claiming that newprocedures documents had been completed and that their introduction in
the assembly teams started in late 1991. This would seem to be a salutarychange, but it prompts a number of questions. What were the worker’s rolein developing these documents and how would the workers be involved in
implementing, maintaining, and improving these standards? What practices
were put in place to identify and diffuse the most effective practices acrossthe most relevant units? Unfortunately, Berggren is silent on such criticalpoints, but they are at the heart of successful continuous improvement.
This leads us to another related concern. A major theme throughout the
postwar history of the Swedish work reorganization movement has beena stress on the importance of autonomous work teams.8 In the case of theautomotive industry, this interest grows in large part from the desire to turnshort cycle work into long cycle work, as a remedy for the alienating effectsof traditional auto assembly work. These driving forces in turn have naturally
led researchers and those managers influenced by them to focus on individual
and small group learning rather than organizational-wide learning.
These themes appear prominently in the work of a group of scholars
173closely associated with the Uddevalla experiment. Their focus is on ‘naturalgroup work’ which they see associated with long-cycle times.9 They stressthe ‘holistic learning principle’ (helhetsinriktad lärandeprincip) but uponcloser examination, the focus is clearly on learning within one’s particularnatural group and insuring that this group has a broad view of the production process. Their strategy for Uddevalla was first to create long-cycle
parallel final assembly and to develop the rest of the production system(e.g., component procurement, subassemblies of kitted systems, and storage
facilities), to support this approach.
While occasional references are made to learning across groups and levels, this is not the primary focus. Rather, the emphasis is on the learningthat goes on within autonomous work groups (autonom arbetsgrupp), as asolution to long-standing problems of worker motivation.
There is an emerging consensus, however, that many of the most fundamental roadblocks to improved productivity and quality are problems
that require the cooperation of different groups within the production
system. The conception of the autonomous work group, with its focus on
the technical and administrative freedom of the group, does not adequately
support the kind of organizational learning we believe to be essential forsustained productivity and quality improvement.10 As Berggren correctly
notes, manufacturability is a key issue impacting final assembly time; yetmanufacturability is achieved not just by engineers doing a better job but byintense structured iterative feedback between the different functional units inthe organization. In looking at Berggren’s original treatment of Uddevalla,
however, we see no indication that he, or those at Uddevalla, recognizethat this is an important concern to be addressed. Instead, we see the usual
focus on developing a long-cycle parallel production system with its implicit
emphasis on expanding individual and small group learning.11
As Berggren and Sandberg note, the interesting question is whether these
problems we have identified are intrinsic to the Uddevalla approach or were
external elements that were rapidly being jettisoned as Uddevalla came togrips with real world pressures. Would Uddevalla managers and workers havecome to accept the need to adopt standardized work as a basis for improvement activities? Would they have come to downplay the role of autonomous
work groups so that fuller and broader cooperative and learning could takeplace? And could these accommodations have been made without drasticallyrevising the basic concepts of a parallel production flow that underlay thewhole experiment? We do not know the answers to these questions though
we have some strong doubts. Despite his claims to the contrary, we do notbelieve Christian Berggren knows that answers to these questions either. What
we do know, and what we can all agree upon, is that it was a tragedy that theplant was closed and these questions will remain unanswered.
174

Notes to Designed for learning
1. By contrast, there is now a rather strong consensus on the organizational
designs required to support learning in more automated settings and where
product designs or services change very frequently. On automated settings, see:
P.S. Adler, ed., Technology and the Future of Work, New York: Oxford University Press, 1992. On settings where designs or services frequently change, see:S. Davis and W. Davidson, 2020 Vision, New York: Simon & Schuster, 1991.
2. J.P. Womack, D.T. Jones, and D. Roos, The Machine That Changed the World,
New York: Rawson, 1990.
3. See F. Naschold, Evaluation Report Commissioned by the Board of the LOM
Programme, Berlin: Science Center, 1992, pp. 2–3; and C. Berggren, Alternatives to Lean Production, Ithaca, New York: ILR Press, 1992.
4. See R.R. Rehder, ‘Building Cars As If People Mattered’, Columbia Journal ofWorld Business, Summer 1992, pp. 57–70; and C. Berggren 1992.
5. J. Krafcik, ‘Learning from NUMMI’, Cambridge, Massachusetts: MIT Sloan
School of Management, International Motor Vechicle Program, Working Paper,1986.
6. Power Report, June 1992. Revised data for earlier years provided by J.D. Power
and Associates.
7. ‘Edgar Fray on Volvo’s Brave New Humanistic World’, New York Times, 7 July
1991, p. F5.
8. One caveat to this conclusion should be mentioned: the productivity and quality
performance data are strongly influenced by the manufacturability of the respective vehicle designs. Toyota products’ manufacturability has been ranked thebest in the industry, whereas Volvo has been ranked fifteenth. See: J. Krafcik,‘The Effect of Design Manufacturability on Productivity and Quality: An
Update of the IMVP Assembly Plant Study’, Cambridge, Massachusetts: MIT
Sloan School of Management, International Motor Vehicle Program, Working
Paper, 1990.
9. See M. Parker and J. Slaughter, Choosing Sides: Unions and the Team Concept,
Boston, Massachusetts: South End Press, 1988.
10. K. Dohse, U. Jurgens, and T. Malsch, ‘From Fordism to Toytism? The Social
Organization of the Labor Process in the Japanese Automobile Industry’, Politics and Society 14 1985:115–146.
11. S. Kamata, Japan in the Passing Lane, New York: Random House, 1993; andJ. Fucini and S. Fucini, Working for the Japanese, New York: Free Press,
1990.
12. Parker and Slaughter, 1988.
13. R. Wokutch, Worker Protection, Japanese Style: Occupational Safety and
Health in the Auto Industry, Ithaca, New York: ILR Press, 1992, p. 225.

175

14. See, for example, Fucini and Fucini (1990); and R. Cole, ‘Nihon kigyo yo,
kokujin koyo no judaisei o shire’ (Be aware of the importance of black employment in Japanese firms), Chou Koron, 10 October 1989.
15. R. Cole, ‘Racial Factors in Site Location and Employment Patterns of Japanese Auto Firms in America’, California Management Review, Fall 1988, pp.
9–22.
16. K. Ellegard, T. Engstrom and L. Nilsson, Reforming Industrial Work: Principles
and Reality, Stockholm: Swedish Work Environment Fund, 1991.
17. P.S: Adler, ‘The Learning Bureacracy: New United Motors Manufacturing Inc.’,
in Research in Organizational Behavior, eds. B.M. Staw and L.L. Cummings,
Greenwich, Connecticut: JAI Press, 1992.
18. K. Koike, ‘Learning and Incentive Systems in Japanese Industry’, Paper presented to the conference ‘Japan in a Global Economy: A European Perspective’,
held at Stockholm School of Economics, 5–6 September 1991.
19. K. Endo, ‘Satei (Personal Assessment) and Inter-Worker Competition in Japanese Firms’, Industrial Relations, in press.
20. Koike (1991).
21. C. Brown and M. Reich, ‘When Does Cooperation Work? A Look at NUMMI and
GM-Van Nuys’, California Management Review, Summer 1989, pp. 26–37.
22. Adler (1992).
23. R.B. Freeman and J.L. Medoff, What Do Unions Do?, New York: Basic Books,
1984.
24. R. Cole, Work Mobility and Participation, Berkeley: University of California
Press, 1979.
25. ‘More Japanese Workers Demanding Shorter Hours and Less Hectic Work’,
New York Times, 3 March 1992, p. A6.
26. Ellegard et al. (1991), p. 25.
27. See P.S. Adler, ‘Time-and-Motion Regained’, Harvard Business Review, January–February 1993, pp. 97–108.
28. R. Cole, ‘Different Quality Paradigms and Their Implications for Organizational
Learning’, Paper presented to the conference ‘Japan in a Global Economy: A
European Perspective’, held at Stockholm School of Economics, 5–6 September
1991.
29. ‘Factory Fantasia’, Automotive News, 13 July 1992, pp. 3, 31; and ‘Japan Lures
Auto Workers with ‘Dream’ Factories’, New York Times, 20 July 1992, pp. A1,
D2.

176

Notes to Postscript
1. See Part II, page 100.
2. New York Times, ‘Edges Fray on Volvo’s Brave New Humanistic World,’ July2, 1991.
3. This is an average for the total worldwide luxury and volume producer samples.
Regions differ by only plus or minus 3 percent.
4. This absenteeism adjustment is made by IMVP so that comparisons reflect the
number of people actually involved in building cars on an average day, notthe total number of people on the payroll. This makes allowance for factors
beyond the control of plant management that might explain absenteeism, suchas national social welfare policies regarding health-related absences. Thisadjustment may be overly generous to Uddevalla, since one of the goals of its
holistic work design was to make work so attractive and interesting that absences
would be greatly reduced.
5. See J. Womack et. al., The Machine That Changed the World. New York: Harper,
1990:89, Figure 4.3 for the IMVP averages for volume producers and page 89,
Figure 4.5 for the luxury car segment data.
6. K. Ellegård et. al., ‘The Development of Unique Production and Work Structuring Principles Through a Creative Search and Learning Process: The Volvo
Uddevalla Final Assembly Plant’, Brussels: EUROTECNET Technical Assistance Office, The Commission of the European Communities, Task Force Human
Resources, Education Training and Youth, 1992:14.
7. K. Ellegård et. al., Reflektiv Produktion, Gothenburg: AB Volvo, Media,
1992:76.
8. R. Cole, Strategies for Learning, Berkeley: University of California Press,
1989.
9. K. Ellegård et. al., Reflektiv Produktion, Gothenburg: AB Volvo, Media, 1992:
82.
10. K. Ellågard et. al., Reflektiv Produktion, Gothenburg: AB Volvo, Media, 1992:
138.
11. C. Berggren, Alternatives to Lean Production, Ithaca: ILR Press, 1992: 146166.

177

Limits to innovation in work organization?
An international comparison:
Volvo Uddevalla and GM SaturnBob Hancké and Saul Rubinstein

In May 1993, in a small former shipyard town on the west coast of Sweden,
Volvo closed its Uddevalla plant. The plant had become famous in its four
years of existence because it radically abandoned the assembly line. Cars
were made by highly skilled workers who, in autonomous teams of 8 to
10, built an entire car. One month later on the other side of the Atlantic, inSpring Hill, a small town in the state of Tennessee, the Saturn Corporation
added its third crew in order to utilize its full production capacity. Saturnis GM’s newest attempt to regain lost share in the small car market: in thisattempt, the local parties are trying to reinvent management.
There are many differences between the two companies beside the stories
of apparent failure and success that open the article. The national systems
of industrial relations they are embedded in, the motives and antecedents
to each, day-to-day operations and work organization, the market segment
they produce for, and finally their size and respective places in their parent
organization are very different.
Yet the differences between Saturn and Uddevalla obscure an important
set of issues for both organizations that have to do with the relationshipbetween each and its parent corporate and union environment. (For reasonsof style, we will, despite Uddevalla’s demise, use the present tense for boththroughout this paper.) First of all, they are relatively small operations inlarge corporations. Uddevalla is a final assembly plant in Sweden’s mostimportant industrial enterprise, Volvo, while Saturn is a wholly owned
corporation of General Motors. Second, both Uddevalla and Saturn are
operating laboratories in the search for innovative alternatives to the traditional organization of production. And third, unions were, in both cases,
critical to the conceptual, planning and design phases, and as a result, theexperience of both organizations sheds new light on the issues of labor’srole in management.
179

Not the differences, but the similarity is at the basis of the comparison inthis paper. Our basic point is that the degree of congruence between, on the
one hand, the organizations and their vision of workers and management
and, on the other, the wider corporate and union environment and structure,
is a crucial variable in the assessment of the innovative organization’s future(or, as in the case of Uddevalla, of its past): both the plant in Uddevalla andSaturn make a lot of sense economically, yet that alone does not guarantee
their success within the overall organizational context in which they areembedded. This paper is a search for the other factors: how far can technological and organizational innovations go in such insular settings, and whatrole do institutions, in particular the wider corporate and industrial relations
structure, play in these processes of innovation?
In this paper, we will use a synthesized version of the developments in Uddevalla, where the entire race has been run, as a way of suggesting questions
about other innovative efforts in organizing production and work relations,specifically those at Saturn. The paper consists of three parts. The first partwill lay out the terms of the debate on firm governance in manufacturing.
In the second section, we will give a reinterpretation of the Uddevalla experience, followed by a discussion of the innovations at Saturn. The thirdand final section concludes by presenting a set of questions which we think
follow from the analysis in this paper.

1. The social organization of car manufacturing
Ever since Henry Ford coupled the assembly line with exclusive management control on the shopfloor, and thereby increased productivity (and thus
wages), car factories all over the world have moved to adopt both these technical and social systems. ‘Fordism’ also gave us a particular mode of workorganization and firm governance that divided car-building (and in its pathmany other industries as well) into two distinct sets of activities, separated
by an impenetrable wall. Managers, according to that model, conceived ofinvestment, products, process and tasks, while workers executed tasks and,at most, bargained over wage levels through their unions. (Dankbaar 1992;
Jürgens et al. 1989; Katz 1985).
Especially after World War II, therefore, firm governance in mass car
production has followed a relatively simple, straightforward and universal
path in Europe, the US and to a lesser extent Japan: management, ‘theverb’, was also really a task for management, ‘the people’, not becauseof technology or some inherent natural division of labor, but as a result of
the way the knowledge to produce a car was divided between workers andmanagers. Management, on the shop-floor embodied in the person of theindustrial engineer, designed the tasks to balance the line – that is, they di180

vided assembly up in small tasks in such a way that neither line nor workers
would stand idle when the conveyor belt made its way through the factoryand supervisors directed the workforce in order to efficiently coordinate
those disparate tasks. Workers followed those orders, and that was where
their responsibility stopped. World-wide, this was the predominant socialorganization of car manufacturing.
It was not until Japanese cars appeared on Western markets, first in the
low-end segment and recently also in the luxury car segment, that the ideaof alternatives to the Fordist division of authority was taken seriously forthe first time. Whatever the particular form the argument took, they all built
on different notions of the relationship between workers and managers (andof their responsibilities) than had prevailed in postwar mass-production. Instead of dividing the construction of a car into two different worlds – one ofstrategy, centered around conception and symbolized by control over investment – and the other of execution – with assembly tasks and wage-bargaining
at its core – the Japanese tried to fuse the two by systematically integrating
workers in production and design decisions. And instead of accentuating
the social distance between workers and managers, the Japanese did justthe opposite (Womack et al. 1990). Growing international competition has
thrown into question the nature of authority structures under mass production regimes. Workers – and in many cases unions as well – have suddenly
come to be perceived as strategic assets in global competition, and thosecountries where they have been – as in German and Japanese industry – aresuddenly regarded as models, if not to emulate, then at least to borrow fromfreely (Dertouzos et al. 1989; Turner 1991; Streeck 1992).
Yet for the most part, the empowerment of workers has, even in this new
system – definite limits and, despite the tighter integration of workers’
knowledge into each step of the design and production process, management still manages without too much interference from workers or unions.
In fact, judging from most accounts of industrial reorganization, theseauthority structures remain intact, with the traditional lines of demarcationin the workplace easily accommodating changes in workplace organizationsuch as teams or quality programs that push part of the responsibility down
to the shopfloor. Workers’ participation has, in this new world, become an
instrumental goal, and therefore limited to what is economically efficient.
We take issue with precisely this argument. Our primary aim in thiscontribution is to point out that serious alternatives to that traditional division of authority exist. Uddevalla and Saturn provide such alternatives far
beyond what is limited by a purely economic rationale, since they deal withpower-sharing in decision-making and are part of a broader social agenda.
Furthermore, the two cases we discuss here point out that such alternatives
to the conventional social organization of car manufacturing exist under both181

line and stationary manual assembly, and that it is viable for both relatively
inexpensive, standardized smaller and up-scale customized larger cars. We
depart from the dominant views, however, in our point that the existence
and survival of such alternative efficient modes of organization cannot be
accounted for solely in economic terms; in order to understand their evolution, politics has to be taken into account explicitly (Kochan et al. 1986;
Sabel 1982; Piore & Sabel 1984).
Both organizations embody – or at least have the potential to embody – asharp break with the logic of management prerogatives and union domainsthat has dominated all Western political economies for most of this century,
but especially since World War II. In Uddevalla, that break is a logicalconsequence of a production system that turns the conventional logic ofassembly-lines on its head by reintegrating small tasks in long cycles. In
Saturn, it is a result of the involvement of the union in both organizational
governance and the day-to-day management of operations. The salienceof the comparative treatment in this paper resides exactly in the way bothorganizations differ from their corporate and union environments. We will
discuss that point in the next section and then move on to a detailed analysisof the two cases.

2. Breaking with tradition: Saturn and Uddevalla
The path-breaking approach to industrial relations makes both organizations
exceptions in their own corporations. Saturn breaks with many accepted
practices in manufacturing management inside GM. Volvo Uddevalla took
the Swedish micro-model of production by autonomous teams to its logical conclusion. But whereas Saturn marks a clear break from traditional
industrial relations practices in the US, and is exceptional because of that,the plant in Uddevalla is much less of a radical departure from those institutionalized facets of firm governance in Sweden and North-Western Europe
more generally, in part because of the already extensive co-determinationrights the unions have had in Volvo for many years. The relevance of theSwedish plant for this debate on firm governance is that it has taken us as far
as we have ever been on the road toward work without supervision, wheretask conception and execution are again linked (many of the other chaptersin this book cover this point in much more detail).
In Uddevalla, management as it has become known under the old Fordist
structures, has all but disappeared. Self-managed teams deal with all or mostof the former plant management functions: pacing, coordination, sequencing, parts supply, quality control, etc. Management head count is – hardly
a surprise – very low: 16 managers for a workforce of roughly 900. Directsupervision is even lower: one shop manager supervises more than 100 work182

ers. Saturn is, as we will detail in the next section, the only car plant/firmthat comes even close to this with a indirect/direct workers ratio of 1:50.
Most plants operate at considerably tighter supervision levels of around 1:20.
This compares very favorably with other car plants. Most GM operations,for example, have, on average, a supervisor-to-production-employee-ratioof 1:25;1 NUMMI (the GM-Toyota joint venture) operates at 1:182 and theJapanese US transplants operate at approximately 1:20.
Worker autonomy is also very high in Uddevalla, job content is rich andthe structure of the assembly task itself invites workers to permanently
challenge and rethink what they are doing and come up with better ways,
suited to their individual needs. Coordination of assembly too has, to a large
extent, been decentralized to the teams. Management, in short, primarily
brings expertise to the process, and given the workers’ knowledge of theirtasks, even that is highly dependent upon (and probably non-existent without) tight collaboration between workers and engineers.
Saturn challenges the conventional management logic too, but from anentirely different angle than Uddevalla. Whereas in Uddevalla the natureof the production technology is such as to throw into question the need forseparate management functions, in Saturn the challenge is rooted in an attempt to reorganize and redistribute authority on the shopfloor. While thedetails will follow later, a preview will make this point clear in its generalform. Throughout the Saturn Corporation, all elements of firm decisionmaking involve a consensus process between workers, represented by theirlocal union, and management. This includes among others strategic business planning around product, process and quality, scheduling, suppliers,
retailing – in short all functions that have traditionally been considered
the exclusive domain of management. Further, the union has also taken on
responsibility for co-managing operations by filling half of the line middle
management positions with their own members. In Saturn, the labor union
is defending workers’ interests while jointly governing and co-managing
the business.
In the following sections, we will detail these points for both Uddevalla
and Saturn. We will direct our attention to the role of the labor unions,because (a) while we care deeply about the positive contributions democratic labor institutions can make in our industrial organizations, we areconcerned about the current state of organized labor in most Western political economies, and (b) because we believe that the unions hold the key
to understanding the innovations in both unconventional organizations. We
will conclude the two discussions, of Uddevalla first and then of Saturn,with a short section that reiterates the basic elements of the cases in termsof our central idea about the ‘politics of congruence’.

1832.1 Volvo Uddevalla: Beauty is its own reward
The plant in Uddevalla is special because it is a ‘Copernican revolution in
car assembly’ (Berggren 1990). Rather than having many workers who, intask cycles of one to two minutes, assemble a minute part of a car, the Volvo
940 that is produced in Uddevalla, is built one at a time by a small team ofhighly trained craftsmen, who have a knowledge of parts and their operation
roughly comparable to a skilled car mechanic. Since the cars are built one
at a time in small docks where they do not move during assembly, ultimate
customization (and hence a price premium) is easily obtained.
Important to know is that the plant was a highly viable economic operation:
productivity was very good and on a steep learning curve, capital costs, as
expressed in basic investments and tool changes, were very low, quality andcustomization (and therefore the price of the Uddevalla cars) was very high,and the ‘social record’ of the plant, as expressed in, for instance, strains,stress and illnesses, was among the best in the world.3 Moreover, every car
made in Uddevalla was a sold car. By the time the closure was announced,
the plant built predominantly cars on order from the dealerships they had
set up contacts with.
Despite the generally positive record, the plant closed in May 1993. What
happened? Part of the explanation, we will argue, is indeed what others inthis volume suggest: Volvo’s tremendous cash-flow problems and the belttightening operation by Renault, combined with the sudden turnaround by
Volvo corporate management with regards to their smaller innovative plants
in Kalmar and Uddevalla. Volvo management thought that the rationalization
which was necessitated by the squeeze on the European car market, could
best be found in a concentration of productive capacity in the larger plants
in Sweden and Belgium.4
Yet, while this explanation provides us with the structural backgroundparameters, it does not allow us to appreciate the full story. Our treatmentof the Uddevalla closure starts where the other stories come to an end,
and tries to explain why the counterfactual ‘What if the unions had put up
a fight to keep Uddevalla open?’ never occurred. Given the power of theunions in the Volvo firm as a whole, it is very likely that this would havecreated such a different configuration that Volvo would have been forced
to re-evaluate its decision and simply look for other ways out of the crisis.
In this counterfactual world the story might have been very different andUddevalla’s closure may not have been as over determined as it is now. A
different outcome was therefore possible and the key is to understand whythat did not happen. Part of the answer is obviously to be found in the events
surrounding the closure decision that others in this volume are considerably
better-placed than we are to deal with; part, however, is also hidden in therole of the union in the Uddevalla project group in the mid-1980s.
184

Metall project members, both from the Gothenburg union district and fromthe Stockholm central leadership, played an important role in the discussions
that led toward Uddevalla. Initially their demands were rather conventionalbut, once they found their momentum, the union people in the project grouppushed the project considerably into new areas.
However, while Metall people played such an important role, other issues, at that point seemingly marginal to the project, were left untouchedin the development process. The most important one of these, if judged
by the final outcome, was the influence of the project group on corporate
decisions. Throughout, there was no discussion of what cars to build in
Uddevalla – originally the low-end 240 as well as the high-end 940 were to
be built there; then that changed and, eventually only the most expensivemodel was built in Uddevalla. Similarly, there were no contacts with projectgroups that were working on a new Volvo car, the currently marketed 850,
and existing models were never re-engineered to match the learning andproduction process at the Uddevalla plant. Also, from a reconstruction of
the development process, it appears that strategic linkages between the
Uddevalla union reps and the Volvo corporate board union reps (but thisseems to be true to some extent for management as well), were virtually
non-existent. All of this suggests that the Uddevalla project group – andthe unionists in it – acted in an autonomous manner, detached from theirparent organizations.5
Why did the union leave these and other strategic issues untouched?
From interviews with the people involved, two sets of answers emerge, andboth help us understand at least in part what happened. The first one is the‘official Metall story’. According to this view of things, any involvementwith other issues was simply not deemed necessary at that time. The groupconcentrated on how to make a car, because, once in operation, it believed,
production would be intrinsically so flexible that any changes in the demand mix would be easy to meet. The other issues were, in this view, not a
problem and if strategic issues became important, the co-determination law
framework would provide the union with the resources it needed. The issues
were never discussed, in other words, because they were no issues.
But unions do not always do what they say they do. That is the starting
point of the second argument, which digs somewhat deeper, puts the firstplausible but limited point in larger perspective, and complements it: internal
union politics blocked the active participation of the local Uddevalla people
into these other, non-traditional areas. In order to understand this, a shortreview into the structure of Swedish unions is necessary.
Swedish unions operate at three levels of the economy simultaneously: thenational economy, the industrial branch and the individual firm/plant. (In thecase of large corporations such as Volvo, there is a fourth level, the corporate,
185inter-plant level.) Territorially, the unions have so-called ‘groups’, regional
union bodies (districts), that consist of the plant/firm-level unions within
one region, the so-called ‘workplace clubs’. (Kjellberg 1983 and 1992)
Inside the Gothenburg Metall union district – the regional union bodythat organizes the workers in the main Torslanda plant (ca. 10,000 workers) and the small Uddevalla plant (ca. 1,000 workers) – there have always
been two large camps with regards to Uddevalla. One side supported the
project be-cause they were convinced about the necessity for the union toplay an active role in shaping companies and work in Sweden. The othergroup, mainly consisting of more traditional unionists, were very good at
the conventional type of union work, and therefore did not appreciate nor
like the Uddevalla-type ventures into new fields, or understood what theunion role would be in this new production and management system. Thislatter group was embodied in the Torslanda local president, who attempted
to restrain the local union people involved in the Uddevalla project groupseveral times, wanted to impose the 20 minute ceiling on the task cycle as
the official union line, was unable to envision a car factory without lines,
and denied the union people the authority to discuss other, wider-ranging
strategic issues.
The reasons why the local union people were, in the end, able to pushthrough their program, is a fine illustration of the role of surprises and contingencies in the development of Uddevalla. Whereas the Torslanda Metall
president was easily among the most important and powerful people in theunion not only in Gothenburg but in all of Sweden, one of the Metall people
in the project group was his ‘political party counterpart’, the chair of the
SAP clubs in the Volvo concern (the Social-Democratic Party). He could and
did use this position as an independent power basis in the struggle over the
direction of Uddevalla and managed to prevail at least in terms of setting
the signposts for the union’s participation in the project.6
As long as Volvo’s company results were good – and they were very goodin the mid-1980s – the ‘defeat’ over Uddevalla was acceptable to even thehardest-nosed opponents of the project, in union as well as management
circles. But when the situation soured, the old animosities resurfaced. The
moment the general over capacity crisis in the European automobile industry hit Volvo, however, the initial coziness was over and the real problems
emerged. In 1988, a rift between different management factions had alreadybecome clear. Official unemployment in Sweden is currently some 9%factoring in those workers who are currently in training programs, more orless the average of unemployment in Europe and a straightforward disasterin a country that has known unemployment rates of 2–3% for most of thelast thirty years.
Yet the trouble runs deeper than a management cycle. It starts with the186Renault-Volvo alliance in the mid-1980s. In the summer of 1992, a French
consultant wrote, in a report to his government (Renault is, as of the dayof this writing, still a Régie) that the deal with Volvo was bad for Renault
and that Uddevalla was an especially troubling cost factor in the alliance.7
Volvo also posted, in the same period that this report was made public, its
second year of big losses, and the company’s situation kept getting worse:by the second half of 1992, Volvo was losing something of the order of
10,000 Swedish Kronor (at that time around $2,500) on every car it sold.
In the alliance with Volvo, Renault footed that bill.8
Renault thus forces Volvo to shrink. For a number of reasons, the Volvo
plants outside Sweden are immune to calls for capacity reduction. The plantin Born, NL is a joint venture between Volvo, Mitsubishi and the Dutch state,
and the Ghent plant in Belgium is not only the corporation’s flagship interms of productivity and quality, but also too important in strategic terms,
located in the heart of the EEC.9 Sweden is therefore the place where it will
all happen. And here the old tension between the Uddevalla and the Torslanda
local reappears. Neither of the two wants to lose their own members. Yet
the Torslanda union is by far the biggest local in Volvo, and this position
gives it the power to prevail over the smaller locals in the Volvo concern,
especially over Uddevalla, which is technically in the same union district as
Torslanda. A defensive coalition of Metall unionists in the Torslanda local,
unhappy with Uddevalla anyway, who want to safeguard jobs in the plant
in Gothenburg, and ‘traditionalists’ in management, who did not see theneed for Uddevalla, emerged. The decision was made, and even a series of
provocative opinion pieces from industrial sociologists and other experts
in one of Sweden’s leading newspapers, Dagens Nyheter, in the spring of1993 on the plant closing was unable to change Volvo’s mind. ‘Dissident’consultants, who offered their services to the union in case an alternativeplan was drawn, were politely told that their services were not appreciatedbecause the Volvo union agreed with the decision, and it was not up to thecentral union to meddle in local affairs anyway.10 The national union, thelocal, and management simply refused to discuss the issue in public, arguingthat it was an internal Volvo affair.
Volvo’s crisis thus resuscitated long-standing divisions within both management and labor unions, and sealed Uddevalla’s fate. What mattered was
not the plant’s performance – which management later admitted was not the
primary reason for the closure – but the way it was never able to muster thepolitical support it needed. And the reason it could never muster the support
is in large part connected to its exceptional nature; that is one of the central
causes for the tension between the locals in Torslanda and in Uddevalla.
Both locals have vastly different ideas of what unions in the 1990s ought tolook like, which explains why Uddevalla never had a broad political basis
187inside the union (in Volvo, not among the staff in Stockholm). Once thecircumstances had pitted one local against another, the stronger one won.
2.2 Saturn: GM’s New Prodigy
Today, only a few years after its initial launching, General Motor’s new
Saturn Corporation is a remarkable success in the marketplace. The car
is highly innovative in design and technology: Saturn uses a space frame,
poly-mer panels, water based paint, an aluminum lost foam cast engine andtrans-mission, and moving platforms carry and adjust the height of the vehicles during assembly. Most remarkable, perhaps, is the record on quality.
Two years after the first car came off the line, Saturn received higher ratingsfrom consumers than any other U.S. domestic car line in initial vehicle quality, in satisfaction after one year of ownership, and in service.11 The hiringof a third crew in June 1993 allowed the plant to fully utilize its capacity.
It also brought total employment to 8000, of which 6000 are members of
the bargaining unit. While GM continues to close plants, an expansion of
Saturn is being planned.
The United Auto Workers national union played a crucial role in thedevelopment of Saturn. Without the active participation of the UAW at thenational level in the planning and design stages, Saturn in its present form
could not have been created by GM on its own. In 1983, responding to aloss in market share, General Motors management and the UAW national
union formed a joint labor-management committee to study the feasibility ofbuilding a small car in the United States of America under new productionand employment relationships. After an international evaluation of worldclass manufacturing practices, the committee identified a set of principles
for organizing Saturn:
•
•
•
•
•

•
•
•
•

Treat all employees as fixed assets and invest heavily in their training
and skill development;
Organize based on groups, with self-managed work teams as the basic
unit;
Openly share information including financial data;
Make decisions through consensus with the UAW as a full partner;
Decision making authority will be focused at the level of the organization where the necessary knowledge resides and where implementation
will take place;
Minimize job classifications;
Union and management will jointly administer recruitment and selection. Seniority will not be the basis for selection;
The technical and social organization will be integrated;
The organization will require fewer full time UAW officials and labor
relations personnel to administer the contract than would be required188•

in a GM organization of similar size;
Compensation will include a contingent portion based on performancein quality, cost, delivery and value to the customer.12

In 1985 these principles were codified in a Memorandum of Agreement,
which served as the first Saturn contract between the UAW and General
Motors. The contract, however, differs significantly from the voluminous
agreements traditionally negotiated between GM and the UAW. Only 28
pages in length it is viewed as a ‘living agreement’ subject to modificationby the parties as needs arise, with the focus on problem solving, shareddecision-making and joint authority at its core.
Conflicts and grievances have not disappeared, but have been redefined
as joint problems, to be solved through consensus rather than elaborated
ad-vers arial procedures. By integrating workers’ knowledge and input, andthe union’s authority into the process early on, problems can frequently be
dealt with before they reach a level where the grievance procedure is the
only way out.
Through the agreement the national union and GM established several
levels of formal joint union-management committees. Committees or Decision Rings were created at each of the three plants – assembly, engine, andbody. They were also organized across the entire manufacturing complex
and at the strategic level of the Saturn corporation. These committees meetweekly and reach decisions by consensus. They deal with long and shortterm planning and ‘determine the resources needed by the Work Units (seebelow)’13 The strategic corporate-level joint labor-management committee
undertake(s) strategic business planning necessary to assure the longterm viability of the enterprise, and will be responsive to the needs of themarket place … It is charged with creating the environment, facilities,
tools, education and support systems which will enable Saturn Members
to perform their responsibilities.14
At the shop-floor, self-directed teams organize production. Unlike manyother car plants, however, the teams (or Work Units, as they are called in
Saturn) have considerable autonomy and responsibility. These ‘selfdirected’teams organize production scheduling, are directly responsible for quality
control, safety and health, equipment maintenance, budgeting, material andinventory control, training, and many other tasks that are typically the roleof supervision in most of the auto industry.15
These teams or ‘Work Units’ have between 6 and 15 members, and theyelect their own leaders who remain ‘working’ members of the team. Members
rotate between all of the jobs in the team and receive extensive technicaltraining as well as the skills needed to operate as a self-directed team. The
first crew of production workers hired into Saturn had between 350 and 700
189hours of training before they built a car. This already extensive commitment
to training, which most likely makes Saturn workers on average among themost highly-trained in the high volume segment of the car industry, wasexpanded in 1991, when, during contract renewal talks the local union proposed separating the risk and reward portions of the compensation and tying
the risk portion to a training goal of five percent of total working hours (92hrs) per year for each employee.
The self-directed team structure has implications for task cycles. At the
team’s discretion, the cycles vary anywhere between the one minute cyclethat is the standard in the industry – in which every worker deals with one
small set of tasks on every car – to considerably longer cycles, even up to
six minutes – whereby one worker will finish all the jobs which his or her
team is responsible for, then skips five cars and moves on to the first to
begin a new cycle.
Teams interrelated by vicinity, sub-assembly or similar technology, aregrouped together at a higher level in Modules. Usually, five to seven teams
totalling approximately 100 members, constitute a module. Each module
has two advisors who replace the supervisors in traditional GM plants.
The module advisors’ task is to provide expertise, leadership and advice tothe teams and therefore is the Saturn equivalent to what would be middle
management in other plants.
While self-managed teams allow UAW team members significant control
over their day-to-day operations, the original Saturn organizational design
provided for UAW institutional involvement largely through off-line planning and information-sharing via the labor-management joint committees.
However, as employees were hired and the union organized, local UAW
officials recognized the need for more direct involvement in operational
decision-making if the union was to fulfill the language in the agreement
calling for ‘full participation’. Here Saturn, already far removed from theindustry standard, broke even more new ground.
Perhaps the most significant is the ‘partnering’ of UAW members with
their management counterparts in the middle management and staff organizations. Initiated by the local union leadership in 1988, by 1993, thisin-volves over 375 jointly selected UAW members who are partnered fulltime with management in supervisory and operations middle management
positions in all three plants. UAW members are also partnered in almost all
off-line staff functions: maintenance, engineering, sales, service and marketing, finance, industrial engineering, quality assurance, health and safety,
training, organizational development, corporate communications, and product and process development. ‘Partnering’ is an arrangement that goes muchfurther than what is known in continental Europe, as co-determination. In
Saturn, union partners share offices with their management counterparts and190participate equally in decision-making through a consensus process.
As a result, institutional union participation extends well beyond theoff-line labor-management committees originally envisioned in the initialagreement. The union now participates ‘on-line’ in the day-to-day operational decision making. Management is, in Saturn, no longer simply a groupof people occupying particular positions in the organization, but a set offunctions and responsibilities shared by union represented employees with
their non-represented partners. The local union at Saturn truly co-manages
the business.
At the same time the local represents the stakes and equities of the workforce. In its functions and structure, and independent of the union’s involvement in management, local 1853 at Saturn is a workplace union as many otherin the US, whose role it is to negotiate local issues and working conditions
with management, resolve grievances. The union also has retained its ability to organize strikes if necessary. The difference with other unions is thatmost of the conflicts that surface – many more probabaly in Saturn than inother firms because of the high degree of workforce involvement in decisionmaking – are resolved without recourse to the traditional union weapons.
The local union also takes its role as an independent representative of theworkforce very seriously. All the usual internal local participatory institutions are in place in the Saturn local. But there is more. Yearly, the union
conducts a member-to-member survey in which the (UAW) team leadersinterview each member for 45 minutes on the issues, concerns and needs
that they would like to see addressed by the union. Finally, local 1853 hassought to expand the representation of the union to all employees working
in the Saturn complex, including outside contractual workers.
Despite Saturn’s impressive record of innovation and market success,strains do exist in the evolving partnership arrangements. As mentioned
earlier, the national union played a critical role in Saturn’s creation and early
development, joining with GM in the joint study team and articulating theprinciples for organization in the 1985 Memorandum of Agreement providing the enabling language and new contractual and employment relations.
Yet, over the past few years the national’s involvement has been reduced.
To some extent this is of course a natural development as the local parties
take the initial contract language as a starting point for developing their own
arrangements based on problems and needs as they arise. The partneringarrangements that lead in effect to co-management of the operation wereperhaps the most dramatic example of local innovation in response to thechanging needs of the corporation. Most of this was, as we suggested, notanticipated by the early work of GM and the national union.
However, the change in relationship between the local and the national
union appears to be more than a natural evolution. In recent years the na191

tional seems to view Saturn not so much as a model for the future, but as
an experiment that is perhaps moving in the wrong direction. (Interestingly
this also has been mirrored by some ambivalence on the part of GM management toward Saturn.)
Tension has occurred in other areas as well. In the summer of 1992, forinstance, public disagreements between the local leadership and the national
erupted over strike strategy employed by the national and directed against
GM supplier plants which also supply Saturn. Strains also grew over the levelof autonomy enjoyed by the local: in advance of the 1993 GM negotiations,
UAW national leadership asked that the Saturn Agreement be reopened. To
some observers, this indicated that the union would like to bring Saturn backin line with the national contract pattern.
Clearly the appropriate relationship between, on one hand, a local unionthat departs so much from tradition in order to jointly govern and co-manage an innovative organization, and the parent national union, on the other
hand, which itself planted the seeds of this innovation, has not yet been
fully worked out at Saturn. New methods and relationships for producing
cars are necessary for GM and the UAW to survive in the global automotive
industry. Some critics, both within the UAW and within GM, argue that if
GM had put its investment in Saturn into older facilities, they too would
be competitive now. Often people point to NUMMI, once among the worst
plants in the US, today one of the best (see Adler & Cole in this volume),with the same workforce and in the same factory as before.
Yet Saturn can provide enormous return on its investment by capturing
what it learned from its innovations, and transferring this knowledge backto GM and the UAW. To date, however, this potential and the opportunities
it provides, is underrealized. The continuous development of best practicemodels of production and organization will depend on available resources,
learning models, diffusion patterns and coordination.
The national union can play a critical role in all of these activities.
Moreover, the national union can also serve as a protection against corporate
whip-sawing, whereby one plant competes against another, thus provoking
a regressive spiral as each tries to undercut the others.
However, the local union has gained power and influence through its increased competence in strategic and operational areas, precisely the kind ofexpertise that is critically important to the success of modern high performance work systems. How the power of the union at Saturn is shared between
the local and national will be one of the critical tests regarding Saturn’s future
viability as an alternative to the traditional practices of GM and the UAW.
Over the long run its performance will depend on finding the right mix oflocal autonomy, national coordination and mutual learning.
The Saturn partnership breaks not only with the organizational arrange192

ments in other GM facilities organized by the UAW, but also with the restof US industry which sharply separates the roles of labor and management.
In its operation, the company thus explicitly challenges the logic of management prerogatives and union domains which has defined all postwar
Western political economies. Investment (almost always the managementof resources) was management’s business, the social repercussions that of
the union. In Saturn, the traditional distinction between the concerns ofmanagement and those of the union, has been completely rethought.16
2.3 Comparing Saturn and Uddevalla
At first glance, Uddevalla and Saturn do not appear to share many characteristics: they are located in different parts of the world, one is closed, theother increasingly growing, one built cars for the high end of the market, theother moderately priced mid-size cars. In short, the two are very different.
Yet they share one important characteristic: both are, in their operating logic,
exceptions with regard to their parent corporations because of the way they
break with established patterns of firm governance. And this exceptional
character is an important variable to keep in mind when evaluating bothinnovative organizations.
Uddevalla failed, we think, not because it was inefficient, or an incomplete
plant, and not even because of a conservative management reflex in times ofcrisis. In our reading of the story, Uddevalla closed because it did not havea winning coalition that backed it. None of the social groups involved in theorganization of manufacturing could tie their fate in an almost existential
way to Uddevalla’s long-term success: not the managers, not the unions
and not the workers.
The first group is permanently caught in a dilemma. A self-managed production system that relies on the collective and individual skills of workers
as in Uddevalla reduces the role of engineers and management in the control
of production processes. However, this loss of control over the production
process is off-set by the potential gains to the production system. Politics andeconomics thus collide, and there is, neither on economic nor on politicalgrounds, reason to believe that the model which combines higher efficiency
with a democratic redistribution of power and skills will prevail.
Labor unions have a related problem with this new production model. In
recent years, we have witnessed a major re-assessment of the role that car andmetal industry unions see for themselves in the organization of industry: in
Sweden and Germany, for instance, they have in recent years drafted union
platforms that demanded better jobs for teams of workers, and in which thelabor unions would play a role in training the workers (Metall 1985; IG Metall 1991). Yet while such programmatic changes are important, the old orderis still a vital point of reference. For in practice unions remain, in Sweden193

as much as in other countries, the defenders of the semi-skilled workers,
until they know how to translate the new union programs systematicallyinto practice. And here the problems of Uddevalla appear: the semi-skilledworker is exactly the group that disappeared in Uddevalla.
Moreover, despite the attempts by the Metalworkers and Autoworkers
unions in Sweden, Europe and the US, to re-think their role in the economy,
unions have not yet ventured very far into the new field of production organization. Whatever promise Uddevalla may have held for the labor movement in the long run, its development was always blocked by the short-term
uncertainties that it created, as it called into question a series of assumptions
about the distribution of power and authority in the workplace upon which
the postwar union model was built and that proves with amazing regularity
how solidly entrenched it is.
The workers, then. It may be very hard to substantiate this, but there issome evidence and logic that suggests that workers only appreciate changes
à la Uddevalla after they worked in them, and it is only then that their support can be mustered for these new forms of work organization, that are still
distant. It is defiantly difficult, presumably impossible, to organize aroundthe promise of reflective work and organization as in Uddevalla. With noneof the strategic actors capable of linking their interests to the survival of theplant, Uddevalla’s fate was sealed.
How does this general point about the closure of Uddevalla inform us
about Saturn? It forces us to see that economic success is only one variable
in a giant equation. Saturn is very successful; so was Uddevalla. But GM andVolvo are having serious trouble surviving in today’s competitive global car
industry. Uddevalla was safe as long as Volvo was successful. The plans for
Uddevalla emerged when Volvo was among the most profitable car companies
in the world, and were implemented in order to build more Volvos. Volvo’s
crisis in the last four years, which at some point even culminated in merger
plans with Renault (with a minority stake for Volvo), quickly exacted a victim:
Uddevalla, the ‘swan among the ducks’, in Ellegård’s words.
GM and Saturn do not have the same relationship and any linear transposition of scenarios from one case to the next would be foolish. But the events
that we analyzed for Uddevalla, combined with the information on Saturnshould warn us – both the sympathetic observers and those actively involved– that in GM Saturn too, politics is an important variable in analyzing andunderstanding the plant’s performance, now and in the future.

3. Conclusion
The history of Uddevalla and the analysis of Saturn remind us that theeconomy and society are really two sides of the same coin, and inseparable.
194

In the economy, as we have tried to demonstrate, economics may determine
a lot – but not everything. Economic organizations do not operate in a social and political vacuum: they are a vital part of their environment, just as
their environment is found in every aspect of their operation. Saturn andUddevalla are perfect illustrations of the interrelationship between politics
and economics. They are both economically viable operations and embody,within the confines of their national systems of industrial relations, a bold
new path towards combining economic democracy and economic performance; yet they are also so different from the rest of their corporate and union
environment, that friction creeps up and emphasizes the differences between
the new-born and the parent.
Their exceptional character resides in the way both organizations deal withthe distribution of skills, authority and with the ideas of management andworkers’ self-management. Today, in an era when the ‘human factor’, exactly what makes Saturn and Uddevalla so exceptional, is almost continuallyrediscovered in manufacturing processes, this minor point suddenly takes
on gigantic proportions. Because, as firms and plants experiment with newmodes of social organization, politics and society are re-discovered as an
intricate part of industrial processes, and as potential sources of conflict.
It is important, though, to understand that plants in big corporations suchas the ones we discussed here invariably face a very peculiar kind of Catch22 situation: their existence depends in large measure on the resources theparent corporation is willing to pump into their development – and thefarther removed from the standard in the parent organization, the higher
the development costs. Yet exactly this makes them very vulnerable, since,
almost by definition, they will differ in very important respects from thestandards prevailing in the rest of the corporation that they are embeddedin, while they are so dependent upon the resources of the latter. The tension
between these innovative production islands and their parent corporations at
the core of the analysis of this paper, is thus one of those implicit conflicts
that are almost impossible to avoid, and therefore require careful management. That is what makes this analysis relevant for other organizations as
well: as more and more companies embark on new and bold paths toward
competitiveness, and rediscover human resources and labor relations as
strategic variables in this process, the way organizations are able to deal
with corporate frictions of the kind we describe in this paper will become
ever more important.
This suggests a number of questions, addressed directly at Saturn. Whatcan an analysis of Uddevalla’s demise teach Saturn and General Motors
about the appropriate mix of central coordination and local autonomy? Howto keep the initiators in the corporate or national union engaged in on-going
innovation? How should the local and national unions share power to allow
195

for the innovation, flexibility, responsiveness and ownership necessary for
local co-management and joint governance, while at the same time ensuring
coordinated policy, security, learning and diffusion of best practices at thenational level? We think that a careful analysis of Uddevalla – and other
innovative cases where they exist – will actually benefit the innovators in
the American automobile industry, on the union as well as the management
side. It may have been a different country, and (by now) a long time ago,
but what happened in Uddevalla is still relevant.
Finally, we want to pre-empt accusations of naive optimism: however
innovative, more democratic and efficient workplaces such as Saturn andUddevalla are, many political and economic disparities that are removed
from the world inside the factory, remain once we step outside. For, as the
Uddevalla tragedy makes painfully clear, corporate management, not theworkers, ultimately control group decision-making and its purse strings.
Crucial corporate decisions, such as market and product strategy, remain far
outside the reach of local management, labor unions and workers. In Uddevalla, such invisible disparities may not have mattered a lot in the initialstages and the growth phase of the project; however, as we discussed above,
without a ‘special’ product, the plant was an obvious first victim of the cutsin Volvo. In the case of Saturn, product and marketing decisions are notmade entirely independently either, but must still be coordinated with thelarger GM corporate strategy. In sum, while within Saturn and Uddevalla
decision-making has been decentralized and workers empowered far beyond
what one accepts as the norm in the industry, key aspects remain beyond
the reach of workers and unions.
This may ultimately well be the most profound weakness of the ‘experimental’ islands: as long as their future is ultimately decided elsewhere, no
one can ever be certain about their long-term viability. In the face of tragedies like Uddevalla, trade unionists looking for models of innovation cansometimes show some ambivalence in their allegiance to such changes.

Acknowledgements
The material on Saturn presented in this paper is based on research conducted jointly byThomas Kochan, MIT, Michael Bennett, UAW Local Union 1853, and Saul Rubinstein,MIT. Funds were provided by the MIT Leaders for Manufacturing Program and the
MIT International Motor Vehicle Program. The research on Uddevalla was conductedby Bob Hancké and was funded by the Harman Program in Technology, Public Policyand Human Development of the Kennedy School of Government at Harvard University. We wish to express our appreciation to Harvey Brooks and Michael Maccoby
for their help in improving this paper. The views expressed, however, should only be
attributed to the authors.

196

References
Paul S. Adler & Robert E. Cole (1994), ‘Rejoinder’ Sloan Management Review,
Vol.35, no. 2, (Winter)
Christian Berggren (1990), Det Nya Bilarbetet (Lund:Arkiv)— (1994), ‘NUMMI vs. Uddevalla’ Sloan Management Review, Vol.35, no. 2,(Winter)
Kajsa Ellegård (1989a), Akrobatik i Tidens Väv (Gothenburg: Department of Human Geography of the University of Gothenburg)— (1989b), Metalls Medverkan i Projekteringen av Volvos Uddevallafabrik(Stockholm: Metallarbetareforbundet)
Michael Dertouzos et al. (1989), Made in America (New York: Harper)
IG Metall (1991), Tarifreform 2000 (Frankfurt: IG Metall)
Ulrich Jürgens et al.(1989), Moderne Zeiten in der Automobilfabrik (Berlin:
Springer Verlag)
Harry Katz (1985),Shifting Gears (Cambridge MA: MIT Press)
Anders Kjellberg, Facklig Organisering i Tolv Länder (Lund: Arkiv 1983)— (1992), ‘XX’ in Richard Hyman and Ferner, Industrial Relations in Europe(London: Allen & Unwin)
Thomas Kochan et al.(1986), The Transformation of American Industrial Relations (New York: Basic Books)
Metall (1985), Rewarding Work (Stockholm: Arbetsmiljöfonden)
Michael Piore & Charles Sabel (1984), The Second Industrial Divide (New York:
Basic Books)
Charles Sabel (1982), Work and Politics (New York: Cambridge University Press)
Wolfgang Streeck (1991), ‘The Institutional Conditions for Diversified Quality
Production’ in Egon Matzner & Wolfgang Streeck (eds.) Beyond Keynesianism (Aldershot: Elgar)
Lowell Turner (1991), Democracy at Work (Ithaca NY: Cornell University Press)
James Womack et al. (1990), The Machine that Changed the World (New York:
Harper and Row)

Notes
1.

Data were gathered through interviews with GM Human Resource Managementfrom the Saginaw and Inland Fisher Guide Divisions, December 1992.

2.

Interview with Wilfred Wilms, UCLA, December 11, 1992.

3.

The chapter by Christian Berggren provides more details; see also Berggren
1994, and Adler and Cole 1994 for a discussion of the economic performanceof the plant. The conclusion of this debate appears to be that Uddevalla wasindeed probably sufficiently productive, but perhaps in the wrong sector: thecar industry produces, after all, still primarily standardized products on a large
scale.

4.

See the chapters by Williams et al., Berggren and Sandberg in this volume.

197

5. The chapter by Ellegård provides the background; see also Ellegård 1989a and1989b.
6. Most of this information on the internal union politics was gathered in thespring of 1993 during interviews with (central and local) Metall members who
participated in the project group, local union people in Uddevalla and Uddevalla
management.
7. The Financial Times printed a short article on the report in the summer of 1992:
Financial Times 9 July 1992.
8. In December 1993, a coup in Volvo’s board ousted Pehr Gyllenhammar, thecompany president, and froze the merger plans. By early March 1994, the twocompanies were untangling the ties between them and the merger plans had
definitely been aborted. The decision not to merge is rather irrelevant for the
purposes of this paper, since the events we deal with here took place when thealliance between the two was very strong. There is, however, one detail worth
mentioning. The same manager was responsible for Uddevalla’s closure andfor the failed merger: Sören Gyll, the current president of the company.
9. The chapter by Dankbaar gives details on the Dutch plant and the chapter by
Huys on the plant in Belgium.
10. This was said with so many words by a leading Metall official in a reply to thecriticism in the newspaper of LO, the blue-collar labor union confederation (see‘Metall går till motangrepp för kritiken om Uddevallafabriken’ (Metall starts acounteroffensive over the criticism on the Uddevalla factory) in LO-tidningen
no 8, March 19, 1993)
11. JD Power 1992 Customer Satisfaction Index. Saturn Ranked highest among
all US (transplants included) car lines and third overall behind Lexus and Infiniti.
12. These principles can be found in the Memorandum of Agreement, published by
the Saturn Corporation 1985.
13. Memorandum of Agreement, Saturn Corporation, 1985.
14. Memorandum of Agreement, Saturn Corporation, 1985.
15. Memorandum of Agreement, Saturn Corporation, 1985.
16. Saturn also has the potential to break new ground in law and public policy. The
US Supreme Court (in NLRB v. Yeshiva University, 444 US 672, 1980) ruledin 1980 that employees doing managerial work were not covered under the
National Labor Relations Act, and thus did not have rights to collective bargaining and the protection of a labor union. The institutional arrangements createdat Saturn by the members of the UAW local union and their non-represented
partners call into question the adversarial assumptions behind labor relations
in current law.

198

Group work and the reception of
Uddevalla in German car industry
Ulrich Jürgens

If the routine of the workman’s movement is broken he must inevitably
call his brain into action to find the best means of bridging his troubles
and must lose some time in devising and executing his unusual lineof procedure … The minute division of labour allowed the worker toperform his unvaried operation with the least possible expenditure ofwill-power and hands with the least brain fatigue. (Horace L. Arnold,
Fay L. Faurote: Ford Methods and the Ford Shops (1915), New York:Arno 1972, p. 275, p. 245)

1. At odds with MIT’s lean production message
The German as well as the Swedish variants of work organization weretreated with harsh critique by the authors of the MIT study ‘The Machinethat Changed the World’ (Womack et al, 1990; German edition 1991). Get
rid of it the sooner the better, was the advice of the authors referring towhat they regard as the base principle of the German and Swedish models:(neo-)craftmanship.
The MIT critique was very influential, indeed, in a change of directions
which has taken place in the debate and implementation of new forms ofwork in the two countries. Up to the late 1980s these seemed to follow a
specific national trajectory of work organization based on a tradition of
jointness between labour and capital and responding to the specific labour
market conditions. In Germany during the 1970s and 1980s the Swedish
debate on new forms of work and, specifically, Volvo’s experiments withwork organization in its Kalmar and Uddevalla plants were often referred
to as a model for future oriented work structures. In the German production
concept the skilled workers played a central role indeed. This characteristic
element of the German model was highlighted by an account of a plant visit
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made by the MIT authors. ‘When we visited this plant’, the authors recall,… we didn’t have to go far to find the basic problem: a widespreadconviction among managers and workers that they were craftsmen. At
the end of the assembly line was an enormous rework and rectificationarea, where armies of technicians in white laboratory jackets labored tobring the finished vehicles up to the company’s fabled quality standard.
We found that a third of the total effort involved in assembly occurredin this area. In other words, the German plant was spending more effort on fixing the problems it had just created than the Japanese plantrequired to make a nearly perfect car the first time. (Womack et al.
1990, p. 90f.)
The Financial Times disclosed that this was a Mercedes-Benz plant (Done,1991). In the Swedish case the authors do not reveal the empirical basis of
their negative evaluation. After a short description of the process layout at
Uddevalla they conclude:
We are very sceptical that this form of organization can ever be as
challenging or fulfilling as lean production. Simply bolting and screwing together a large number of parts in a long cycle rather than a small
number in a short cycle is a very limited vision of job enrichment. The
real satisfaction presumably comes in reworking and adjusting every
little part so that it fits properly. In the properly organized lean-production system, this activity is totally unnecessary. (Womack et al. 1990,
p. 102)
Here we find the same critique as in the case of Mercedes Benz’ plant.
The Uddevalla system, even worse, is moving intentionally in the ‘wrong’direction as it does not aim towards further automation, instead focusing
on handcraft production:
Thus by the end of the century we expect that lean-assembly plants will
be populated almost entirely by highly skilled problem solvers whose
task will be to think continuously of ways to make the system run moresmoothly and productively. The great flaw of neocraftmanship is that it
will never reach this goal, since it aspires to go in the other direction,back toward an era of handcrafting as an end in itself. (op. cit.)
The authors did not pay any need to the differences in ‘craftmanship’ inGermany and Sweden. However, there is a considerable difference and thisdifference played an important role for the German reception of Uddevalla’s work organization.

200

2. The shaping of the debate
on new forms of work in Germany
The German debate on group work started in the 1970s. There were twodifferent and partially contradictory driving forces. One was a government
sponsored policy programme for the ‘humanization of work’ and corresponding demands by the unions and the workers’ interests representations
to improve working conditions. The other was the automation strategy of thecompanies which was developed by the end of the 1970s and materialized
in the first half of the 1980s.
Within the framework of the ‘humanization of work’ programme several
group work experiments were initiated. The main thrust of this programme,
however, was on ergonomical aspects to reduce stress and strain at theworkplace. With regard to assembly line work, the IG Metall successfully
put forward the demand to rule out work cycle times below 1.5 minutes insome regional master agreements. The demand reflected a growing critiqueof paced fragmented work which spilled over from the shop-floor rebellion
at the General Motors plant in Lordstown, USA, and of the debate on newforms of work in Sweden (cf. Kern 1979, p. 193ff.). The conviction became
widespread in Germany that the days of the classical assembly line werecoming to an end, and that alternative means to organize the work process
had to be found.
A major driving force for this orientation were labour market considerations. The government hat decided to end the policy of ‘guest worker’ imports and thus companies could no longer count on a supply of labour willingto fill in jobs which were unattractive to Germans. And here the automation
strategy came into play. A vision of future oriented work structures evolved
where the direct production jobs became substituted by new technology andskilled labour taking over the task of running the high technology equipment. This went along with a vision of ‘computer integrated manufacturing’aiming at high degrees of automation even in areas like final assembly andsmall-batch production, where until then human labour had prevailed. The
skilled worker was regarded as the key figure in the modernized plants andit was thought that high-tech work structures would again give Germany
the competitive edge.
The notion of ‘skilled work’ has a clear meaning in the German context.
It relates to the task profile of the ‘Facharbeiter’ who has completed a threeand-a-half-years’ apprenticeship in the so-called ‘dual system’. During thistime the apprentice stays half a week in a public school for vocational training and the rest of the week at the employer for on-the-job or off-the-job
training. The apprentice has a temporary employment contract only, after
finishing the apprenticeship it is up to the employer whether he or she will be
201taken on as a regular employee. And it is an open question whether this will bea skilled worker’s job or not. Thus, a skilled worker could end up with a jobclassified as unskilled or semi-skilled i.e., on an assembly line. And indeed
this was a growing tendency due to the ‘qualification offensive’ which beganby the end of the 1970s. A broad policy consensus had emerged that every
youth should have a right to enter an apprenticeship after finishing school.
The demand for skilled work became less and less a determining factor forthe companies’ intake of apprentices. But after finishing the apprenticeship,
finding a skilled worker’s job became increasingly difficult. In order not
to have to dismiss these young qualified workers they were offered jobs
in direct production beneath their skills.1 But in view of future automation
measures which were seen as the general trend, production management
saw these employees as an asset which they tried to hoard.
As a consequence of this development, the share of ‘Facharbeiter’ among
the direct production personnel increased from year to year. The skilledworkers at the Mercedes-Benz plant mentioned in the MIT study, were an
example of this development. Here the job of re-working and rectifying
defects on the line is also classified as non-skilled work. But for reasons wehave just cited, these jobs were filled by ‘Facharbeiter’ and because of theirskill potentials production management probably was proud to point this out
to the researchers. But the fact that these skilled workers were deployed on
this job was not due to their perception as ‘craftsmen’s jobs’.
The main rationale to hoard Facharbeiter for non-skilled jobs at the beginning of the 1980s was the perspective of further automation. Accordingly,
the Anlagenführer (equipment controller) became the new paradigm ofindustrial work in the debate initiated by the sociologists Kern and Schumann in their book called: ‘The End of the Division of Labour’ (1984).2
The Anlagenführer is a person who ideally would be a Facharbeiter withfurther training for running high-tech production equipment and managing
support work. The Anlagenführer also was at the centre of the new debate
on group work in high-technology areas in the 1980s. The question here
was how to deal with the remaining manual jobs in these areas such as filling magazines, taking off finished parts etc., jobs which were regarded as‘residual’ in regard to the trajectory of future automation and which wereclearly dequalified compared to most of the jobs which were substituted by
the automation. The equipment controller was regarded as the natural leaderof a team responsible for running the equipment.3
The debate on group work or manual assembly jobs had come to a deadend by the beginning of the 1980s. One project inspired by the Swedish discussion and carried out in the context of humanization of work programme,
particularly, contributed to scepticism towards group work on the side ofmanagement, as well as, the union. In this highly touted project, group work202

was introduced in a section of assembly operations at Volkswagen’s engine
plant in Salzgitter. The group work experiment started in 1975 involving
28 workers in total. Four groups were assigned the task of carrying out thecomplete assembly of the engine. In contrast to the one-minute work cycleon the conventional assymbly line, work stations had been set up with alabour content of around 45 minutes per station (four stations per group).
The groups were given additonal responsibility for material transport, engine
testing, and repair. Job allocation and rotation schemes were to be decided
by the groups. The groups could regulate their own internal affairs, theyelected their own groups spokes(wo)men (Volkswagen/Technische Hochschule Darmstadt/Eidgenössische Technische Hochschule Zürich 1980).
It turned out that the surrounding organization was not prepared to accept
the change dynamics set free by this experiment. The self-assertiveness ofthe group speakers were regarded as threatening by the works council andshop steward (Vertrauensleute) system and management regarded demands
for wage adjustments as threatening to its overall wage structure. In the end,
the group work section was closed down in 1977. On the basis of economic
data which were never published and remained controversal,4 the company
argued that this kind of work organization may be suitable for low-volume,
small-lot production but not for mass production. ‘Not suited for mass
pro-duction’ hence became the standard argument against a transfer of theSwedish experiments into German car plants.
By the end of the 1980s, German car manufacturers seemed to follow a
specific model for production organization. Table 1 summarizes the characteristic traits in comparison to what might be called the ‘Swedish’ andthe ‘Japanese’ models at least as they were referred to in the general debate
about future oriented work structures.
At the center of the ‘German model’ is the skilled worker and a specificunderstanding of skilled work as a ‘profession’. This understanding includes
several features: interest in the work, a willingness to accept comprehensive
responsibility (also crossing over the borders of one’s own task area), anda large degree of self-regulation in carrying out the work. This model presupposes a ‘qualification offensive’, above and beyond the direct company
needs for skilled workers, which in turn is dependent on institutions andpolitics of vocational training. With this we are referring to the societal
prerequisites for a specific form of labour regulation as they exist in the
educational system of the Federal Republic of Germany. It is clear that themodel of skilled-worker-centered work regulation is especially importantfor modern technology management. The general expectation is that future
work structures will be characterized by qualified labour, uncoupled fromthe production cycle and the rhythm of the machines. Uncoupling work fromthe flow of production is the prerequisite for a type of labour with increased203

Table 1: Models for production organization
SwedishGermanJapanesesemi-skilled workers
with high initial training (quasi-apprenticeship)skilled worker deployed on direct production jobs after full
apprenticeshipsemi-skilled workers
with generally highstarting qualifications

work totally uncoupled work (partially) uncou- work tied to the profrom the productionpled from the producduction cycle
cycletion cycle
wholistic tasks withlong work cycles(> one hour)

job enlargement withwork cycles below one
hour

highly repetitive work;
cycle times around
one minute on the assembly lines, aroundfive minutes in themachining areas wheremulti-machine work is
the norm

homogenous groups

mixed teams of‘specialists’homogenous groups

high partial autonomy little partial autonomy
for teams through proc- for teams through auess layout
tomation and module
production

no partial autonomy
for the teams throughJIT designde-hierarchization withelected speaker andself regulation of groupaffairs

strong hierarchical structures, groupleader appointed bymanagement, no groupself regulation

controversial role ofgroup speaker/leader
and of degree of self
regulation

possibilities for self-regulation and with increased responsibility, i.e. the‘Facharbeiter’. With this goes an enlargement and enrichment of the work
content but clearly below the levels of the Swedish model. The future-oriented concepts within the German model also aim at establishing production
teams, but more in the sense of teams of ‘specialists’ of different pay andqualification levels. Teams have less leeway in organizing their work due torequirements of the technology and production control. Finally, the freedomof the teams to elect its speakers and self-regulate its own affairs appears
more controversial between the social partners with different solutions atthe various local sites.
204

The Japanese model also gives a central role to skilled labour, though notin the sense of the ‘Facharbeiter’ who has time-sovereignty in her or his
work. Rather, ideal-typical for all Japanese models is self-regulation under
the pressure of the assembly line and the production pace (for the more recent development, particularly the case of Toyota’s new assembly plant inKyushu; cf. Shimizu in this book). In the Japanese automobile industry, thework group is the starting point for the flexibilization of labour deployment
and for the qualification of the workers. In stark contrast to the Swedishmodel, the teams have little autonomy in organizing the work process dueto the just-in-time principle of production control and there is no democraticsystem of regulating teams internal affairs and of electing a team speaker.

3. Reception of Uddevalla
Against the background of the negative evaluation of the Swedish inspired
group-work experiments in the 1970s (for other group-work experiments
see Altmann et al., 1981), German observers were quite surprised when
Volvo revealed its plans for Uddevalla. At that time, in the mid 1980s, theGerman trajectory towards new forms of work seemed to have reached its
limit, however, and there was a new openness to new production concepts
developed elsewhere. It had turned out that the automation strategy did not
pay off economically. The downtime of the equipment was much higher
and the model-mix/change-over flexibility lower than expected. It became
clear that during the 1990s, at least for assembly operations, technology
would not play the dominant role and, nolens volens, ‘human centered’ workorganization had to receive more attention.
In fact, two different strategies had been followed by the German companies in restructuring assembly operations in the first half of the 1980s (cf.
Jürgens, Malsch, Dohse 1993, p. 345ff.). One was the outright automation
strategy with the most famous example of Volkswagen’s building 54 where
about 30 % of final assembly operations were automated. The other strategy
was based on the concept of modular production, aiming at a shorteningof the main assembly line by creating subassembly areas where productmodules were built and then transferred to the main line. Examples would
be the subassembly of doors, of the instrument panel, of the wiring harness
system, of transaxles etc. Preferably the modules taken off the main line
would encompass those operations where the model mix had caused mostproblems in terms of differing labour content and line balancing. The newsubassembly areas were seen as experimental ground for new forms of workorganization in many cases. Thus for instance, at Opel’s Bochum plant adoor and the instrument panel (cockpit) were assembled in a stationary location with individual work cycles ranging from 15 minutes to 45 minutes.
205After finishing the operation, automatically guided vehicles carried the partforward to the next stage. This process layout was regarded as well suitedfor group work and first approaches were made in this direction (cf. Jürgens
et al., 1993, p. 362). In two respects parallels to the Swedish group work
development could be seen: first, in the abolishment of the assembly line
and the creation of stationary workplaces (some module areas, however, also
were organized as assembly-line work) and second, in the lengthening of
the work cycle. But lengthening the work cycle was not so much driven byhumanization of work considerations as by the need to cope with model-mix
variation. Thus the average length of the individual work cycle in the cockpit
area at Opel Bochum’s plant was not much more than five minutes but the
maximum (highest option content) cycle was more than 15 minutes.
By the mid-eighties, according to research carried out by the author on
the introduction of new forms of work in the German car industry, production planners believed that a further job enlargement and lengthening of thework cycle up to 15 minutes average was to be expected. In some cases the
optimum was set a bit higher, but in general a labour content between 15
and 45 minutes was regarded as feasible and desirable by the practitioners(Jürgens et al., 1993, p. 349). The increasing share of skilled workers among
the direct production workers was seen as one factor which would make thislengthening possible and, for reasons of job satisfaction, also necessary.
There was no attempt to follow the Swedish trajectory towards full car assembly with individual work cycles of two hours up to eight hours anywherein the German car industry. In fact, the essence of the Uddevalla concept,
the principles of ‘reflexive production’ (cf. the contributions of Ellegård,Engström, Medbo and Nilsson in this book; cf. also Ellegård et al., 1992)
was not understood. There was a widespread consensus that work cycles
of one to two minutes length and thus highly fragmented and repetetive
work should be overcome in modern assembly plants. But the rationale ofassessing work cycles was still the search of the optimum between routine
and habituation on the one hand and motivational considerations of job
challenge and meaningfulness on the other hand. The difference between
the one minute cycle and the eight hour cycle was seen in terms of linear
extension, not in terms of a paradigm shift.
Three aspects of the Uddevalla production concept were particularly
highlighted when introduced into a German context:
1.
2.
3.

The fact that a factory was designed to support group work explicitly
and to do away with the assembly line process type altogether.
The wholistic work tasks and long individual work cycles and thus theattempt to make car assembly work meaningful to its workers again.
The long initial training of assembly line workers and thus the re-skilling of assembly line work.
206

(Budde and Muster, 1990; Auer and Riegler, 1988; Pornschlegel, 1990)
Other aspects were seen as a continuation of the principles of semi-autonomous groups known from Kalmar already, even though the attempt tosocially balance the composition of the group and measures to support the
integration of women into production work received much attention.
The question of the length of the work cycle remained a ‘hot potato’ inthe debate, especially the qualification target of enabling everybody to assemble a complete car. Budde and Muster stress the fact, in this context,that the work organization allows to flexibly adjust to different levels andspeeds of individual qualification up from a minimum level of 120 minutes
work content, which shall be reached by the initial 16-months-training period. The initial training period of 16 months is seen as a kind of assembly
work apprenticeship by Budde and Muster aiming ‘at a level of vocational
qualification which is close if not already equal to the level of the skilledworker (‘Facharbeiter’)’ (Budde and Muster, 1990, p. 99). Pornschlegel
makes a point of reservation here:
A qualification concept for passenger car assembly is quite remarkable
and it is quite exemplary in its dynamic and participatory orientation.
The level of skill formation attained through this concept, however,remains far below the standards for vocational training in the metaland electronics industries at the Federal Republic of Germany … Inso far the model Uddevalla remains in the realm of semi-skilled jobs.
(Pornschlegel, 1990, p. 28)
In the fall of 1992 a union delegation from the southwest of Germany cameto Sweden for a study of group work and this visit took them, of course,
also to Uddevalla. The (unpublished) report points out that the target levelof productivity had been reached and the average work cycle for a car andworker had reached almost two hours. 22 workers were able to assemble
the complete car, among them two female workers. They were able tocomplete the car within 17 and 11 hours respectively. The report sees theseachievements as evidence of the ‘productivity potential of this type of workorganization’. After describing the training system and the opportunities offurther training however, the remark is made: ‘Experience has shown, thoughthat nobody has the confidence to master all tasks and only a few want tomaster the complete work content of car assembly. One should never forgetthat we are dealing here with semi-skilled workers who perform assembly
operations with two hours of work content, a task profile beyond imagination in the German context.’
With no further comment the report states that in the meantime the decision to close Uddevalla had been made.
207

4. Learning from Uddevalla
It was not by chance that the study group visiting Sweden in fall 1992 camefrom Baden-Württemberg. The seeds of the Uddevalla plant had taken roots
especially in this region. The regional IG Metall in the early seventies had
been the first to contest the assembly line principle and Mercedes Benz, thedominant car manufacturer of the region, obviously was prepared to follow
a Swedish trajectory of work organization in its modernization programmein the latter half of the 1980s. Particularly for its new plant in Rastatt, forwhich planning began in early 1987 and which started production in early
1992, Sweden was regarded as a model. The factory planning team wasmade up jointly of union and management representatives. Early suggestions, mainly from the union side, to plan for a ‘line-free’ process were not
fol-lowed further, however, a rather complex process layout was developed
based on principles of modular production. The idea was to differentiate
the process layout and work organization according to different job requirements. Operations which were most effective by model-mix variation, likeinterior trim, wiring harness installation etc., became stationary work places
with individual work cycles ranging between 70 and 120 minutes; othertrim operations were to be performed on moving assembly platforms, i.e.
in a modified assembly line system where work cycles vary between 20 and
25 minutes between the groups; for some operations of final assembly, likeengine mounting, a shorter work cycle of around five minutes was planned.
In this manner Rastatt reduced the reign of the assembly line considerably:
the share of direct workers off-line on stationary work places was around
42% in 1993. But still the assembly line remains in place for a large numberof operations, even though in a quite modified form and with long work
cycles. Thus refined different socio-technical principles of assembly workorganization were combined in this plant. What is common is the implementation of group work as the principal form of work all over the plantwith elected group spokes(wo)men.
Learning from Sweden obviously has influenced the production concept
realized at Mercedes-Benz in Rastatt. The three essential innovations of
Uddevalla, however, were not implemented. Neither was the assembly line
abolished altogether, nor were work organization and qualification systems
targeted at building complete cars by small work groups introduced. The
concept of skilled assembly work is common to Rastatt and Uddevalla but
has a different meaning: At Rastatt almost all assembly workers have theskilled-worker (‘Facharbeiter’) certificate in some metal related vocational
trade, whereas at Uddevalla skill formation aimed at the requirements ofassembly work specifically.

208

The publication of the MIT auto study in German (‘Die Zweite Industrielle
Revolution’) came as a shock and threatened to become an embarassment
for the planners and protagonists of the Rastatt plant. Here were the bestpractice plants particularly in Japan, all of which had conventional assemblyline organization with work cycles around and even below one minute andUddevalla even was named as the manifestation of a wrong line of development and a mistaken belief in craftmanship. Could the announcement of
Uddevalla’s closure come as a surprise under these conditions? The sceptics and traditionalists among managers and unionists began to raise their
voices. Had Rastatt, too, gone into the wrong direction? In April 1993 a
joint management/union study group made another tour to Sweden to search
for an answer. The (unpublished) report concludes somewhat consoled thatthe closure of Uddevalla/Kalmar was no decision against the Swedish typeof group work. Continuation of the small assembly plants had become too
expensive due the market situation and overcapacities, even though bothplants were equal to Torslanda in terms of productivity and quality andhad some additional advantages compared to the bigger plant. As a consequence, it was stated that group work should remain a central element of
the companies’ restructuring programme and a return to the old division oflabour and work organization was ruled out; at the same time, continuous
improvement principles following the model of Japanese plants should be
intensified as a part of the group work particularly in optimizing the job
content. The report stated that similar conclusions were arrived at Volvo’s
management in regard to the restructuring the Torslanda plant.
Thus, did Uddevalla’s closure lead to no change of direction in Germany?
One should not be mislead by the statement of continuity made above. Uddevalla’s closure has helped to shift the balance towards Japan-oriented
concepts. The effects may be quite far-reaching. The implementation of lean
production concepts is still in an early stage. Manifestations of the learningfrom Sweden are on the retreat in factory reality. Whereas for a decade andmore, factory and work planners saw no future for the assembly lines andexpected further advancements of job enrichment and enlargement, these expectations have changed fundamentally. Now we can observe a re-appraisalof the assembly line and the word is passed to rather roll-back cycle times,
at least dampen the expectations of their enlargement. The assumption ofa principally positive correlation between the length of the cycle time (jobcontent) and productivity which seems to underlie the Uddevalla concept
has become a focal point of critique. The curve has a different shape, argues
R. Springer who is in charge of the area of work organization at Mercedes
Benz: Productivity increases only to a certain point with the increase ofjob content. Beyond this point a further enrichment and enlargement of
the job makes little economic sense, and from a certain point productivity
209

would drop even below the current level. Pointing at a hypothetical curve(see Figure 1) he states: ‘The section of the curve P1 to P2 describes thework-organizational scope for raising productivity from a given position(P1) to its optimum level (P2). In section P2–P3 of the curve the same productivity level is reached, compared with the current position (P1), as in thesection P1–P2. However, because job contents are larger here, higher wage
costs and additional training costs are incurred, which, given that only thesame productivity level is obtained as in P1–P2, makes it less economic.
Any enrichment of job content beyond P3 leads, on the final analysis, to a
decline in productivity to below the initial level and is thus to be avoided.’(Springer, 1992, p. 59)<Figure 1, Page 210, Part II, Jürgens>

Figure 1. Productivity of manual work with varying degrees of job enrichment
Source: Springer, 1992, p.58
Most practitioners in the field of work organization in German companies
would probably agree with the assumption of a productivity optimum somewhere on the curve and clearly not at the ‘complete car assembly’ end of it.
The assumptions regarding the shape of the curve will vary depending on
experience and beliefs, as well as on the size of the plant and the flexibility
requirements of the production programme. Where do plant practitioners see
the optimum for their trim and final assembly lines? The answer by a leading
work planner of a German car manufacturer in a survey carried out by theauthor was ‘between three and five minutes’; for stationary workplaces inmodule areas the answer from another company was ‘around 20 minutes’,210relating to job enlargement. In the case of job enrichment wage considerations play a major role: if the group is to rotate tasks the tendency is to keepa narrow range of qualification/pay levels within the group.
Summing up: It can be stated that the Swedish ‘new plants’ clearly had an
influence on the German debate of new forms of work. There was never a real
attempt to follow the full model, however, transfer considerations remained
limited to certain aspects. Differences in scale of production output of German assembly plants (with daily output volumes of around 1000 cars per day,even more than 3000 cars per day in the case of Volkswagen’s Wolfsburg
plant) and, related to this, the stronger emphasis on automation measures
are among the reasons for limiting the transfer of the Swedish concepts. The
core of the Uddevalla concept, i.e. the principle of the complete car assemblyby the group or even by individual workers, has never been embraced bywork reformists in the German debate. There has been no awareness of thepotential for continuous improvement which builds up in this kind of work
environment. Taking into account that the product was not designed for thiswork organization and the rest of the company did not fully support nor
understand the new concept, the improvements made at Uddevalla during
its last year should impress anybody. After all, the investments in ‘humanresources’ needed some time to bear fruit. Accounts of record performanceof some groups and individuals in the plant showed the further potential
for improvements. It is a process of improvement, however, which cannot
be controlled by management. Company strategists and work planners inGermany as in Sweden obviously prefer a more controlled process to increase performance level: A bird in the hand is worth two in the bush. The
Japanese concepts seem to offer an alternative way to achieve a steady andcontinuous process of improvement that is easier to control by management,
instead of a process in leaps and bounds with much individual variation andthat is highly self-regulated by the shop-floor, as could have been expected
at the Uddevalla plant, if it had survived.

211

Notes1.

According to estimates at Mercedes Benz seven out of ten ‘Facharbeiter’ in theGerman Automobile Industry were assigned to jobs below their qualificationlevel (Springer 1992, p.57)

2.

In more recent publications, the Anlagenführer became renamed as ‘Systemregulierer’ (systems regulator). According to data of 1992 the share of systems
regulators among production workers in German car companies was 8%; it was
25% in press shops, 27% in machining operations, 6% in body shops and 1%
in final assembly areas (Schumann et al. 1993, p. 17)

3.

Similar concepts were discussed e.g., at Renault and Peugeot (Cohen et al.,1986) and at FIAT (Camuffo and Volpato, 1994).

4.

At the end of the experiment one worker completed eight to ten engines per shift
on the average, some workers even twelve engines. A study made by external
consultants came to the conclusion that the group-assembly setup would pay off
economically at a level of 120 to 150 engines to be completed by both groups
per shift. Taking into account the continuous progress on the learning curve
it could be expected that this level could easily be improved upon the groups
in the future. In addition, the number of quality defects in the group area wassignificantly below those of the assembly line area.

212

References
Altmann, N., Binkelmann, P., Düll, K., Mendolia, R., Stück, H. (1981), ‘Bedingungen und Probleme betrieblich initiierter Humanisierungsmaßnahmen’,Forschungsbericht BMFT-HA 81-007, (1) bis (4), Eggenstein-Leopoldshafen.
Arnold, H. L., Faurote, F. L. (1972), Ford Methods and the Ford Shops (1915),
Arno, New York.
Auer, P., Riegler, C. (1988), Gruppenarbeit bei Volvo: Aktuelle Tendenzen und
Hintergründe, Stockholm.
Budde, D., Muster, M. (1990), ‘Die Alternativen kommen ins Hauptwerk zurück.
Vom langen Marsch der Gruppenarbeit in die Pkw-Montagen bei Volvo’ in
Dieter Budde, Manfred Muster (eds.), Mit Vollgas in den Stau – Automobilperspektiven, Unternehmensstrategien und die Perspektiven eines ökologischen Verkehrssystems, VSA-Verlag, Hamburg, p. 88–105.
Camuffo, A., Volpato, G. (1994), ‘Making Manufacturing Lean in the Italian Automobile Industry: The Trajectory of FIAT’, Actis du Gerpisa réseau international Nr. 10, p. 31–90.
Cohen, Y ves, Durand, J-P., Freyssenet, M., Lojkine, J., Mahieu, C. (1986), ‘Travail et Automatisation dans l’Industrie Automobile’, Actis du Gerpisa réseau
international Nr. 2.
Done, K. (1991), ‘Sophistication may not suffice’, Financial Times, 05.03.1991.
Ellegård, K., Engström, T., Johansson, B., Nilsson, L., Nedbo, L. (1992), Reflektiv
produktion – Industriell verksamhet: förändring, AB Volvo Media, Göteborg.
Jürgens, U., Malsch, T., Dohse, K. (1993): Breaking from Taylorism – Changing
Forms of Work in the Automobile Industry, Cambridge University Press,
Cambridge.
Kern, H. (1979), Kampf um Arbeitsbedingungen. Motivation zur ‘Humanisierung
der Arbeit’, edition suhrkamp, Frankfurt a. M.
Kern, H., Schumann, M. (1984), Das Ende der Arbeitsteilung, Verlag C. H. Beck,
MünchenPornschlegel, H. (1990). ‘Ein neues integriertes Arbeits- und Fabrikkonzept. Das
Beispiel des schwedischen Automobilmontagewerks Uddevalla der Firma
Volvo’, in REFA-Nachrichten 1/1990, p. 16–29
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213

Part III

Volvo Car plants internationallyand the alliance with Renault

Volvo truck and bus in the UK:
The clash of the Titans
Paul Thompson and Terry Wallace

Volvo has had a presence in the UK since 1958, with manufacturing interests
in buses, trucks and industrial and marine engines. The company although
importing commercial vehicles into the UK from 1967 had began large scaleassembly operations of trucks and busses on the Irvine site in Scotland by
1975. Their leverage in the UK commercial vehicle market was enhanced
in 1988 by the acquisition of Leyland Bus, with its two assembly plants at
Workington and Farrington, plus the latter’s component factory. The continuing decline in the UK bus market in the late 1980s meant that assemblyof buses was concentrated on the Workington site by 1991, with Farrington
now manufacturing components only. In late 1991 it was announced that theWorkington site itself was to close with the Volvo B10M bus transferred backto the home base in Borås, while the Volvo B6 and Leyland Olympian wastransferred to Irvine. With this latest rationalisation the Volvo commercial
vehicle operation now has the two manufacturing sites at Irvine and Farrington plus a sales and marketing operation at Warwick.

The argument
This then is a bare outline of the history of Volvo truck and bus production in
the UK. In this chapter we want to focus on the key moments of take-overs,
transfers of production and plant closures. These will illustrate the issues of
relevance to social scientists, for there are a number of crucial parallels in
the UK with debates and events in Sweden. Shutting down Workington andits experiment in dock build and team working took place at about the sametime as the announcement of the closure of the Kalmar and Uddevalla plants.
Though the uproar that greeted the latter closures in the academic and news
media within Scandinavia (Leijon and Löfström, 1993) was sadly lacking in
the UK, the events and what led up to them do have significance.
217

In the early days of the acquisition, Volvo set about fundamentally transforming bus production in Workington from traditional flow line production
to cell assembly and team working, based around the introduction of docks.
In exporting innovative work organization, the company’s actions question
Berggren’s (1990) judgement that there is no ‘Volvoism’ outside Sweden.
But that referred primarily to the Belgian plant, with the UK operation representing a tiny part of the story in his magnificent study of the company.1
In this respect, our story is part of the wider picture. In closing Workington
and relocating to Irvine, a plant which until recently had traditional flowline assembly and work organization, there are uncomfortable echoes of thedecision to close Uddevalla and Kalmar.
From a relatively early stage we formed a judgement about company
strategy that seems to have stood the test of events. Our argument, in contrast to some commentators (e.g., Auer and Riegler, 1990), was that Volvo
has no intrinsic interest in innovative work organization or ‘good work’.
Observation across the company’s range of plants in commercial vehicle
production, reveals a heterogeneous stock of work organization practices.
In our interviews at ten truck and bus division sites in the UK and Sweden, we heard considerable commitment to ‘good work’ philosophies andmethods such as ‘its the natural way of working’ (Production Supervisor
at Workington). On the other hand it was equally clear that ‘the market
governs everything in this company’ (Finance Manager at Farrington) and‘decisions are based upon economics’(Production Manager at Workington).
Volvo is a transnational company which constantly looks at and compares
costs across plants, with those that are more efficient and produce better
quality products getting the business.
Our view is that these two tendencies coincide in favour of innovative
work design with respect to bus production and more recently truck production in the UK, but not necessarily elsewhere. A brief overview of corporate
responses to the changing nature of primary markets reveals that within
Sweden itself, Kalmar and Uddevalla were attempts by Volvo to sustain
and increase its share of specialist niche markets. Within its commercial
vehicle division dock assembly techniques, originally experimented in theGothenburg truck facility, were introduced into the purpose built Borås factory largely as a result of changes in the nature of the bus market. Although
there is a high degree of equivalence within its European, South Americanand Australian bus plants; similar equivalence is missing from the four major
truck outlets in Gothenburg, Gent, Dublin North Carolina and Irvine. The bus
market itself is now so heterogeneous that single line assembly techniques
have become unable to efficiently manufacture the high number of extras
or special vehicles that many customers are now demanding.

218

This is increasingly becoming the case within the truck market, notwithstanding the fact that there is still sufficient demand for standard vehicles
in the US and Europe to make the use of flow line methods still applicable.
Consequently, the Gent and Dublin factories, which produce respectively,‘FH’, ‘F and FL’ vehicles (Volvo’s standard truck models) and White trucks,
face management opposition to the introduction of dock assembly techniques. The depth and strength of the current recession in the commercial
vehicle market has, however, forced companies such as Volvo to reassess
its overall production strategy. They are now more then ever willing to takeorders for ‘S’ or special vehicles. These vehicles tend to be concentrated
in the Gothenburg and Irvine factories and consequently it is there thatexperiments with a mixture of line and dock assembly techniques are currently taking place.
However, we are not arguing for a mechanical ‘market rules’ perspective. The existence of a repertoire of work organization practices in Volvo
and its particular divisions, means that they act as a resource for different
individuals and groups to pursue their own ideologies and interests. There isthus a struggle in Volvo, an intra-company version of global ‘best practice’in which the key actors within and between management, unions and workforce, struggle to impose their conceptions of efficiency and equity. For
example, at Irvine the introduction of dock build into its bus assembly unit,
following the closure of Workington, is forcing senior managers within theplant to debate the applicability of the forms of production methods used inbus and, more interestingly in view of the Kalmar and Uddevalla closures,
vice versa from truck to bus. This is then the current state of play. Througha series of ‘flashbacks’ of critical incidents, we will now reconstruct theevents and issues in more detail.

The Leyland take-over: Workington vs. Farrington
The Volvo take-over of Leyland Bus was driven by four factors; the needto increase its production capacity; to take out its major UK competitor; toacquire a production facility in its largest market outside of Scandinavia;
and finally, to have a bus production facility within the EC in the run-up
to 1992. But, within a short time of the take-over, Volvo was faced witha number of harsh decisions based around the need to relieve the undercapacity of ‘B10M’ production at Borås and the continuing decline of the
UK bus market. The first of these demanded that one of the UK plants had
to be transformed into a dock assembly facility, so as to facilitate transfer
of orders around the company’s ‘chain’ of bus production. The second wasthat one of the assembly units should close and all production transferredto the remaining plant unit.
219

As we indicated earlier, at the time of the acquisition Leyland had two
major plants at Farrington and at Workington. The view of the executive
directors of Leyland Bus was that by closing Workington they would be outof body building and they would be able to retain a headquarter’s facility at
Farrington. But a major sticking point in this Leyland plan was the proposition
for building B10Ms at Farrington on flow line. Consequently, Gothenburg
argued for the closure of the assembly facility at Farrington and the transfer
of production to Workington. The Swedish argument prevailed for a numberof reasons, not least that the President of the bus corporation, Larserik Nilsson, who had invested considerable political capital into the Leyland venture,
wanted a UK plant which was the mirror image of Borås. This choice was
not really surprising. Farrington’s old and inappropriately structured building
with its BX chassis assembly shop based on pillars and sloping floor was
ideally suited to flow line production, which made it impracticable to transfer
vehicles laterally across the track. By comparison, Workington had a flat
floor and was a large open plan building with a high ceiling. To all intents
and purposes it was a structural clone of the Swedish plant.
However it was not only the structural similarities of the two plants whichconvinced Gothenburg to expand at Workington. The Farrington site has
been in existence since 1913, manufacturing a range of commercial vehicles
for civil and military applications. An engineering background and strengthof craft unionism meant that it managed to retain a highly skilled and wellorganized blue collar workforce. In contrast, Workington was designed as
the first high volume, mass produced assembly line factory with integral
buses assembled through car production techniques. One of the underlying
philosophies behind the plant was to do away with traditional engineeringskills in an attempt to overcome some of the demarcation difficulties thecompany had experienced at the Farrington plant. In order to move into agreenfield site they felt they needed to recruit semi or unskilled labour asassembly operators.
The whole operation was effectively de-skilled from day one with aflexible workforce all on one rate of pay, with job rotation and a highemphasis on job training, with operators expected to learn other jobs
as and when required. (Production Manager, Workington).
The skill profiles of the Workington and Borås workforce and the geographical location of the two plants therefore coincided. Both plants hada largely non-craft, flexible blue collar workforce compared to the largely
craft-oriented workforce at Farrington. Both were built in the 1970s andrecruited workers from local dying industry, textiles in Borås and steel in
Workington, who were less steeped in the history of automotive production
and perceived to be more amenable to learning new ways of working:220

The Workington plant has undergone so much change in the past andthe people therefore are more receptive to change, there are no deeply
entrenched working practices that there have perhaps been in the Leyland factory. I think to have introduced team working into the Leyland
factory might have been a little more difficult (Finance Manager, Farrington).
Community and geographical factors also intervened. The Farrington factory was very much linked to the history of Leyland as a town and Leyland
Motors. Workers at the Farrington plants still saw themselves very much as
employees of Leyland Motors, even though the company had gone through anumber of name changes over the past 25 or so years. The name of Leyland
is also strongly linked to the town of Leyland with all the implications forcompany identity within the workforce. These links with the traditions of
Leyland Motors either did not exist at Workington or were not as strong.
Consequently, the process of ‘Volvoisation’ was less difficult to achievewith the Workington employees. This would have been less of an issue if
Volvo had not wanted to introduce dock assembly techniques into its UK
operation. It had to have a workforce more willing and able to adopt newtechniques of production. A less solid connection to traditional patterns ofwork and a long standing fear of the eventual closure of the plant meantthat Workington was more open to new ideas than perhaps the Farrington
workforce. Managers also saw more straightforward similarities:
If you come to a big town or city it is difficult to run a factory there
than in the countryside. If you compare Workington to Borås, Borås isa small town. not like Gothenburg which is a big city – 600 to 700,000
people. The relation between the two places is different between thetwo cities. I think it is the same here. I can feel that as well. When
you are in Preston it is a big city in the area, when you come up here,
you have more people who are standing up for the industry. I think it
is lower upsets here. people know each other more. (Swedish Plant
Director, Workington)
But the similarities did not mean that production could be easily transferred.
Producing another Borås at Workington was primarily a question of workorganization.

Transfer of cell assemblyThough Volvo likes to distinguishes itself from its competitors through aperception of having an innovative and pioneering approach to manufacturing, and one that can and should be exported, the transfer was based largely
on market contingencies. It is clear that Volvo’s reaction to the fragmentation221

of the bus market, the increasing emphasis on quality issues and continuing
low volume production was to experiment with the dock build and teamwork
philosophies.
Line production is OK when you have 10,000 similar vehicles, but
not when you have different types every time and you have to build
to customer orders. In heavy vehicles where you have low volumes,
it is the system. I cannot see how we can build on a line. (Production
Manager, Borås)The original expectation was to completely abandon flow line production
at the Workington plant and replace it with the cell assembly system acrosschassis and final assembly. They wanted to develop autonomous teams of
between seven and fourteen workers each with a responsibility for a distinct
stage in the assembly function. Responsibility for inspection and quality
was to be in the hands of the teams, as was the allocation of tasks within
the group. Employment was expected to increase by just under 10 per centwith increased production targets from 80 vehicles in the first year to 1,000
per year after 10 years.
However, when embarking upon a complete redesign of production
systems, experience gained from its car and bus plant in Sweden has convinced Volvo that to attempt the installation of a theoretical system without
modification to suit local conditions is not feasible. Above all else thisinvolves a recognition of different knowledge systems existing in specificcontexts. The knowledge system within, say, a workforce recruited fromdecaying industries such as mining, steel and agriculture, and operating a
traditionally highly disciplined and task specific, semi-skilled environment;
is immediately at odds with the a knowledge system able to comprehend
the more democratic and self-responsible dock assembly system of Volvo.
Such was the meeting of knowledge systems in 1988 at the Workington assembly plant in West Cumbria. To have introduced a complete overhaul ofthe system at one go would have created more problems that it would have
solved. The recognition of different knowledge systems meant that Volvo
was prepared to introduce dock assembly on a incremental basis over anumber of years.
In January 1990, a small team of operators travelled to Sweden to be
trained in the working practices at Borås. The major focus of the training
revolved around the introduction of team working within the Workington
plant. The initial group of eight were to form the basis of the first assembly
team. In June, a further six operators were sent over to Sweden and these
two groups worked on chassis assembly at Workington, forming cells covering specific work areas. As others then drifted into the teams, they became
fragmented and the dull state of the market limited the scope of training222

to only those areas operatives were immediately involved in. So from theinitial small team, who covered all assembly operations, the developmentof later cells saw them performing limited functions, with some operators
only being able to carry out one or two of the full range of eight operatingtasks. The idea was that those teams in those smaller areas would then build
up as production volumes increased. Scale, therefore, in terms of number
and size of teams, was very much dependent on volume throughput. The low
volumes, 15 buses per week, slowed implementation of full cell assembly
across the whole of the plant.
The ideal team for the co-ordinator was said to be somewhere between
eight to ten. However of the original eight who went to Sweden, six weremade redundant during a rationalization programme on the ‘last in, first out’
principle. In the early stages, the company was able to carefully select theworkers who went on the training programme to Sweden, usually younger
workers, and to weed out those they saw as ‘contaminated’ by traditional
British working practices. In the latter stages of the plant’s life, the depressedstate of the internal labour market meant that the teams had little choice
regarding replacements on the next upturn in production. This meant thatnew recruits had little knowledge of how the system worked and they had
to squeeze out one or two operatives, who although technically competent,
found it difficult to shed the habits of production line working.
With these and other factors mediating the pace and character of change,
it took from 1988 till 1992 for the production regime to change from traditional assembly line to dock build in chassis assembly. But the system inplace in Workington was not exactly the same as that in Borås. Nor could
it be with an inevitable degree of autonomy and mediation for the actors
involved. At Workington, it was very much left to production engineers,managers, and supervisors in conjunction with selected team members
from within the existing structure. These key personnel received extensive
training on the philosophical, technical and production underpinnings of thesystem within the Borås plant. However, Workington personnel identified
a number of problems which they thought they could rectify, drawing upon
their own expertise. Although the philosophy of the two plants was the same,the lay-out and its technical organization was different, as was the ratio of
sub-assembly to final assembly work.
Indeed, there is an understanding within Volvo that systems themselves
are not static entities, but need to be constantly updated. One way of doing
this is to locate production units within several discrete geographical locations and experiment with different inputs. The underlying philosophy inthe export of ‘best practice’ is that one factory should not completely takeon the aura of another because each factory has its own history, its own
traditions, its own knowledge systems and its own people. This produces
223a two-way system which has the effect of constantly pushing production
systems to the limits of applicability by improving and developing them.
This is, however, a strategy not without its problems. A basic knowledge
of Newtonian physics reveals that for every force pushed in one direction
there is an equal and opposite counterbalancing force in the other. In thecase of Workington, sections of management and trade unions provided thatcounterbalancing force.
Among managers, there were doubts about the success of the arrangementin the long run. Those closely involved, notably the manager who had initial
responsibility for training team members, tended to see the problem in termsof the lack of flexibility and imagination within some the company’s more
traditional managers. He was concerned about the way the Swedish system
had been ‘modified’ by UK managers to suit British conditions. To backthis up, one operator joked that, ‘the best thing would be to lift the whole
factory up and drop it into Sweden’.
Management resistance to change, although initially present in the chassis division, was more widespread in the body division and perhaps did nothave the wholehearted support of some seniors managers at the Farrington
headquarters. In one interview, a senior manager in the firm hinted that hewas sceptical as to the long term success of the project. He was afraid thatthe system would end up as a ‘half-baked’ mixture of British and Swedish methods and was sceptical as to whether it would work successfully inthe long run. However, most management resistance was eliminated earlyon either by bringing in new staff or by processes of conversion. With theappointment of Tommy Svensson as Production Director for the chassis
division another Swedish manager commented that initially he:… did not recognize Volvo here. Tommy brought the Volvo spirit to thechassis. In the chassis division there were some very strange things going on. It seemed that Volvo left Leyland business very much alone for awhile, before Tommy came. Tommy started to work with the managers
here before he came over. That was a major change. I don’t know how
good they were before Tommy came, I have no idea. You can see now
the difference between chassis and body, there is such a tremendous
difference now. (Swedish Production Manager, Workington)
Turning to the unions, there is no doubt that the core of union organizationin the plant was in the body division, with both the convenor and deputy
convenor coming from within that section. The convenor was less thanconvinced of the effectiveness of dock build in the factory:
I have always said – we used to do the chassis on a line system and thenthey put in a dock system – I think we could have built them faster on224

a line system. We have been doing them on a dock system and I think
we could have done them without having to spend a lot of money on
the system (TGWU Convenor).
This anti-dock feeling has its roots not in the system itself, but is largelya result of the separation of the plant into two divisions and the resulting
proposed round of redundancies. It was generally accepted throughout theplant that it was overmanned with the body division been the focus forthis excess of labour. The splitting of the plant into two divisions gave thecompany the legitimacy to concentrate its redundancy plans onto the body
division, a tactic that was vigorously resisted by the unions. They argued
that traditionally the plant organization had been ‘wall to wall’ which meantthat redundancies were organised purely on a seniority principle.
The role of the convenor was also undermined by the split which led tohim being excluded from any negotiations concerning the chassis employees. One manager commented on the unions that:
Because they were very sceptical, the comments were passed, ‘Oh you
have been to Sweden, you have had head lifted off and your wires rearranged’. They did not believe it, they didn’t believe it could work …
I think everything was treated with the inherent suspicion that the tradeunions had had for a lot of years. They would not back off, they would
not believe what they were told. To be perfectly honest I really do notthink that they looked at it in that light at all. I don’t think there is anyone here who looked in depth at team working. I think they simply saw
it as another method of negotiating. The convenor has been to Sweden
and he still doesn’t. He stills sees it as a negotiating issue. The problem
is, that was has happened now is that chassis areas have developed, we
have installed these new working methods, irrespective of the supportof the union, we have now a larger and larger group who are prepared
to do it and his power has been virtually almost undermined, he is not
the force that he was 2 1/2 years ago (supervisor, Workington)
Though some in the plant actually went as far as citing the actions of theconvenor and the shop steward’s committee as a factor behind the plantclosure, this was not the view of senior management. Within the constraintsof the existing limited volumes, Workington met its efficiency and quality
targets. However, the continuing decline in the bus market and its effect on
capacity meant that, irrespective of the plants success in becoming ‘Volvoised’, it was unable to survive as a stand alone unit. Eyes began to be
cast northwards to the truck assembly unit in Scotland and the possibilityof merging bus and truck production into one unit. But why choose Irvine,
a plant that had more of an independent character, over Workington?
225

Why Irvine?
The dominant argument in the company is that Irvine management had moreof a competitive edge in their outlook and successful performance, plus theplant was considered to have a longer history as being a Volvo operation.
Leyland plants, no matter how modern or successful, were still tinged with
the ideology of failure. Workington was still effectively only a Complete
Knock Down (CKD) operation and did not have the expertise in either outsourcing parts for Volvo products or being able to have full control over the‘bill of materials’, or the means by which vehicles were built. In other words
Workington was overly dependent on Borås, whilst Irvine was a fully independent unit able to design and organise its own production schedules.
It is also the case that the power base in the company had moved to thetruck division. The truck and the bus companies merged in July of 1991,
with the Headquarters of the company moving to Warwick and the components part of the business put up for sale. In September, the final nail in
the Workington coffin was the resignation of Larserik Nilsson. With this,the last champion of the Leyland operation had gone. The feeling of many
managers in both the Leyland and Volvo operations was that he had made abad judgement in buying it in the first place. In part this had been masked
by the strength of Larserik’s leadership and the continuing success of Volvo
in its other markets. However Volvo’s bus sales were now dropping off in all
their other markets and this made the Leyland problem more visible giventhat the operation was no longer cushioned by the performance in the restof the world. The new MD of Volvo Bus inherited a UK company whose
performance was getting worse by the minute despite the organizational
restructuring of the previous 12 months. The market was continuing to
decline, losses were building up and Volvo Bus was having to concentrate
more of its efforts into the UK at a time when volumes at Borås were also
in decline. With Sweden having made an application to join the EC, theyno longer needed an EC base. What is more, with the Renault alliance coming into the picture some senior voices in Volvo were arguing for the RVI
bus division to take over major responsibility for bus production outside of
Scandinavia. The role of Leyland in that equation was no longer as relevant.
At an executive group meeting in Gothenburg, in November of 1991, thedecision to close Workington and shift production to Irvine was made. The
announcement was later made on 5 December 1991. The decision was madewithout the knowledge of any managers at the Workington plant.

The merging of the truck and bus operations
However, as with the move into Workington, the merging of the truck andbus operations and the introduction of some form of dock build will not be226straightforward. To understand this, we have to recognise that the historyof the Irvine plant is different from Workington in that it has always had
some form of relationship with Volvo. In the late 1960s, Ailsa Trucks began
importing Volvo trucks and although the business had quite a slow take off,
within three years they were ready to invite Volvo to join them in a moreformal partnership relationship. Originally situated at Barrhead, the company moved to its present location in Irvine in 1974, when they had begun
the assembling of CKD kits imported from the Gothenburg truck plant. By
1976 Volvo had become 100 per cent owners of the venture. In 1983, they
took stock of themselves and accepted that they must become more of atruck builder than a CKD assembler. This lead to a total restructuring of thefactory, extensive investment and goals of reducing build-time and improve
productivity by at least 20 per cent.
This meant that they now considered themselves the functional equals of
Volvo’s other two main truck plants in Gothenburg and Gent in Belgium.
We felt that the flexibility to have a factory in the market was very
essential. We did not obviously want to run an operation that was notcompetitive with the other Volvo operations in Belgium and Sweden.
So we set out to be as good or better than all the others. We set very
strict targets and improvements in productivity. In international manufacturing one factory cannot perform worse than all the others, we havealways had to be competitive. We strongly believe… that we becamecompetitive within the Volvo family. (Former Managing Director, Volvo
Truck)
This notion of family is an interesting one. Generally Volvo is a very orderly
company with well defined targets. Not only does the notion of a Volvo family involve national distinctions, it also involves divisional distinctions. In
other words, there is no simple idea of what it is to be ‘Volvoised’, as theprocess in truck is something different to bus production. For example thegoal of duplicating Borås all its facilities within the Workington plant waslargely a result of the duplication of product ranges. Within truck, a more
complex picture presents itself. Let us turn back for a moment to comments
made by the former MD:
I like to think there is a special Volvo culture. Everybody is so proud ofwhat they are doing and it is like a huge big family. I have the opportunity
to know many European markets, you have that culture everywhere,
but it is more nationalized. In Holland you the Dutch Volvo family, in
Belgium, the Belgian Volvo family and so on.
There has, however, been a mixed reaction to the proposed introduction ofdock build into Volvo’s three major truck assembly plants:
227

To be honest the truck business is not suited to docks, our Belgian factory is very much against it, the people in Irvine are against it and in
Gothenburg it is divided with the majority against it and about a thirdor a quarter for it (Swedish Production Manager, Workington).2
This is not strictly the case in Irvine, as opinion is now coming round to theidea of dock build. These reactions to team build are not so much expressions of different national cultures, but a reaction to the changing nature of
the product range being assembled in the different factories. As the truck
Production Manager at Irvine commented:
No, I don’t think there is a single best way to build trucks. It depends
very much on what you are building, what your volumes are. The Gent
factory, they are building, relatively speaking, high volumes of similarvehicles therefore there is a benefit of a normal assembly track. I think
we are building low volume, specialist vehicles with different equipment, so something like dock assembly or approaching dock assemblyis probably a better way of going. As I said earlier if you are trying to
fit a lot of additional equipment and you have to move the vehicle every
40 minutes this becomes complicated. I would like to see, if not a dockassembly for these vehicles, certainly a slower line move time to allow
more time to do the work in that area. There is no one answer.
There is a feeling now in the plant that their traditional system of working has outgrown its usefulness and they are consequently in the middle
of introducing the team concept throughout the factory. This has caused
some problems for them, especially in the definition and role of the charge
hand. Traditionally, the charge hand has been seen as part of management.
Now renamed as team leader, there is confusion concerning the new role,as manager or as group member. This is largely the result of plant’s use of
the charge hand in the past in a diagnostic rather than a disciplinary role.
This had lead to one production manager asking, ‘what is the difference
between a charge hand and a team leader’? There is also some tension as tothe use of docks in the plant with the Production Manager of the bus division arguing that the system they have introduced is a mixture of docks andlines. There is some evidence that we talking semantics here and what wehave is a modified dock, which they have problems labelling as such. Theirpreferred solution in both bus and truck, is to have two lines, one slow for
specials and one fast for standard vehicles, with a dock area for final assembly and frame manufacture. What is clear is that the introduction of the bus
has been a catalyst for change in the factory; change that is at the moment
experimental. Managers we spoke to question the extent to which Kalmar
and Uddevalla plants were successful and do not see their factory falling
victim to the same fate. Their ultimate concern is to get the most efficient,228effective and profit-able plant possible. If this can be achieved with docks,
that is fine. If not and the use of smaller lines in tandem with docks proves
to be more effective, then that is the system that will be used.

Conclusion
If the above discussion had perhaps been about the Ford Motor Company,
General Motors or Renault, one could forgive an audience for muttering‘so what’. But, because of Volvo’s international association with innovative
work organization, what happens in the company carries a wider significance, even in the UK. For example Peter Wickens (1993), the Personnel
Director of Nissan UK, has recently pronounced on the ‘failure’ of the experiments in Sweden indicated by the closures and what they mean for thetriumph of lean production. What Volvo has actually done in the UK bus
and truck industry is only a small piece in the overall picture. Yet the story
appears to be a familiar one. Volvo transforms work organization at Workington in a progressive direction, the plant meets its efficiency and quality
targets in a shrinking market, is then closed and production is transferred
to a more traditional plant.
The events appear less surprising if the analysis proceeds from the starting
point used in this chapter; that for all their justifiable pride in manufacturingexpertise, Volvo has no intrinsic interest in particular forms of work design.
Rather, the repertoire and choices made reflect the company’s strategic
response to shifting market conditions. There will be room to struggle overthose choices, but the circumstances are not likely to get any easier in the
short term. Commenting on the merger between Renault and Volvo, a senior
Swedish Government official commented, ‘Ten years ago there would havebeen turmoil from the unions, but not these days’ (Guardian, 7 September
1993). Although this reflects to some extent the changing nature of European
trade unionism, it is also indicative of the gradual recognition by the unions
that in Volvo, ‘there are no more sacred cows’ and that ‘remaining competitive’ is the only way for Volvo to survive (Per Gyllenhammar, Guardian, 9September 1993).

Notes
1.

However since late 1993 the Gent truck plant in Belgium has increased bothits product range and of variants within these ranges. Consequently they havebegun to utilise dock production technology and team working for the assemblyof low volume, highly specialised trucks.

2.

Since we spoke to this Production Manager the Gent and Gothenburg factories
have switched to a mixture of dock and flow line assembly, largely as a resultof the changing requirements of the market.

229

References
Auer, P. and Riegler, C. (1990), ‘The Swedish Version of Group Work – The Future Model of Work Organization in the Engineering Sector’, Economic andIndustrial Democracy, Vol 11, pp. 291–299.
Berggren, C. (1993) The Volvo Experience: Alternatives to Lean Production in the
Swedish Auto Industry, Macmillan, London.
Leijon, S. and Löfström, M. (1993) ‘The Good Work in Sweden – Twilight time?
An analysis of the debate following the closure of alternative car production
in Sweden’, Paper presented at the Labour Process Conference, University ofCentral Lancashire, March 31–April 2 1993.
Wickens, P. (1993) ‘Lean Production and Beyond: The System, Its Critics and the
Future’, Human Resource Management Journal, Vol.3, No.4, pp.75–89.

230

Volvo-Gent: a Japanese transplantin Belgium or beyond?
Rik Huys & Geert Van Hootegem

1. Belgium as a car-assembling nation
In international literature, Belgian car assembly usually escapes the attentionof researchers. This may be due to the absence of a national car producer
or the small size of the country. There are, however, several good reasons
why this country deserves a closer look:
There is a long tradition of car manufacturing, starting back at the endof last century with national production plants like Minerva, Imperia andF.N., in addition to some foreign automobile constructors. Soon, however,
the growing complexity and technological advancements in car production demanded unaffordable investments from the small-scale Belgian car
producers and caused their closure before World War II. After the war, carproduction was completely taken over by foreign investors.
Car manufacturing is of overwhelming importance for the national economy. Currently, five assembly plants containing welding, painting and final
assembly divisions (with Ford having an additional steel-pressing division,
wheel and shock absorption production units) are operating in Belgium.
More precisely all are located in the Flemish region. With a total production of 1,115,000 cars (Figure 1), Belgium is the largest car assembler per
capita in the world (0,11/capita, compared to 0,07 for Japan or 0,05 forGermany and France).1
There is the good performance of the car manufacturers in Belgium, forwhich most of the plants are well known. Compared to the production ineach plant, the market in Belgium is small2. Plants export around 95% of
their production, and can as such not rely on the internal market in bad
times. Of course good productivity is the main argument for any plant, butthere is a continuous awareness in all Belgian assembly plants that it is the
only card to play as decisions of major importance are taken in far away
headquarters.
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Figure 1. Production of automobile-industry in Belgium (1993)
Signs of this performance can be seen in the remarkable way Belgian car
assembly plants passed the slump in the market during 1992–1993 relatively
unscaved, without any significant loss of production or lay-offs. Moreover,two plants were able in recent years to attract the exclusive production of a
new model (The 850 by Volvo-Gent and the Mondeo by Ford-Gent).3
While any of the five car assembly plants in Belgium has an interesting
story, in looking for new forms of organization the biography of Volvo
attracts attention. Compared to all other concerns present in Belgium, theVolvo-concern has a strong tradition of alternative work organization. It isalso the only producer of luxury cars, which seem to be a more fertile groundfor such alternatives. Looking from Sweden and with the wisdom of what
has happened in the last couple of years (the assignment of the exclusive
production of the 850 to Volvo-Gent, the success this model has proved to bein the market, and the closure of Kalmar and Uddevalla), one might wonder
whether the fate of Kalmar and Uddevalla are linked to this plant. At least
it looks ironical when at the same time as Volvo-Gent is struggling to meetthe huge demand and producing at a current rate of 140,000 units / year ina plant build for 90,000 units, other Volvo plants are closed.

2. How Volvo got involved in Belgium
As was mentioned previously, car production was certainly not new in
Belgium as the first Volvo-Amazone drove off the production line in 1965.
Indeed, Volvo was the last of several car producers which found their way
to Belgium. The decision by Volvo to erect an assembly plant in Belgium
was made in the wake of the creation of the European Economic Community(EEC). As Volvo was hardly presented in this important potential market,
it was vital for the company to set up its own production units in order toreinforce its position. Especially since custom duties were implemented
232around the then six members which taxed imported cars at 22 percent. Although the import of parts was also taxed by 14 percent, a Volvo production
unit within the EEC could work under similar conditions as its European
competitors.
Gent was chosen as a location in 1963, because the region was experiencing a strong economic growth around the expanding port while at the sametime provided an available labour force due to the decline in the traditional
textile industry. But above all, the location is at the crossroads of the twomain European highways (E40 to G.B. and Germany, E17 to the Netherlands
and France), and at the port of Gent with a good maritime connection to
Sweden.
Until 1972, the plant consisted of only a final assembly division. Because
the number of vehicles grew rapidly, transportation costs, as well as repair
costs, due to transportation of painted bodies soared. Therefore, the plant
was extended with a welding and paint division. Although ironically, atthis moment none of the five assembly plants in Belgium exports as manycars outside the EEC as Volvo-Gent, Belgium still represents an importantfoothold of Volvo within the EEC Not only did Volvo-Gent grow to be thebiggest automobile plant of Volvo outside Sweden, Volvo’s presence in Gent
was also expanded by a parts centre for distribution mainly to European
countries (1973), a truck plant (1974), and more recently one of Volvo’s
four marketing centres covering the marketing, sales and after-sales of all
Volvo-automobiles in Western Europe (1990). All taken together Volvo
actually employs over 5,000 people in Belgium.

3. How Volvo-Gent grew
In such a cyclical market as automobiles, the fate of the Volvo-Gent plant
was not without down-turns. After the oil-crisis in 1973, production fell
dramatically (figure 2). The newly introduced two-shifts production had toswitch rapidly to one-shift again, with important lay-offs and social unrest.
More recently production dropped steeply again (1990). This was not only
due to the simultaneous phasing out the 740 and 950-five-doors models andphasing in of the 850-model. In an effort to limit stocks of unsold cars in asloppy market, 24 days without production were introduced and the speedof the production line lowered. As such, no lay-offs were put through since
all workers were needed in the newly constructed 850-production lines.
Gradually the Volvo-Gent plant evolved towards a more self-sustaining
and autonomous enterprise. Soon after its opening the plant was expandedwith a welding & painting division. This gives the location a more economically viable future, an advantage which was denied to Kalmar and Uddevalla.
The original markets of the six EEC-countries were expanded to a worldwide
233

supply. With the introduction of the 850-model the plant has been given for
the first time the exclusive production of a Volvo-model. It is also the firsttime the Gent plant had any involvement in the development of the car.
Although even here the design was fully accomplished in Sweden and only
the detailed design of parts and their testing could be discussed. Indeed, farfrom a lean design procedure, the final decision to produce the 850-model in
Gent was only made in 1990! If only the choice of where to produce the car
had been made earlier in the development, production-engineers of the plant
concerned could have helped to control tuning and coordination problems
between the development and production of a car.
At the other end of the product line, Volvo-Gent has thrown itself in to the
distribution as well, despite some resistance of the central planning divisionin Sweden. In direct contact with importers, they are allowed to deviate up
to three weeks before production from the planning Volvo-Gent receives
from Sweden. Of course this requires that the plant be flexible. Therefore,
the plant has an important and growing number of suppliers working on a
JIT-basis, including some sequential suppliers.
As figure 2 shows, numbers from the past are fast becoming obsolete.
Indeed during 1993 and continuing until this moment (March 1994), theplant is in an ongoing struggle to increase production without further investment in order to meet growing demand. Production in three shifts has
been introduced in body & paint shops. Two-shift production in final assembly could be maintained by several increases in linespeed. With a mere
90 production-stop per day in body shop and 75 in paint-shop necessary for
maintenance work, the plant has an actual production of 624 cars per week.
However one final increase in linespeed is planned in April 1994 to reacha limit of 644 cars per week.
Such high capacity utilisation is not unusual in Belgian automobile plants,
even when demand is low and plants close down frequently. Indeed, threeof the four other assembly plants produce in three shifts, in each case extending over all production units. Plants have little output-flexibility upwards
as overtime is legally restricted, heavily taxed and, considering the highun-employment, generally not accepted by unions. However plants enjoy
great flexibility downwards as workers put on temporary unemployment
are granted additional benefits. Although the cost of flexibility is hereby
placed on the social security, this is generally accepted as a measure to
divide available work.

234

Figure 2. Number of workers and produced cars at Volvo-Gent (1965–1993).
235

4. Production process and automation:a highly automated plant with some specific features
The body shop
Volvo-Gent consists of three units as most assembly plants do: body shop,
paint shop and final assembly. But not only is there no steel-pressing division, a large amount of spot & arcwelding is also carried out in Sweden andshipped to Gent. Although the data in Table 1 & 2 show no exceptionallyhigh automation in the body shop, one must keep in mind that compared toother assembly plants, Volvo-Gent is a ‘small’ producer. Moreover several
high-tech installations are introduced. Among others we mention the laser
welding station for attachment of the roof and the automated detection andmeasurement in the course of the production process. All assembled floors
are checked on the presence and position of studs, and at different stages
three Perceptron-installations measure the welded body dimensionally bymeans of laser-beams. As such no 100%-inspection by man is needed until
the end of the body shop.
Due to a specific build up of the body in which the front-end and inner &outer side-panels are assembled straight on the floor, these production steps
have no large buffers towards the production process as is usual.
Table 1Degree of automation in body shop

Spotwelds (number)
Arc-Welding (mm)Total ‘average’
850-model

Gent

Automation
at Volvo-Gent

4045
8840

2547
7342

92%
56%

Table 2
Number of robots in body shop
Number of robots
Spotwelding
117
Arc-welding
8
Other (studwelding, hotmelt, Pasta …)
16
Total
141
The paint shop
Apart from several additional and specific coatings to sensitive areas,
connected to the luxury car a Volvo is, Volvo-Gent has a largely classicalpaint shop. However, one should seek in vain for a separate topcoat repair236

spraybooth. Indeed as the production line for the application of topcoat is
doubled, the second line has an intake of new as well as repair bodies. In
this way faulty topcoats are returned mercilessly.
Noteworthy is the adhesion of a protective plastic at the end of the paintshop on all horizontal parts of the body. This protects the body from damage
throughout the further assembly operations as well as during transportation
as the plastic remains on the car until delivery to the customer. Since mostof the bodies are wrapped in this way, paint-repair after final assembly already shrunk considerably. In the near future all bodies should follow thistreatment in the hope to abolish final paint repair completely.
The final assembly
Even in the final assembly, automation is high compared to other Belgian
automobile plants. We refer to the automatic sealing and installation ofwindshield and backlite as well as the automatic engine assembly andrear suspension module lift. Specific is the complete preasembly of thedrive train (engine, gearbox, front & rear axles), with fuel tank and fuel &breaktubes on a pallet. Where the lift of the motor and all mechanical operation in the ‘chassis’ are usually carried out after the trim-operations, the‘wedding’ takes places here very soon after the entry in the final assemblyarea. This build up should increase quality, as almost no operations need
to be executed overhead, and as this full preassembly can be tested before
entering the body. Indeed thanks to a well thought out production process,automation of inspection, but mainly thanks to the containment of quality
problems into the team, the repair-area is breathtakingly small, both in space
and in manpower. A result which would undoubtedly raise applause fromthe IMVP-researches at MIT.
An area of automation which often escapes the attention of researchers isthe body-transfert mechanisms. At Volvo-Gent the driven line hides a bewildering variety of transportation means, especially in the final assembly:
ordinary body-skids on a chain, but also small AGV’s for preassemblies,
high carriers, low carriers, palettes on a chain, fixtures on wheels in a track
forming a loop… Some of these transfert means facilitate the implementation of alternative work design. But the available diversity present at
Volvo-Gent should not disguise the fact that the whole process flow frombody shop until the end of final assembly is on a driven line, and with a few
exceptions one single line.
The choice to organize production on a single line raises questions. In
the past, one easily assumed that a rigid line might be productive but costs
inevitably in flexibility. In other words, a single line would be as such incompatible with a flexible production. This brings us to the main question
we want to address in this article: how does Volvo-Gent manages to be a237

flexible producer and at the same time be productive? Of course this is adilemma to all car assemblers on a driven line, as are most. But as we want
to show, Volvo-Gent is particularly well equiped to combine these two goals.
In realising the leap forward from rigid to flexible mass production, bothtechnological and organizational solutions are implemented.

5. A flexible production-process and a flexible workforce
Technical answers to the flexibility problem
In a sense the full potential of the available AGV’s on the production floor
is not exploited as they operate in a single line. The use of carriers in body
& paint shop is merely restricted to the transfer of bodies from one line toanother. Only in the final assembly, part of the operations are executed on
a carrier with additional ergonomical advantages. However this ‘expensive
line’ remains more flexible as bodies can at several stages be taken out ofthe process-flow and routed off-line for further inspection and repair. The
frequent use of carriers weakens the pressure in a rigid line to ‘move themetal’ irrespective of the quality. Furthermore it is at the same time a meansof transportation and a potential buffer.
More flexibility is attained by postponing the complete identificationof the body until its launch in the final assembly. Of course, production in
the body shop is in accordance with a planned scedule, but the linkage to
any specific order is reestablished after the paint shop. In this way isolated
problems in the body & paint shops do not lead to a cancelling of the order,
since any other similar body that is available can be used to fulfill the order
eventually. As body specifications are less stringent this gives the body &paint shops more space to operate as is usual. Take for instance the colour
batching in the paint shop. A fixed link of all bodies with specific orders
poses any producer to the following classical dilemma: or not to disturb theprocess-flow and change colour with each passing body according to its
specification (with the obvious disadvantage of spilling solvents and higher
environmental pollution), or creating a large buffer to batch the bodies according to their topcoat colour. Where no fixed coupling exists the paint shop
can escape this dilemma and considering certain restrictions spray colours
in batches as bodies pass by, irrespective of the order.
Of course such advantages are not without a cost. A late body identification requires a large buffer between the paint shop and the final assembly.
Volvo-Gent has indeed a very large ‘Random Access Bank’ with a capacityof 450 bodies, and thus potentially 450 choices. Although this buffer is alsoneeded for bridging the difference in production time between the two units,
it enables at the same time an elaborate balancing for operations in the final
assembly. In this way idle time in the final assembly can be minimized as238varation in work content are limited. This softens the continuous collisionof flexible production on the one hand, and a rigid line, on the other hand.
A battle that seems to cause any foreman on the production floor headaches,
and is a major source of quality problems.
A further advantage of this large bank, is the additional time it provides
for preassemblies and external suppliers to produce parts in sequence. Indeed, more than two hours before the physical launch of a body in the final
assembly the sceduling is established. While other Belgian auto-assemblers
manage to establish sequential supply for one part (usually seats), VolvoGent has five major parts which are delivered in sequence by nearby plants.
Again, as option variability seems to rise continuously, this softens anothermajor problem for flexible production on a fixed line: how to provide thisrigid production-system with the necessary parts for all variations that it
has to swallow?
A flexible allocation of production workers
Of course the greatest potential flexibility remains with the available workforce. Here Volvo-Gent reached considerable flexibility within the Belgian
context.
Considering output flexibility, agreement was reached with the unions
on the introduction of ‘flex-time’. In order to fulfill demand, one hour ofovertime is possible on three days per week. This is restricted to the final
assembly as the body & paint shops are already working in three shifts andhave no further possibility to work overtime. But the flex-time agreement
also provides the opportunity to work on Saturdays. Following the mentioned restrictions on overtime, these additional working hours are not paid
as overtime but can be compensated on a later date. In practice all overtime
during 1993, is currently being compensated for, through the additional
recruitement of workers on a temporary basis, which allows production
workers to take leaves.
The introduction of the three shift production system is also handled to theplants advantage, by using the nightshift as a flexible buffer. This concerns
mainly the body shop in which the subassemblies produce at maximum
capacity during two shifts, while at night, a reduced workforce take care of
the additional output to reach the required output of the day. The allocationof this workforce depends on the technical losses each subassembly has occured during the day. Because subassemblies usually produce in overspeed
compared to the main line as a safety net for breakdowns, this causes themto lay idle frequently if no disturbances occur. By employing the nightshift
workforce in a flexible way, the up-time of subassemblies is maximized andat the same time the necessary manpower reduced, especially since thesesubassemblies are the most labour-intensive parts of the body shop.
239

All production workers in the body & paint shops work on an 8-hours
nightshift, although production stops during 90 minutes in body shop and75 minutes in paint shop. In this period production workers take on additional cleaning and maintenance tasks which is often carried out by external
services.
This flexible allocation of the workforce is only possible if multitasking
is practised. All producion workers in Volvo-Gent are members of so-called
VEC-teams (Volvo Europe Car), consisting of around 10 workers and headed
by a teamleader. Due to frequent increases in linespeed in the final assembly,
this number has risen in some areas to 15 and even 20 workers. Generally,in the body & paint shops, all members of the team can be allocated to alljobs with frequent rotation among them. This frequency can be chosen by
the team and varies from daily to three or four times per shift. In the final
assembly teams are divided in two or three cells, each containing about
five jobs in which workers rotate. As such workers can be allocated to alljobs within their cell, usually with complete rotation within a cell during
a single shift.
It is important to stress that this rotation is more than doing ‘more of
the same’. The variety of jobs over which is rotated is wider than usual,a consequence of the plants radical abolition of job classifications. Whilemost Belgian car manufacturers have around four or five job classifications
within the executive production workers, Volvo-Gent has only one. This isa unique result in Belgian car assembly, as a reduction in job classifications
is a very sensitive area for unions.
To make this concrete by means of an example, let us focus on the automated lines in the body shop. Here part feeders, spotwelders, arc-welders,
fitters, polishers, inspectors, on & off-line repair-man … are all membersof teams and have the same job classification. There are no ‘fixed’ workers
to any off these jobs as all members rotate within their team. More strikingly, even robot operators are members of these teams and have the samejob classification. While in three of the four other Belgian assembly plants
these robot operators are indeed part of the production instead of the maintenance department, Volvo-Gent is the only one to assign them the samejob classification. But the plant goes even a step further and expects robot
operators to execute production tasks as well. For any robot operator job thathas to be fulfilled, at least two production workers are able to do the job,
usually with a weekly rotation between production and maintenace tasks.
This gives the plant more flexibility to allocate manpower. Any unforeseen
absentee, including robot operators, can be replaced. But more importantly,
the production worker ‘switches’ instantly to a robotoperator in the case ofa breakdown. While in a segmented workforce production workers standidle in the case of a production halt, a flexible workforce can be used inmachine-downtime as well as in up-time.
240

The willigness of robot operators to execute production work stems fromthe plant’s policy of ‘upgrading’. This means training of production workers
as a robot operator, instead of a ‘downgrading’ policy in which maintenanceworkers are ripped of their special suit and told they have suddenly become
production workers. In this last scenario, management can hardly hope thatthey would accept ‘ordinary’ production work as well.
This same story on flexible allocation is realised on many levels andforms a shift from a traditional and counterproductive division of labour.
While having ‘fixed’ inspectors and ‘fixed’ repair-man weakens the quality-awareness of the production workers, producing good quality causes
these specific jobs to be idle. Even worse, they have a personal interestin bad quality in fear of losing their job. Vice-versa having one single jobclassification for these jobs and having a multitasked workforce needs aninvestment in training but realises three goals in one stroke:•••

quality-awareness is brought to the source of the problem
allocation of manpower where it is needed (to repair if there is repair
to be done, to production otherwise)getting the personal interest of the worker and the interest of the plant
more in line

Multi-tasking or multi-trading?
The word ‘team’ means much more at Volvo-Gent than production workers
who rotate frequently, however extensive this rotation may be. In 1987, management issued directives for an elaborate new work organization system:
a VEC-team plan. Actual implementation on the production floor started in
1989 and was very gradually worked out. This implementation is currently
still very much underway.
Figure 3 illustrates the difference in work-organization on the production
floor. In the past, one foreman backed by an instructor, supervised some
60 to 70 operators who assembled parts at a driven line. In addition to the
production department there were service departments, such as maintenance,
quality and material handling which carried out both routine and specialist
activities.
Now, all production workers still operate on a driven line, but are integrated in VEC-teams. The former assistant to the foreman has been decentralised
to the team and plays a pivotal role as the team leader. He is not chosen byits members, but appointed from above after a long training and selection
procedure. While most team leaders are former instructors, team members
can be promoted to team leader as well. The team leader has to know all
production-tasks within his team as he must be able to train team members
and fill in for short periods. In practice he is not involved in production
tasks, and he is no stand-by as special substitutes remain available under241

Figure 3. The old and new (VEC-team) work organization (*)4

each foreman (who has 2–3 team leaders under his supervision). In orderto achieve maximum cooperation the team leader is not given disciplinary
powers, these remain the competence of the foreman.
Together with his team the team leader is increasingly responsible for awider range of tasks:
•
•
•
•
•
•
•
•
•

checking the quality of its operations
increasing overal effectiveness of the equipment
repair of failures within the teameducation and training of its team members
stand-in in case of absent team members
set-up and implementation of the team balance
implementation of prevention policy concerning labour-accidents, ergonomics and environment
initiate the necessary amount of improvement proposals (in accordancewith the plants suggestion scheme)
preparing and leading the team meetings (30 minutes per fortnight)
242

<Figure 4
Page 243
Part III
Huys>

Figure 4. Multi-trading in the body & paint shops, and in final assembly.
243

While the team leader has a central role to play within the team, it is important to stress that the decentralization of tasks from staff departments do
not stop here. As teams are also given additional tasks in quality assurance
and maintenance the word ‘team’ must be understood as all team members,
and not merely the team leader. This is a crucial distinction between theJapanese approach to teamwork (as can be seen at NUMMI), and the way
in which some American or European producers work out their experimentswith teamwork (as can be seen at Saturn).
With production work at a driven line and a cycle-time around 83 seconds
in the final assembly and around 100 seconds in the body & paint shops, there
are only two alternatives if this decentralization is seriously pursued.
••

Either the production line is halted in the course of the shift to enableproduction workers to take on these additional tasks. This option costs
capacity, and is with current demand unaffordable to Volvo-Gent.
Or production workers are relieved from the line to carry out these additional tasks. This option costs manpower, and is the option worked
out at Volvo-Gent.

Every team is provided with an extra team member, the so-called Vec-teamman (man is indeed the right word as no women are operating on the production floor). He stands in for individual relief of all operators within theteam. E.g., he relieves 12 operators during 30 minutes = 360', plus his own
relief = 390'. This leaves 150' in an 8-hours shift during which he carries
out the established checklist of maintenace and quality tasks. In body &paint shops this additional man is no ‘fixed’ person. As everyone is able to
do all jobs within the team (with a limitation on the job of robot operator),
everyone becomes by daily rotation the Vec-team man. In final assembly
where production workers are only allocated to the jobs within their cell,the extra man is indeed a specifically assigned person who reliefs anotherproduction worker every day during an extra 1.5–2 hours during which hecarries out these Vec-team tasks.
Thus the execution of these tasks is restricted to around two hours every
two weeks for a single worker. But by extending these rotation systems to all
production units, every production worker becomes aware of these quality
and maintenance implications while carrying out production tasks.
These additional tasks are gradually implemented in each team in five steps.
What these steps mean in general is illustrated by two pillars which are ofprimary importance for production workers, namely autonomous maintenance and autonomous quality (figure 5). The time each team is allocated to
implement each step is only loosely defined. In fact the team evaluates eachstep on a weekly basis, which consists of answering a number of questions.
When a team reaches 80 out of 100 points, a screening committee is invited244

to repete the evaluation. When the committee also gets to 80 points, the team
may move on to the second step. Before proceeding to a subsequent step,
the team must be able to retain its score on every former step. For each step
the team is awarded with a green circle on its VEC-team board. Each step is
accompanied by a considerable amount of training for all production workers(dependant on the actual content of the steps for the team, the whole implementation consists of 96 to 151 hours of training for a production operator,
207 t o 282 hours for a machine-operator, and 307 to 405 hours of training fora team leader. A supporting factor is the low turn-over (a mere two percent
in 1993) by which the investment in training is not lost.

<Figure 5, Page 245, Part III, Huys>

Figure 5. Steps of implementation of autonomous maintenance and autonomous quality.5
A thoroughly pursued decentralisation of the staff
At the end of stage 5 the Vec-team plan entails a massive shift of tasks fromstaff departments to the production floor. In this process the team is increasingly supported directly by staff, who in their turn are brought increasingly under the supervision of the production department. In most Belgian
plants the decentralisation of quality-control, maintenance, engineering(and sometimes material handling) under the supervision of the respective
unit-managers is common practice. In some cases the decentralisation ofpart of these specialised functions are brought under the hierarchy of lower
production supervisors.
245

<Figure 6
Page 246
Part III
Huys>

Figure 6. Organizational structure of a foreman area.
246

At Volvo-Gent, with the notable exception of material handling, this decentralisation goes much further. First of all many maintenace and qualitycontrol tasks are defunctionalised and integrated into the tasks of production
workers. All first line maintenance, all 100 percent inspection and all on andoff-line repair is fully transferred to the teams. Thus, walking through theplant, no specific functions other than production workers can be seen on
the line. Furthermore indirect functions like the pool (workers who stand infor absentees), specialised quality-control, specialised maintenance (albeit
functionally) are also brought under the supervision of the foreman. Evenan engineer is assigned to every foreman, to work out what the VEC-teamgoals mean in practice for each team, give support to the teams in working out these goals, and to assist them in optimising work procedures andbalancing. This assignment must be interpreted ‘physically’ as well, since
the engineer leaves his office in the staff department, shares the room of
the foreman on the production floor and becomes his colleague. At the endof stage 5 and with his help, the teams become quasi-autonomous and selfsustaining small plants within the plant.
For illustration, let us return to our example in the body shop and lookat how the very first area of the plant under the supervision of the foreman
is organised.

6. Volvo-Gent: a hybrid plant
Much of what has been mentioned resembles what we know, or presume,
about Japanese car assemblers:
•
•
•
•
•
•

production workers operating on a driven line with a standardised work
practiceshort work cycles coupled with frequent rotation
the abolition of job classifications
involvement of production workers in kaizen through a suggestion planand team meetings
enlarged responsibilities of first line supervisors
decentralisation of the staff and bringing them under the ‘pressure’ of
production

Indeed, it is no coincidence that Volvo-Gent in 1991 was awarded, as the firstplant outside Japan, the prestiguous TPM-prize from the Japanese Institutefor Plant Maintenance. However, the attempt at job enrichment probably
goes further than what we know about the Japanese production system, andcould be a legacy of Volvo’s historical experiments.
Viewed from this perspective, Volvo-Gent may seem a ‘traditional’
plant with an orthodox line assembly and a traditional work organization.
247

Yet using these measures, isn’t almost any (operating) car assembly plant
traditional?
Looking from the Belgian perspective on the other hand, Volvo-Gent canbe considered as a pioneering plant for other car assemblers. While concepts
as Kalmar & Uddevalla are seen as an answer to a Swedish problem, being high turnover, high absenteism and recruitment problems due to higheducation and low unemployment, the goals as described in the VEC-teamwork organization are widely shared. However, due to a short-time approach
resulting in uncoordinated and sometimes conflicting changes in work organization, the failure to pursue an aim throughout all its consequences, anda more conflictuous relationship with unions, they seem unable to actually
implement these goals as successfully as Volvo-Gent.
If the perceived ‘specific’ Swedish reasons (at that time) were correct,
there is currently no drive for car assemblers in Belgian to take these experiments as a goal. If we take the example of Volvo-Gent in 1993, turnover
was a mere 2 percent, absenteism due to illness 4 percent, and no recruitment problems despite the recruitment of 227 new production workers on apermanent basis. If currently the pressures from the labour market are weak,
the pressure for rationalisation to lean production are all the stronger. As
such, both Volvo-Gent and Uddevalla may be proof of Volvo’s ability toadapt itself more swiftly and thoroughly to the changing environment.
Information for this article was obtained by a two week field work at VolvoGent during February 1994. This consisted of observation and interviews,
mainly with second line supervisors (section heads) of all the production
steps in the plant.

Notes
1.

Data on car production in Belgium are without ckd-activities. Car productionin Japan in 1993 was at 8,497,000 / France 2,836,000 / Germany 3,753,000.
Source: Automotive news: Market Data Book 1994, Detroit. However these data
include production of kits send to other plants. The actual number of finishedcars is considerably lower.

2.

Registration of new cars in Belgium was at 465,000 in 1992.

3.

Production of the 850 is planned to start at Torslanda (Sweden) during spring’94. Concerning the Mondeo, a second plant at Kansas produces the model for
the American market since ’93.

4.

Figure from Saey, E. (1991), ‘VEC-TEAM: a Volvo lean manufacturing system’,Volvo Cars Europe Industry, p.12.

5.

Figure from Saey, E. (1991), ‘VEC-TEAM: a Volvo lean manufacturing system’,Volvo Cars Europe Industry, p.14.

248

First DAF, then Volvo and now Mitsubishi
Continuous improvement in a Dutch automobile plant?
Ben Dankbaar

This chapter describes the development of (ideas about) work organization in a Dutch automobile plant, that has changed from Dutch to Swedish
ownership and later to co-ownership by a Japanese manufacturer. Two mainquestions are of interest in this context. First: did ownership by Volvo havean impact on the organization of work in the Dutch plant? More particularly:
did Volvo management try to introduce the concepts it had developed in
Sweden into its foreign operations? Second: what will be the impact of theownership of Mitsubishi on the organization of work?
The chapter consists of five sections. The first section describes briefly
the history of the plant, its products and its current size. A second section isdevoted to the impact of Volvo on organizational thinking at the plant. The
impact turns out to be limited. Nevertheless, there were some interestingorganizational developments to be noted during the 1980s. These are briefly
described in Section 3. These developments were inspired more by Japanesepractices than by the Swedes. In a fourth section, we describe some more
recent developments in organizational design at the plant, that have moresimilarity to the ‘Swedish model’, but are actually more inspired by Dutch
socio-technical thinking. These developments have resulted in the introduction of so-called task-groups in production, which are themselves organizedin semi-independent production units. A final section raises the question if
these recent developments can be sustained under the new co-ownership ofMitsubishi. The latter firm is taking the lead in the design and organizationof the new production lines that will be installed in 1994. Some early signals
point to an interesting confrontation of ideas.

1. The Born plant: ownership and products
The only passenger car manufacturing plant of the Netherlands is located in
Born, in the province of Limburg, the southern most part of the country that249

drives a small wedge between Belgium and Germany. The plant was opened
in 1968 by Queen Juliana. It was an important investment for a region thatwas suffering from unemployment because of the gradual closing of the coalmines. A substantial number of former miners was employed at the plant.
Since then, labour relations at the plant have been influenced by a mixtureof catholic paternalism and authoritarianism on the part of management,on the one side, and a kind of stubborn submissiveness on the part of theworkers on the other side. As in most automobile assembly plants, four main
activities can be distinguished: the press shop, where metal coils and sheets
are being pressed into various shapes; the body shop, where metal parts arebeing welded together; the paint shop, where the body shells are painted;
and the assembly line, where interior and exterior components are added. In
addition to these four main work areas, there are some pre-assembly activities, like engine-dressing. Until recently, car seats were also assembled at theplant, but since the summer of 1993, seats have been supplied just-in-time
directly to the line from a nearby plant of a French manufacturer.
1968–1972: Dutch government minority owner
The new plant was a major step in the expansion plans of the only Dutch
manufacturer of the passenger car, DAF, still a family-owned and -managed enterprise at that time. The production of passenger cars was moved
from Eindhoven, where the headquarters were located, to Born, because thefirm was running out of space and workers. In Limburg, only 60 kilometers
away, an army of unemployed workers were waiting for the jobs. Of course,
the government was willing to pay a substantial premium in support of the
move. In exchange for its financial support, the government acquired a 25
percent share in DAF.
DAF was founded by Hub van Doorne in 1928, as ‘Hub van Doorne’s
Machinefabriek’.1 Initially it produced assembly tables and storage racks
for Philips (also located in Eindhoven), but then switched to trailers. The
name was changed into ‘Van Doorne’s Aanhangwagen Fabriek’ (DAF). Van
Doorne was a productive inventor. In the mid-1930s he developed a system
to turn 4-wheeled trucks into 6-wheeled all-terrain vehicles and received important orders from the Dutch Ministry of Defense. By 1940, DAF produ-ced
almost exclusively trucks and armoured cars for the Ministry of Defense.
In 1948, the company was renamed ‘Van Doorne’s Automobielfabriek’
and received a 6 million guilder credit from the Dutch Bank for Recovery tostart up production of commercial trucks. It was also helped by a temporary
embargo on imports of trucks between 3 and 7 tons, imposed by the Dutch
government. In 1951, DAF received a 175 million guilder defense order
within the framework of Marshall Aid.
In the 1950s trucks and trailers remained the most important product250

for DAF, but by 1958 it presented its first passenger car to the world. It
incorporated a new invention by Hub van Doorne, the continuously variable transmission ‘Variomatic’. DAF’s work force increased from 590 to
4,500 between 1950 and 1960. In 1964, the 100,000th passenger car was
manufactured. Production in the new plant took off quickly and doubled
within five years to reach almost 100,000 in 1973.
1972–1975: Volvo minority owner
Meanwhile, DAF was split up in two separate entities: DAF Trucks BV andDAF Car BV, both owned 100 percent by DAF. The purpose of the separation was a change in the ownership situation. DAF needed additional funds
to finance new expansion plans. Its size, although growing, was far too
small compared to its competitors and it needed a partner. The Swedish car
manufacturer Volvo came to the rescue. Volvo acquired a 33 percent sharein DAF Car BV in 1972. It seemed a good idea at the time. Production at
the DAF plant was expanding steadily, it had experience with relatively
small cars that would nicely supplement the Volvo product line of larger
and more expensive cars, and it was ideally located to serve as an entrance
point to the Common Market.
1975–1981: Volvo majority owner
During the next year, the 1973 oil crisis hit the automobile industry withfull force and DAF Car suffered badly. Production dropped to 70,000 in1974 and 61,600 in 1975. Market shares of the Dutch passenger car market
dropped from almost 8 percent in 1968 to 4.5 percent in 1975. Volvo had tosupply additional finance and in the process increased its ownership share to75 percent (1975). DAF Car BV was renamed Volvo Car BV. Soon after, allties with DAF were severed. The remaining 25 percent share of Volvo Car
BV was transferred to another state owned enterprise (DSM, the chemical
enterprise that continued chemical operations that had started on the basisof coal mining).
1981–1991: Dutch government majority owner
However, the 1970s did not offer a friendly climate for a small car plant.
In 1977, Dutch market shares fell below 2 percent and even lower in other
European countries. The plant needed further financing in order to develop
new products. Both the Dutch government and Volvo provided additional
support. As a result Volvo’s ownership share decreased again to 55 percent
in 1978. In spite of rising production and sales after 1977, the cash flow
remained insufficient to cover development of new products. The second
oil crisis of 1979/80 put an end to the upward trends. The additional aid
given by the Dutch government in 1981, resulted in a change in ownership251

once again. Volvo lost its majority ownership to the Dutch state and retained
only 30 percent of the shares. The plant continued to manufacture cars under
the Volvo brand name and relied on Volvo for some of its engineering andmarketing functions.
Since 1991: equally shared ownership of Dutch government,
Volvo and Mitsubishi
The 1980s and especially the second half of the decade were an era of growth,
as new products were introduced and production came close to 150,000
units. Nevertheless, the financial basis for the enterprise remained too narrow and the Dutch government was neither willing nor able (nor permitted
on the basis of EC competition policies) to provide unlimited additional
support. Together with Volvo, a new partner was searched for, and found:the Japanese manufacturer Mitsubishi. In the fall of 1991, an agreement wasreached between the Dutch government and the two car manufacturers toshare ownership of the car plant on an equal basis. It is also understood thatthe Dutch state will sell its remaining one third of the company to the othertwo owners before the end of the decade. Starting in 1995, Mitsubishi will
make use of the plant to produce a new car for the European market, while
Volvo will continue to use the plant to manufacture the current product aswell as the follow-up model, that will be based on the same platform as
the Mitsubishi. Total capacity will be expanded to 200,000 units, 100,000
for each of the two partners. Until 1995, losses on current production (ofthe Volvo 400 series), will be carried by the Dutch State and Volvo Car
Corporation on a 70:30 basis. Obviously, the name Volvo Car BV had to bechanged. The enterprise is now called ‘Netherlands Car BV’, abbreviated to
NedCar. The three owners have committed themselves to invest 2.1 billion
guilders (700 million each) in the plant (i.e., for the development of the
new model, including the production installations). This commitment also
implied that the 600 jobs at the Engineering and Design department werealso guaranteed until 1995.
Products
The original products of the plant were DAF’s original models: the DAF 33,
44, and 55, all equipped with the Variomatic. When Volvo took over in 1972,
the DAF 66 and a completely new model were already under development.
After six years of development, in 1976, the new model was launched as
the Volvo 340. With this product, the plant moved from the lowest market
segment to the lower part of the medium segment. At first, the 340 didn’t
sell very well, but after a change in pricing strategy and the introduction ofvarious product variants, the 300-series began to sell quite well in the late1970s. Work on a follow-up model started almost immediately. The aim
252was to move further upwards in the market. This aim could be followedwith greater energy after Volvo had lost its majority influence in 1981. The
first model of the new 400-series became the Volvo 480, a small sports car,that clearly represented a major jump towards a higher market segment.
It was launched in 1986, to be followed by a hatchback (440) and a sedan(460) in 1988 and 1989. Production of the 300 series, which continued tosell quite well throughout the 1980s, was discontinued in 1990. Currently,
the plant’s engineering departments are working on the follow-up modelin close cooperation with Mitsubishi. The new Volvo model and the new
Mitsubishi model will be based on the same platform.

2. The impact of the Swedish model
Between 1975 and 1981, Volvo AB of Sweden was the majority owner of theplant in Born. In 1974, Volvo had opened its new plant in Kalmar, a widely
acclaimed experiment in work organization and factory design, introducing
stationary assembly places instead of the continuously moving assembly
line. The Kalmar plant represented an important step in the developmentof what came to be called the ‘Swedish model’. The movement away fromshort-cycled assembly work is characteristic for this approach and has sinceinspired similar developments in other car plants, especially in Germany.
However, none of the ideas and experiments that were current at Volvo in
Sweden, were transferred to the Netherlands. In the history of the plant,
this period is viewed by most insiders as a period of neglect by the owners.
Products that were in the pipeline when Volvo took over, were introduced
according to plan, but there seemed to be insufficient interest and no clear
strategy as to the future of the plant and its products.
The lack of interest in transferring Swedish concepts of work organization
to the Dutch plant may have various reasons. It may have been the result,as suggested, of the failure to take a strategic view of the investment in thisplant and its products. This may have been compounded by the problems
caused by the second oil crisis, when money to implement changes anywhere
became quite scarce (in Sweden tax exemptions and other government
subsidies may have played an important role). It also seems to indicate,however, that Volvo management considered its experiments in Kalmar as
appropriate in the Swedish context, but not necessarily in other countries.
This underlines that a dominant motive for the introduction of new production concepts in Sweden was the situation on the labour market. Very low
rates of unemployment and a well developed system of social security andjob protection had led to high rates of absenteeism and personnel turnover.
Improvements in the quality of work were viewed as a means to fight these
phenomena and increase worker motivation. Lengthening the work cycle
253was seen as the primary means of improving the quality of work. Apparently,
there was little or no expectation that the new concepts would contribute toproductivity in a situation where absenteeism and personnel turnover wereless of a problem.
From 1986, Dutch management carried out some experiments with longer
work cycles in the production of the Volvo 480. The 480 was produced on a
separate assembly line in relatively low numbers. Some automated guided
vehicles were introduced, which enabled workers to ride along with thebodies and carry out a series of assembly tasks, resulting in a lengtheningof work cycles. Although the results in terms of labour productivity, as wellas the quality of work were positive, the approach was not extended to theassembly processes for the rest of the 400 series. The costs of the automatedguided vehicles were considered too high. There were also some tryouts inwhich complete bodies were assembled by a small team. Again, however, thenecessary changes in layout and equipment were considered too expensive
to be justified. Apart from these experiments, work cycles at the plant havebeen and continue to be between 30 and 60 seconds.

3. The New Style: Deming in the Netherlands
Things changed when Dutch management was released from the ties with
Volvo in 1981. A new plant manager was appointed, Mr. André Deleye, who
is a Belgian citizen. In the spring of 1982, he took the initiative for a major
project to change the organization, quality and management style, which wascalled the ‘New Style’ project. The project had various purposes at the sametime. Its first aim was to make a new start in the plant, that had undergone
extensive rationalization measures in the previous year. In that sense, it wasa conscious effort to create a new climate and a new culture in the enterprise.
The second aim was to improve performance on all levels.
The ‘New Style’ project was inspired by press stories of the contributionsof the American professor Deming to the successes of Japanese enterprises.
Deleye visited the Nashua plant in Boston and came back with the conviction that major improvements in quality were possible. Deming had alreadyshown in the 1950s that 85 percent of the manufacturing mistakes were aresult of faulty management. These mistakes were a result of mistakes in thesystems and the organization that were the responsibility of management.
They could be prevented by transferring more responsibility to operational
levels, where the use of simple measuring techniques like statistical processcontrol (SPC) would often be sufficient for dramatic improvements in quality. The application of such techniques by production personnel would in
effect shorten feedback loops and eliminate the need for special inspectors.
With this message of a less strict division of labour between work execution254

and inspection, Deming had not been very successful in the United States,
but very influential in Japan.
The main idea behind the ‘New Style’ project was to make better use of
the capacities of the work force in order to increase flexibility, improve
quality and lower costs. It took the form of a large number of improvement
programmes (‘Management-Directed Programmes’) in all departments andinvolved training in various analytical tools, statistical techniques and quality thinking for all layers of personnel, starting with management. Therewas strong pressure on the various actors to succeed quickly. This may
explain why the various improvement programmes emphasized short-term,
technically-defined goals. Although the ‘New Style’ was launched withconsiderable emphasis on the need for a different style of management(based on the need to involve workers), the reality was that managementchanged very little, but the workers had the impression that they had to do
more and work harder.
On top of that, latent tensions between the production people, on the one
hand, and the ‘office guys’ on the other hand, came into the open. It shouldbe mentioned here that all (advanced) product development and processengineering functions, the board of directors, and their staff are not locatedin Born, but 40 kilometers to the North in a glossy glass building, which
has not helped to overcome the inherent barriers between these various
functions.2 Internal criticism and evaluation led to a revision of the projectin 1984, which was launched under the title MENS (More Elan New Style;mens = human in Dutch). The revised approach would give more attention
to social aspects, i.e., to the quality of work and aspects of motivation.
More attention was given to organizational matters, such as the need to shift
responsibility to the people who were going to do the actual job. Projects
also became less technical (also, because less money was available forinvestment in new gadgets).
The new approach implied more work for the heads of the various production departments (press shop, body shop, paint shop and assembly).
At the same time, the plant was preparing for the launch of new products.
Obviously, the department heads would need support. More than that, theyneeded people who would function as their ‘New Style’ conscience and who
would remind them constantly of the need to involve the work force andmake use of this important resource. Consequently, for each department, thefunction of ‘mentor’ was created. Older experienced foremen were chosen
to play this role. They were charged with drawing up annual action plans
and had to oversee that all foremen would be trained in various techniquesof process control.
The mentor idea turned out to be quite useful and still being utilized. The‘New Style’ project, however, slowly came to an end. Originally planned to255last until the end of 1985, there has never been an official announcement of
its ending. The phrase ‘New Style’ was used less and less frequently. The
idea was of course that after almost four years, the ‘New Style’ would havebecome the normal ‘Volvo Style’. In reality, it had taken four years beforethe ‘New Style’ became visible in new organizational arrangements likethe new mentor function. In the meantime, workers had been confronted
with a bewildering array of projects, training activities and also outside
consultants, with very little change in the quality of work. Scepticism of
the workers (and in fact of most of the production management), had grown
immensely.

4. Work restructuring
In 1987, the plant management team took the initiative and presented theboard of directors with a report on production policy. The report argued
that a lot of attention had been given in the recent past to products, production processes and human resources, but not to the structures of workthat tie these things together. A new production policy would have to be
developed that would define targets for which the individual departments
could be held accountable. The plant management initiative coincided withcomparable actions by the board of directors. The board was introducing a
flatter organizational structure for the whole organization, aiming to move
responsibility and accountability to lower levels. By eliminating the separate
directorate for car operations (that had been organized as a separate division), members of the board themselves became responsible for operations.
The Car Division was split up in three sectors, each of which was led directly
by a member of the board: business planning and control (BPC, including
advanced engineering), technical operations (TO) and commercial operations (CO) (see figure 1). All production activities taking place in the plantin Born belonged to technical operations. Apart from production, technicaloperations also covered three other activities: product engineering, processengineering and supply (purchasing). Most of the personnel involved inthese three activities were located in Helmond.
After extensive debate, the plant management initiative resulted in the
introduction of so-called production units in the plant over the course of
1989. This involved a considerable change in the composition of the management team for the plant. Before the introduction of the unit organization, themanagement team consisted of the plant manager, the production manager
and the managers of functional departments like quality assurance, manufacturing engineering, materials management and personnel. The heads ofthe individual production departments (press shop, body shop, paintshop andassembly lines), all reported to the production manager. In the new setup the256

Figure 1
management team consisted of the managers of four production units (thefour main production areas just mentioned) and the manager of a unit called‘location affairs’, responsible for various matters related to the plant as awhole. As far as possible, all of the functional departments were divided up
over the four production units, which became self-sufficient in that respect.
Every production unit received its own personnel, engineering, quality andfinance/controlling functions. Maintenance had already been reporting to the
production manager and was now further decentralized to the units. Some
plant-level personnel and organization functions were maintained as a kindof staff functions to the plant manager (see figure 2).
257

<Figure 2, Page 258, Part III, Dankbaar>

Figure 2
Obviously, functional departments and their managers were losing somestatus (or were disappearing completely), in this setup, since they weremoving ‘under’ production instead of having equal status. A large part ofthe debate on the new organization had been concerned with the questionof all supportive tasks being moved to the production units or if some tasks
should move to the other three parts of technical operations, i.e. to product258

development, process development or supply. In the end, parts of materials
management and manufacturing engineering went to supply and processdevelopment respectively.3
The managers of the production units, on the other hand, obviously had tobe more than simply production managers. Whereas, the former heads of the
production departments were responsible only for production, the new unit
managers were responsible for the support functions as well. Depending on
the unit, between 30 and 40 persons were employed on maintenance, engineering and quality alone. Additionally, there were the persons involved inpersonnel, organization, management information and control. Each unit
was composed of three production groups, covering clearly identifiable
components or processes (in fact, after considerable reductions of the workforce over the past few years the units consisted of only two productiongroups at the end of 1993, except for the assembly unit, which still had
three). The heads of these production groups were each overseeing seven toeight area leaders. Each area leader was in turn responsible for two or threetask groups of approximately 15 workers each. The size of a production unit
could thus, vary quite substantially; at the end of 1993, the press shop unit
employed approximately 300 people, while the unit assembly employedapproximately 1,200 people (see figure 3).
The unit managers had a much larger range of responsibilities than ordinary production managers and had to shift responsibility for production
further down the line. Obviously, the old heads of the production departments were not always the most likely candidates for the job of unit manager. In fact, until recently, the unit managers had a head of manufacturing
reporting to them, who was to oversee the production groups. The old ‘New
Style’ mentor function was maintained for each unit as a support function
to the unit manager. From the very beginning, a further decentralization of
responsibilities was envisaged. In fact, the proposal for the unit structure
had already included a proposal for further decentralization of responsibilities towards the task groups on the shop floor. The new unit managers werecharged with the introduction of creating such task groups.
The expression ‘task groups’ shows the influence of Dutch socio-technicalthinking among the managers and staff participating in this reorganization
process. The socio-technical tradition in the Netherlands is strongly basedon systems analysis. It has developed and advocated a specific set of rules
for redesign of organizations.4 These include shifting control and regulation tasks to the lowest possible level in the organization, where the lowest
level is usually not an individual but a ‘complete task’ (i.e., a technicallyand in time and space identifiable part of the production process), that is
carried out by a group of workers. The general sense of the approach is captured aptly in the phrase: ‘simple organizations, complex jobs.’ The Dutch
259

Figure 3
socio-technical approach is critical of efforts to deal with an increasingly
complex environment by means of ever increasing functional specialization.
Instead, it argues that the ability of organizations to deal with complexity
should be located in the flexibility of semi-autonomous work groups. One
should note that improvements in the quality of work can be the result ofredesigning the organization according to this approach, but it is not theprime purpose of the approach. The purpose is to create organizations which
can function adequately and flexibly in a complex environment. Normally,
the creation of semi-autonomous working groups in a production environment will lead to job rotation (multiskilling), and job enrichment (taking
on self-regulatory tasks), but the Dutch socio-technical approach does notstart from the premise that individual work cycles have to be lengthened.
At the Born plant in 1989, socio-technical concepts like task groups wereintroduced by management mainly for two reasons: to enhance feelings ofloyalty to work and to create a structure with more perspectives for change
and continuous improvement.
Until the middle of 1990, the new unit managers were busy coming togrips with their new responsibilities. First pilots for the design of task groups
were then started in the press shop and the paint shop (some experiments
had already preceded these pilots in the press shop). Identification of ‘complete tasks’ for the task groups was done by line management (head of the
production group and the area leader) supported by the plant staff group fororganizational development. Taking layout and equipment as given for thetime being, complete tasks included not just an identifiable set of production
tasks but also quality assurance, materials management5 and what are called260‘regulatory’ tasks. Once these tasks had been identified, manning levels and(on-the-job) training requirements had to be established. Between 1990 and
1993, task groups were gradually introduced in all the production units. By
the end of 1993, this process was nearly completed.6 A total of 140 groups
had become operational.
In most task groups, coordination tasks are still the responsibility of thearea leader. The aim is, however, to have coordinators who are working
members of the group. Training programs have been set up for this purpose.
By the end of 1993, some 40 working coordinators were available (but about
300 are needed, if you want to have one in each shift). The ideal would be
to have the task of coordinator rotate between all group members, but thisobviously depends on the ability and willingness of the group members.
The coordinator is the speaker for the group and contact for communication with other task groups. Each task group has a set of tasks consistingof approximately 10 production tasks and 12 indirect and regulatory tasks(e.g., quality control, materials supply, maintenance of tools, detailing production schedules and work assignments, maintaining standard operatingprocedure forms, production statistics, planning of holidays, advisory rolein the hiring of new personnel).7 Again, the ideal would be for all workers
to have the ability to carry out all tasks (multiskilling), and rotate along
different jobs. In practice, some workers may not be able to achieve that
ideal. The result of multiskilling will be that workers will move to higher
salary grades. In 1990, each worker was tied to one production task. Now,
workers on average can handle five different tasks and the aim is to reachan average of seven in 1995. Similarly, production workers did no indirecttasks in 1990, in 1993 they did two on average and by 1995 the aim is toreach an average of six.8
The introduction of task groups received a mixed reception by the workforce. On the one hand, there was a general distrust of new concepts basedon past experiences. On the other hand, people were afraid that they would
simply have to work harder and carry more responsibility without an appropriate raise in pay levels. A survey carried out in the summer of 1993 (asa joint project of the Works Council and Plant Management), showed that amajority of the workers in task groups (68 percent) agrees that it wasn’t as
bad as they expected, but even more (79 percent) underlined that the task
groups were not yet functioning as they should. Although 83 percent of
the workers said they were willing to make the task groups a success, themajority (52 percent) would prefer to go back to the old situation. The plant
management has made it very clear, however, that they don’t want to returnto the old work organization. They clearly see the task group organization asa way to achieve the considerable increases in productivity that have been
agreed upon with the new owners of the plant and that need to be realized261

by the end of 1994. In reaction to questions of the work force, data were
published which showed that the share of workers in higher wage groups
had increased markedly between the summers of 1992 and 1993. Basically,a kind of pay-for-knowledge system has been installed, although there islimited access to the highest grade, depending on the availability of positions. Workers who are unable to master enough tasks to enter a higher pay
grade may in the future be rewarded for seniority.
More recently, and partly due to pressure from Japanese management(see below), the task groups have also been encouraged to engage in continuous improvement activities. As noted above, this was originally one of
the aims of management in introducing task groups. A formal structure is
being elaborated for the creation of project-oriented improvement groups
in which task group members cooperate with production unit quality andengineering staff.

5. Mitsubishi takes overFor the future of the plant, Mitsubishi is obviously of crucial importance.
The volume of production that Volvo could offer in the past was simply
too low to guarantee survival. The cooperation between Renault and Volvo
seemed to make the Dutch Volvo plant even less necessary, since it could
be assumed that Renault would also have sufficient capacity to produce
100,000 medium-sized Volvos. Now that the merger between Renault andVolvo has been called off, this specter of a complete loss of Volvo businessseems less likely. On the other hand, the danger is still present that Volvo
will not be able to survive as an independent passenger car manufacturer
in the longer run. Volvo may have to find other partners, who may again
question the need for a small plant in the Netherlands, unless of course thenew partner is Mitsubishi.
The cooperation with Mitsubishi came about because Volvo could not afford the plant and related product development costs and therefore needed
to share the costs with another manufacturer. Dutch and Swedish productdevelopment staff are currently engaged in the final stages of developmentof the follow-up of the Volvo 400 series, which is based on the same platform as the Mitsubishi model that will be produced in the plant starting inJanuary of 1995. The success of this new car will be crucial to a continuing
Swedish engagement in the plant. If the new car is not successful, Volvo
will probably be forced to retreat to larger luxury models. In that case, Volvo
would drop out of Nedcar at some point in the future. It is not unlikely that
Mitsubishi has been anticipating this all along. It has followed a similarcourse in the United States, where it started a joint venture with Chrysler
262

and later took over Chrysler’s share. The Diamond-Star plant in the UnitedStates currently serves as a model for the Dutch plant.
Whatever will happen, it is clear that Mitsubishi has taken on a very active
management role in the plant, more active than Volvo has ever been. Norio
Takehara represents Mitsubishi on the board of directors and is responsible
for process engineering. As such, he is not directly involved with current
manufacturing practices, but the new production lines that will start in 1995,
will reflect his views. Obviously, the changeover to the new line will beeasier if these views are already implemented in current practice whereverthis is possible. It is therefore understandable that Takehara set up his officein the Born plant and then moved the whole process engineering department
from Helmond to Born. It is probably also the influence of the Japanese thatforced the decision to move the board of directors and all corporate staff
functions to the site of the plant. Only product engineering and design has
stayed behind in the Helmond offices, facing a rather uncertain future. It is
not clear that Nedcar staff will be involved in developing and designing a
new series of cars following the generation that is currently being developed.
Or at least not with the same intensity, that had been part of the deal madebetween Volvo, Mitsubishi and the Dutch government. The possibilities
for them to carry out design and development for third parties are currently
being investigated.
It is common knowledge that the Japanese car manufacturing system ishighly efficient. Japanese management is naturally convinced of the effectiveness of its own methods. Dutch management is faced with Japanesemanagers who do not directly force them to change their ways, but who arequietly pushing their own solutions and do not take a great interest in European approaches (or more likely have no liberty to do so). In an influential
study on the automobile industry, the Massachusetts Institute of Technology (MIT) has introduced the expression ‘lean production’ to characterize
the production system in the Japanese automobile industry. The production
system is called ‘lean’ because it has cut away all the ‘fat’ in the factories.
All waste has been eliminated and the result is a high level of productivity.
The MIT study considers the Japanese production system as a new stage inthe history of manufacturing, comparable to the introduction of methods ofmass production by Henry Ford (the ‘Fordist’ system), in the early decadesof this century. Characteristic of Ford is short-cycled work on the assembly
line. Swedish alternatives to Ford’s system have focused on the lengthening of the work cycles. Japanese work on the assembly line, how-ever, hasremained short cycled. This has led some observers to the conclusion that
the Japanese approach is not an alternative to or a move beyond Fordism,
but rather a kind of ‘super-Fordism’. There are some important differences, however, between the Japanese approach and Ford’s system. These263

approaches both give more responsibility to production: responsibility for
numbers, for quality, and for improvements. Whereas, the ‘Fordist’ approach
was to take responsibilities away from production and to give it to specialized departments (e.g., for quality and maintenance), the Japanese gave
line workers the responsibility for the quality of their products. In turn, theworkers were given the possibility to stop the assembly line if they could
not achieve required quality (e.g., because of faulty parts). All stocks ofparts and buffers of product were systematically eliminated in order to makeproblems immediately visible. The most fundamental difference, however,is that production workers are also expected to contribute to the continuous
improvement of the products and processes. They are expected to use every
spare minute to think of possible improvements. Part of the improvement
activities take place in special working groups called quality circles, where
production people can interact with engineering and quality staff.
The idea of returning responsibility to production can also be found in theEuropean socio-technical tradition. In the European tradition, it has been
expressed by the notion of ‘autonomy’. The autonomy of working groups
implies that they are responsible for the results of their activities (within thelimits that technical and organizational requirements impose). Autonomous
working groups have a certain measure of independence, that is at the sametime the source of their responsibility. Sometimes, this autonomy is accentuated by the presence of buffers, that separate the group from problems andinterruptions in preceding or following production units. In the Japaneseapproach, this particular notion of autonomy is not present. There are noautonomous teams, because everything has been done to create an uninterrupted flow of product and all stocks and buffers have been eliminated.
People in production are responsible for their own task and they assist
each other if necessary. Western observers have called this ‘team work’,but it differs considerably from the team work in the European and North
American socio-technical traditions. The Japanese notion of ‘team work’refers to a sense of responsibility for the whole enterprise (‘Team Toyota’),and to mutual aid and off-line improvement activities. As a consequence,
the Japanese have also shown little interest in relocating indirect and staff
tasks to production units. In fact, this could be a point where Western
manufacturers have a competitive edge over their Japanese rivals, as theadministrative and staff functions of Japanese car manufacturers appear to
be relatively inefficient.
Considering these different traditions, it doesn’t come as a surprise that
Mitsubishi management found little value in the idea of production units
as it had been developed at the Volvo plant. They preferred to return to anorganization structured along functional lines. After considerable debatewith the plant management, the production units were partly dismantled in264the spring of 1993. Further decisions will be made in the spring of 1994.
All personnel functions, all finance/controlling functions9 and the larger
engineering tasks (about half of the persons involved), have been taken awayfrom the production units and returned to separate functionally specialized
departments. What has remained with the units are some quality control andquality engineering functions, engineering tasks that are concerned withchanges of the existing process (adaptations of purchased parts, changes in
the product, adaptations of the layout), and maintenance. As we have seen,
most of logistics had always remained a centralized function (under supply),and continues to be so.10 As a result of these changes, the unit managers
had less staff to command (unit indirect functions diminished by at least
50 percent). This also allowed for the elimination of the function of head
manufacturing in the unit. The unit manager became directly responsible
for the production groups in his unit. More indirect functions may disappear
from the units in the future, depending on the performance of the plant.
This discussion about the role of functional departments and the value ofsemi-autonomous production units has not affected the introduction of task
groups. Task groups are still the main mechanism by which management
hopes to create motivation and support for increases in productivity. As
mentioned before, the plant and its new owners have committed themselvesto the achievement of considerable improvements in productivity towards
1995. In early 1992, the plant management developed a preliminary ‘Improvement Plan’, that was presented to the employees in the summer of 1992.
A more complete and updated version was presented in the summer of 1993
under the title: ‘Continuous Improvement Plan 400’, setting improvementtargets for the production units and for production as a whole in relation
to current production (the Volvo 400 series). The plan will continue to be
updated every six months.
By 1995, NedCar hopes to produce ‘twice the number of cars with the same
number of people’. This aim was proclaimed after Mitsubishi had stepped
in. Part of that increase in productivity will be reached by higher levels of
automation. Part of it by working harder, and with more discipline. In aninterview published in the plant newsletter in the summer of 1993, the plant
manager complained that 15 to 20 percent of the workforce is still showing
insufficient motivation. He makes it clear that improvement is expected;
otherwise these people will have to leave the firm. Another sign of tightening
discipline is a complete ban on smoking on the job. In the meantime, Takehara is quoted in the newspapers as saying that motivation is demonstrated
by a willingness to stay a little longer on the job if necessary.11
Obviously, not all, nor even a majority of the required gains in productivity will be achieved by working harder. Apart from automation, a major
contribution will have to come from the new design of the cars. It is reported265

that one of the first impressions that visiting workers had of the Japanese
production lines, was that all parts fitted much more easily than at home.
This clearly is a result of close interaction between production and designand development, both at the stage of product development and later, after
the product has gone into production. Starting in the fall of 1993, production workers are going to Japan for visits of six to eight weeks in duration.
They will be trained on the production lines that will later be installed in
Born. Altogether, about 10 percent of the work force will receive training inJapan. Production managers (heads of production groups and area leaders)have also visited Japan and often returned with great enthusiasm for theidea of Kaizen (continuous improvement). Apparently, there is little reflection in Japan on the problems of launching and implementing improvement
activities in an old plant with a sceptical work force in Europe. Manager
enthusiasm, it would seem, can easily lead to disasters comparable to the‘New Style’ activities described above.

Conclusion
The history of the plant in Born is one of permanent change, if not permanent
crisis. Volvo came as a saviour, when DAF could no longer support the plant.
The Dutch state intervened, when Volvo showed insufficient interest. And
now Mitsubishi has come to save the plant again. Continuous improvement
in a Dutch automobile plant? Was Volvo better than DAF? Is Mitsubishi an
improvement over Volvo? Useless questions for a plant that is struggling
for survival. There is no choice. If this doesn’t work, nothing will.

Notes
1.

For the following historic overview, extensive use has been made of the illuminating survey article by Greif and Meijer (1993). For the history of DAF
Car BV, see also Van Diepen and Dankbaar (1990).

2.

This situation is currently changing. The Helmond offices will be closed andall staff functions and engineering activities will move to Born.

3.

The question if and what supply functions should be managed separately or
controlled by production is subject to recurrent debate throughout the industry
and different solutions are being practised.

4.

The main rules for (re)design are:a. First design the production structure and then the control structure;b. The production structure has to be designed top down (from the perspectiveof the demands made on the organization); design aims at simplification
by segmentation and parallelization, creating semi-autonomous organizational units;

266

c.
d.
e.

The control structure has to be designed bottom up (control functions should
be located as low as possible in the organization);
Decisions on process technology should be made after the production
structure has been decided;
The information system should be developed after the control system has
been designed (in order to provide the information where it is needed tocarry out control functions).

5. Doubts about the ability of workers to do materials management tasks wereeffectively eliminated when it turned out that more than half of the workers
had a personal computer at home.
6. The process of introducing task groups has been greatly disturbed by the almost
continuous need to reduce the workforce in view of the downturn of the European car markets since 1989. The creation of teams requires a minimal level ofcontinuity in the composition of the teams as well as time for training.
7. In most car factories there are areas where most workers have only limited
capabilities. In the creation of task groups, such areas have consciously been
incorporated into larger, more varied entities. This may limit the possibilities
for job rotation, if workers are unable to learn additional tasks, but it prevents
the creation of low capability, low motivation ghetto’s in the factory, with possibly severe impact on quality.
8. It should be noted that these are averages and there is a large variation between
the levels individual groups and workers have achieved.
9. Finance and controlling tasks carried out by the production units included multiyear planning and budgeting, periodic reporting, task analysis, management
information and controlling.
10. Production schedules are developed by Supply on a day-to-day basis. Production is only free to schedule the sequence of cars within the daily schedule.
11. Contrary to European practice, Japanese automobile plants have a gap of several
hours between shifts. This gap is regularly used (without prior notification),
to finish production according to plan, if the normal working time has been
insufficient because of a breakdown of equipment.

References
Diepen, B. van and Dankbaar, B. (1990), ‘Volvo Car BV: Gedaantewisseling van
een Borns bedrijf’, in: J Soeters et al (ed.), Het nieuwe Limburg. Herstructurering en ontwikkeling, Scriptum, pp. 164–184.
Greif, B. and Meijer, H. (1993), ‘DAF schakelt terug naar jaren zeventig’, NRC
Handelsblad, 22 February, p. 12.

267

Missing the road:
Working life at Volvo Nova Scotia1
L. Anders Sandberg

A Scandinavian king casts about for a handsome young prince worthy ofthe hand of his daughter, the beautiful Princess Asa, and finds two anxious
suitors. To choose between them, he devises a contest that pits the suitors
against one another in a race to build a castle. One contender uses cheapmaterials and mistreats and browbeats his workers in an effort to speed
construction. The other, the valiant Prince Volund, opts for only the best of
supplies and attracts skilled workers by offering excellent pay and working
conditions, and even a medieval form of profit-sharing. Happily, Prince
Volund is declared the winner of the contest, he and Asa marry, and, we
expect, they live happily ever after. This tale was told in an advertisement
appearing in major North American business journals and paid for by Volvoin 1984.2 Though perhaps tainted by the recent closures of the Kalmar andUddevalla plants, the tale still conveys some of the hallmarks of the Volvo
philosophy: quality in workmanship, product and work environment.3 But
what happens when Volvo establishes operations in a peripheral region, inthe economic hinterland of North America, namely, Nova Scotia, Canada?
This paper tells the tale of Volvo’s automobile assembly plant in the cities
of Dartmouth and Halifax, Nova Scotia, from 1963 to the present. The paper
provides a brief description of Nova Scotia as a peripheral region and theconcessions extended to Volvo over the years by various levels of government. It then suggests that these conditions are also reflected in the workorganization and labour climate of the plant. Here, in spite of the presenceof a powerful national union and relatively high wages, Volvo has ‘missed
the road’ of its official philosophy. Its strategy is more akin to ‘despotic
Taylorism’, where ever-higher levels of work intensity are forced rather
than negotiated.4269

The setting: Volvo in Nova Scotia
Nova Scotia is the third smallest province by population in Canada, witha history of economic underdevelopment, and staple production based onfishing, forestry, coal mining and crude steel-making. In the late 19th andearly 20th centuries, the steel and coal industries boomed and militant union
workers made substantial gains, only to see the regional economy collapse
in the 1920s. Out-migration, high unemployment and declining labour militancy have since prevailed.5 By the late 1950s, its coal and steel industries
were in a poor state, and various regional policies were developed by thefederal and provincial governments to bring large transnational corporations
to the province. Volvo was part of that development scheme. The Canadianfederal government provided the trade inducements to attract and maintain
Volvo in Nova Scotia.6 In the protectionist climate of the early 1960s, it
permitted Volvo the duty-free importation of all components for assembly.
The plant was set up as a so-called PKD (partly knocked down) assemblyplant, where all components, even complete and painted car bodies (hence
the term ‘partly’) were imported from Europe. In 1965, the Canada-UnitedStates Auto Pact was signed. This allowed the duty-free importation of autoparts to be assembled in Canada, provided the assembled cars contain sixty
per cent Canadian content. Volvo was exempted from the latter requirement,with the expectation that forty per cent Canadian content be reached atsome stage. But the company has been allowed to continue to import mostmaterial from Sweden in exchange for operating and employing Canadianworkers in peripheral Nova Scotia. In 1988, 95 per cent of all assemblycomponents for the 740 series Volvos came from overseas.7 Labour is clearly
the most substantial Canadian content. But it is difficult to determine theamount because Volvo does not disclose the percentage of value added toits assembled cars in Canada.8 Volvo has clearly saved on the duty remissions, though it claims profits are lessened by the extra expense of shipping
components, as opposed to finished cars, to North America. The tariff onimported cars was 17.5 per cent in 1963 and 12.3 per cent in 1983. In 1988,
it stood at 9.2 per cent.9
Assembly in Nova Scotia is but a drop in the bucket of Volvo’s global
production. In 1963, 1,139 units were assembled in the province. In 1973,
peak production was reached, at 13,000 units.10 Since then production hasvaried from about 7,000 to 12,500 annually; in 1990, 8,100 rolled off theline in Halifax while Volvo manufactured 376,100 cars globally.11 In 1994,
24 units a day were assembled of the luxury 940 model, which amounts toless than 7,000 units annually. Exports to the United States have steadily
in-creased as tariffs have come down. In 1988, the import duty on cars
shipped to the United States stood at 9 per cent, down from 11 per cent a
year earlier.12 In 1992, the import duty had been lowered to 2.5 per cent.13
270

Exports to the United States began in 1968, amounting to one third in 1983,
and one half in 1988, of total production.14 In early 1994, almost all units
were exported to the United States.
Provincial and local governments also provided locational incentives to
Volvo. When a new provincial government took office in 1956, it created acrown corporation, Industrial Estates Limited (IEL), to solicit and provide
incentives for transnational corporations to come to the province.15 IEL
was instrumental to the coming of Volvo to the twin cities of Dartmouthand Halifax in 1963.16 Volvo’s initial operations were set up on a three-yearlease in an abandoned sugar refinery on the Dartmouth side of Halifax Harbour. The lease was secured on favourable terms from IEL, and the city ofDartmouth contributed with municipal tax concessions.17 When the threeyear lease expired, Volvo was lured to a new site, Pier 9, on the Halifax
waterfront with new tax concessions and a $1 million grant from IEL.18 In
1987, a third plant, designed to assemble the newer and more complicated740 and 760 series, was built in the new Bayers Lake Industrial Park on theoutskirts of Halifax, located conveniently next to railway lines providing
access to the wider North American market. Volvo built this plant itself for$13.5 million, but enjoyed a new round of municipal tax concessions andthe city’s promise to buy the plant, should Volvo decide to leave at any timeafter fifteen years of operation.
Volvo’s operations in Nova Scotia are clearly tiny and simple by world
auto industry standards. But the plant means a lot to the local economy, as
is evidenced by the measures taken by the federal, provincial and municipal governments to attract and maintain the plant in Nova Scotia. Volvo
has exploited its status frequently by threats of closures. These have been
particularly common during labour disputes and the negotiations about
concessions with municipal and provincial governments. Workers havecontinuously lived in a climate of uncertainty and, as one manager once put
it, the notion that ‘the future of the Halifax operations will be influenced
strongly by you and your way of keeping good order as well as contribution
to the efficiency’.19

Technology, labour organization and work environment
Management’s account of the technological status, labour organization andwork environment at the Volvo plant in Halifax conveys an unqualified
success. Only two major legal strikes (1974 and 1988) have occurred at theplant. In a fairly typical statement, management describes the work force
as exemplary, with low turn-over and absentee rates, and high quality ratings for workmanship based on Volvo’s own standards.20 The most recent
strike, management refers to as ‘gentlemanly’. Such scattered references271

give the impression that the plant is ‘a little bit of Sweden in Canada’.21 A
more detailed look at the plant produces a very different picture.
When first set up in 1963, the assembly process in Dartmouth consistedof two parallel lines, each 57 metres long, with 12 work stations on each.
Line 1 was the trim line, where sealants, sound deadenings, compounds andbody trim were installed. Heaters, dashboards with protective foam padding,headlining, fuel tanks, electrical fittings and steering gear were also fitted
at this stage. At the end of the trim line, the bodies were picked up by anoverhead conveyor and transferred to the final assembly area, which beganwith the ‘high line’. Here engines, rear axles, transmissions and suspension
components were fitted into place and at the end the unit would be supported
on its own wheels. The unit then rolled onto a ‘lift’ which lowered it to thenormal working level for alignment, final assembly and inspection.22 The
move to Halifax’s Pier 9 in 1967 changed very little in assembly technology. The plant was bigger, but the assembly line remained the same, being
shipped by truck and set up in Halifax during a 10 day break in production. In time, some improvements were made. Some so-called tilt stations
were introduced, which allowed workers to install components from theside rather than from under the units. More improvements were made at
the new plant in the Bayers Lake Industrial Park in 1987. The tilt-stations
were implemented on a full scale, the layout of the plant made wider, withwindows all around and materials stacked vertically rather than horizontally(as in the old plants). The assembly-line was thus longer and S-shaped rather
than U-shaped. Some robotics were employed to apply glue to and install
windshields and to move and tilt the cars. The paint- and under-coatingbooths were isolated. Water-based paint was introduced and the fluid forthe air conditioning system filled automatically. But it is, so one worker
claims, still the same principle that applies. The cars are pulled by a chain(now located under the floor), some of the airtools from 1963 are still used,
and workers still have to push the cars manually on the line (though there
is a mechanism that give them a boost).
The work organization and labour climate have changed very little over
the years. Top down management, along Taylorist lines, characterizes thedivision of labour within the plant. All work is organized by management.
Supervisors or foremen oversee and control the work process. Jobs aredefined meticulously and job positions are posted and assigned according to seniority among the unionized workers. Job rotation only occurs on
an informal and sporadic basis. Shop stewards, elected from among theunionized workers, receive complaints about job duties and assignments,and forward grievances to a shop committee. Two unions have represented
the workers over the years: Local 720 of the United Auto Workers (UAW),
an international union, from 1963 to 1985 and Local 720 of the Canadian272

Auto Workers (CAW), a national union, from 1985 to the present. From thevery beginning, the members have adhered to a solidaristic wage policy,
arguing that it takes every worker’s participation to assemble a car. Thoughwage disparities have increased over time, they remain low. In 1993, thehighest and lowest hourly rate was $18.18 and $17.63, respectively.23 The
level of skill in the plant is relatively low and can easily be picked up. Job
classifications vary and have a distinct pecking order. The least desirable
jobs are on the assembly line, where the stress in ‘chasing cars’ is the mostintense. The jobs off the line are the most desirable, such as subassembler,
who prepares components for the assembly line, inspector, and adjuster.
Some dirty and hard jobs are also desirable because they generate a lot of
over-time work, something coveted by many workers.24
The labour climate was intially peaceful at the plant. Workers recall thefirst production manager at the Dartmouth plant as respectful and caring.
‘He knew everybody by their first name and knew when somebody had beensick or had a baby’.25 In September 1963, the UAW and Volvo reached its
first three-year agreement, ratified by 98 per cent of the workers. Thoughwages were not competitive with other Canadian auto assembly plants, theworkers were promised ‘that when its production and new plant facilities
reach a position comparable with the rest of the automotive industry in
Canada, it is intended to be competitive in every way and treat its workers
accordingly.’26 But the labour climate soon hardened, taking on the shapeof despotic Taylorism. Management took several unilateral measures to circumvent the contractural agreements. On several occasions, it attempted to
substitute seniority with ability and safety in assigning job duties.27 It introduced additional and altered shifts in contravention of collective agreements
and then used the extra workers hired as bargaining chips to have the shiftchanges stick.28 Supervisors were used to perform workers’ jobs.29 Workers
were reprimanded and threatened with dismissals when failing to keep up
with the assembly line.30 All warnings were recorded in writing and put in
employees’ personal files.31 Work premises were too cold.32 Work stoppages
were frequent as a result of supplies being delayed from Sweden.33 At least
two wildcat strikes (and some near misses) were part of the industrial relations climate of the 1960s. Matters were not helped when a new manager
was recruited from Ontario to, as one worker recalls, ‘teach those farmers
and fishermen a lesson’. In 1969, the Union President wrote that the production manager was ‘commonly known as Hitler and his foremen as little
Hitlers or his SS men’.34 The workers believed firmly that management wastrying to provoke a wildcat strike, something that would have resulted inheavy fines for the union.
The labour situation did not improve in the 1970s when the Volvo Corporation as a whole was in a difficult situation, both in producing a quality car273

as well as in identifying a distinct market niche. The workforce neverthelessgrew slowly to 1976. But then, in 1976, the workforce was reduced from 240
to 160 employees.35 Only some workers were re-hired after this layoff.36 The
plant also experienced temporary closures, such as in 1977, when it closed
for ten weeks due to sagging sales.37. A 13-week strike in the summer of1974 tells part of the story of the issues contested during the 1970s. The main
issues were wage parity with Ontario auto assembly plants (a long-standing
demand) and voluntary overtime. ‘With lots of men to work overtime … I
cannot understand why the company insists on compulsory overtime’, one
union official stated. Management countered that compulsory overtime wasnecessary ‘to ensure that the plant remains in continuous operation’, but
promised that overtime be limited to 8 hours per week and that no worker
be scheduled for overtime two days in a row. After initial rejection by asmall margin, a contract was approved by an 80 per cent majority of theworkers. Some gains were made but the stand that ‘no compromise will be
accepted’ on the overtime issue had to be abandoned.38 The over-time issue
had a deeper political significance as well. Before 1974, as well as after(to the extent that it has been possible), workers have informally refused
overtime work under contract negotiations, mainly to show support for its
negotiators. Such action caused considerable friction during the contract
negotiations in 1966 and 1969.39 The agreement of 1974 allowed management more flexibility in assigning over-time work.
The problem of job assignments continued into the 1970s. It is well illustrated by the strain put on shop stewards. In 1974, one shop steward
resigned from the plant committee, feeling it was ‘no longer an effectively
working body: grievances are dropped, delayed or forgotten for no apparent
reason’.40 Another shop steward, upon resignation, felt that ‘the majority
appear to see [him] as one to complain to and expect him to right all wrong
immediately … a source of letting off their frustration without jeopardizing
their image to the foreman or other Management officials’.41 At the time, one
union official felt that the union, especially the shop stewards, had become
whipping boys, blamed for everything that went wrong.42 Such friction was
lessened by a reorganization of the shop steward system in the early 1980s.
From a wider perspective, the friction within the union needs to be seen in
the context of ‘despotic Taylorism’, and the divide-and-rule strategies thatare often part of this system.
Increased work intensity has characterized work organization and workon the assembly line since the late 1970s. A new system was introduced
for determining the time for each work cycle on the assembly line. The
time clock gave way to time and motion studies, making no allowance for
mistakes, individual worker differences (size, weight, height) or different
qualities of movements. For some workers, with long distances to walk,274

the intensity of work dimnished while for others, who were stationary, theintensity of work increased. On the whole, with subsequent adjustment, the
new system had the effect of speeding up the work and adding stress. The
previous ‘breathing space’ between work cycles which helped to relievestress – and allowed the odd word to be exchanged by workers – disappeared. The duration of work cycles at the Dartmouth and Halifax plants havefluctuated widely over the years. The work cycles appear to be determined
mainly by production and the number of workers employed rather thanto factors relating to an optimal human-centred work environment. In the
beginning years, the work cycles were long, because employment and production was low. Then, in the mid-1970s, when peak production occurred,
the work cycles were from 6 to 8 minutes long. In 1988, the work cycles
were 13 minutes. In 1994, they had increased to 20 minutes. Management
argued – following the Uddevalla model – that the longer cycle slows theassembly line, decreases stress and adds variety to the job task. The Volvo
workers Halifax feel differently. When the Halifax plant built 60 cars perday, ‘it was a breeze’, more workers were employed, the time cycles wereshorter and the job tasks easier to perform.43
Increase in work intensity and down-sizing are well illustrated by the movefrom the Pier 9 site to Bayers Lake Industrial Park in 1987. It resulted in
two bitter strikes: a wildcat strike in 1987 joined in by most workers anda 5-week strike in 1988, where workers voted 111 to 1 in favour of strikeaction.44 The workers obtained some wage increases and the indexing ofpensions. The persistent frustration relating to line speed and workload,
however, were equally important in precipitating the strikes. Workers speak
bitterly about the move to the new plant in 1987. One utility worker – whofills in for sick workers, relieves temporary absentees and helps to ease bottlenecks on the production line and subassembly – felt that the assembly line
was understaffed (‘a very tight ship was run’). Management tried to keep theassembly line moving, no matter what the cost in quality and human frustration, to reach the target of 36 cars per day. Utility workers spent 4–5 hours
per night building parts (subassembly) for next day’s production. Quality
suffered, absenteeism increased and the general frustration level mounted.
The utility workers, much to their distress, had to fill in for absentees. Theircompensation was low because of the solidaristic wage policy. This posed
frustration among the utility workers who – in a stressful and labour-scarcework process – felt ‘suckered’ and exploited for having upgraded theirskills. Quality controls became stricter and the level of tolerance for errors
diminished at the new plant. They posed additional aggravation, as workers
struggled to assemble the more complicated 760-models, which contained
33 per cent more parts than the previous models.
All directives came from the top management during this difficult period.
275

One management representative who acknowledged the shortage of workers
during the initial phase of the move to the new site in 1987, and who wasthen proven right by outside consultants, was summarily fired. The foremen
had no authority and were of little help. The general feeling among the workers was that there were too many foremen, and that ‘they had time on theirhands’. The workers were always at fault. Planning and decision-making,as is a major characteristic of Taylorism, have continued to come from the
top at the new plant. At one point, the location of time clocks was changed
to facilitate supervision, but workers were inconvenienced because timeclocks and work stations ended up at opposite sides of the plant. Routinely,
new versions of cars were introduced on the line without workers being
notified. Although training programs and operating and repair manuals forcertain equipment were available free from manufacturers, these were notavailable to workers. Getting a union office at the new plant location (asthe union had at Pier 9) was a two-year struggle at the new plant. At Volvo,‘a worker stays a worker’, states one worker. Another, who once worked
with Swedish line workers and engineers at Torslanda, claims that Swedish
workers ‘wouldn’t have anything to do with the interference and requests
put on us here’. ‘There is no use trying’. ‘When we complain they say they
will look into it but they never do’. The problem thus continues: ‘It’s likea time bomb ready to explode at any time’.
Hiring practices at the plant tell a similar story. It remains a closely guarded
management prerogative, except for recalls of laid-off workers which follow
the seniority principle.45 In 1988, the company received approximately 60
applications per month.46 In the same year, however, a woman, Mary Ritchie,
who had sought employment with Volvo since 1972, took the company to
the Nova Scotia Human Rights Board of Inquiry, charging the company
with gender discrimination in hiring. After two successful attempts by Volvo
lawyers to delay the hearing, it took place in 1990. After half a day, Volvo
settled privately with Ritchie. The company agreed to pay her $43,000 for
general damages. It agreed to offer her the first available assembly-line job
after receiving a two-year certificate from a community college in automotive mechanics or auto body repair. It also agreed to embark on a policy of
employing 15 per cent women, the national standard, once all male workers from the recall list had been re-hired. Finally, the company agreed todisplay a scroll describing human rights in a public place at the plant.47 In
spite of these apparent concessions, the company claimed victory, arguingthat the settlement ‘sends a message to all employers that they can exercise
their right to hire the best qualified applicant’.48 There are perhaps several
explanations. The stipulation that Ritchie take a two-year training course
is something that has not been required of any previous employee.49 Since
1990, there has been very little opportunity for women to gain employment276

at Volvo. In 1992, the workforce was reduced to 135 people as a ‘cost-cutting’ measure, and the number of units assembled per year was reported ata low of 7,000.50 In 1994, 113 workers were employed. There are still (inApril 1994) no women workers at the plant.51 Nor is there a scroll explaining human rights displayed at the plant.
There are several reasons why Volvo workers in Nova Scotia stay in what
appear to be less than satifying jobs. The wages are high by Nova Scotia
standards. There is little else to do. The workers are relatively old and know
few other skills; in 1988, the average age at the plant was 42 years. In 1994,
the average age was close to 50 years. These are facts of which the workers
are critically aware and constantly reminded by management.

Conclusion
The Volvo assembly plant in Nova Scotia is clearly an enclave factory,
dependent on distant components for assembly and distant markets for
ultimate sale. Concessions brought the plant to the province, and concessions continue to keep it there. But there is no love lost between the local
management and their workers. Under the official veil of harmony there
is considerable frustration. The workers have little good to say about theiremployers.
How do we interpret this situation? Is it a mere reflection of the adversarial
nature of Canadian management-labour relations? Do conditions in Nova
Scotia necessitate a different mode of operation than in Sweden, given a
peripheral location and tumbling tariffs? Is consultation with labour too
costly in Nova Scotia? Is it more profitable to run an operation from the top
down regardless of the resultant acrimony? Is local management pressured
by Volvo headquarters to act as they do? Does the high unemployment rate
invite tougher and less democratic working standards? Does the presence ofa strong national union, which has helped workers to obtain near national
standard wages, at about $18 per hour, necessitate despotic Taylorism in thework place? A squeeze on profits no doubt plays a role but not a determining
one. Volvo Canada has had some hard years but so has the Volvo Corporation as a whole. In 1992, it declared a loss of $1.1 million. But the years
1984 to 1989 were highly profitable, with net incomes ranging from $8–12
million.52 In 1985, the profit of $12 million on $268 million of sales ‘gave
Volvo the best return on invested capital of any major company in Canada,according to Financial Post 500 rankings’.53 The anwer is most likely to lie
in the concessionary climate in which the Volvo assembly plant in Dartmouthand Halifax was conceived and then maintained. Such concessions are also
expected from the work force, a work force which is instrumental in making
the Nova Scotia plant most productive of all Volvo’s assembly plants. The
277

wider lesson of Volvo’s plant in Nova Scotia for work place reform is notpromising. There are at least two plausible scenarios.
Within the last couple of months, Volvo management in Halifax has introduced, but not implemented, a new program based on teamwork and quality
control. It is based on teams working in four, and then being responsiblefor quality control as a group. This trend towards Toyotism is viewed withskepticism by many workers.54 Perhaps it is an effort to improve productivity
and maintain the plant, in spite of the falling tariffs that brought Volvo to
Nova Scotia in the first place. A second scenario is less promising for the
future of the plant in Nova Scotia. In 2002, Volvo is free to abandon Halifax
with a government guarantee to buy back the plant. By that time it is likelythat tariffs will be close to zero. Moreover, the average age of the highly
productive work force will be approaching 60 years, if no new workers are
employed. There are no signs of the latter occurring today, in spite of theimportance to train new workers for the long-term viability of the plant.55
The implications of the Ritchie agreement for the employment of womenand the training of workers generally at the plant suggest that Volvo has nointentions to employ new workers. The turn of the century, in other words,
may be an opportune time to leave.
Volvo did not bring a ‘little bit of Sweden’ to Nova Scotia; instead, thecompany quickly adopted to and exploited the peripheral conditions of its
new location. If there is a future for Volvo in Nova Scotia, this is likely tocontinue. If Prince Volund is in charge of Volvo’s operations in Nova Scotia,
he will probably not gain his Princess but remain a bachelor to his grave.
And, if Kalmar and Uddevalla are now at the end of the road, Halifax seems
to have missed it altogether.56

Notes
1.

I would like to acknowledge the helpful comments by Don Wells, Labour Studies
Programme, McMaster University. I am also grateful for the insights provided
by Percy Seal, former president of Local 720, Canadian Auto Workers [CAW],
and Larry Wark, Maritime representative for the CAW.

2.

On the closures, see Sandberg, Å., ‘Volvo: Human-centred Work Organization- The End of the Road?’, New Technology, Work and Employment, 8, 2 (September 1993), pp. 83–87.

3.

The journals included Financial Post, Wall Street Journal and Forbes Magazine. The advertisement cost Volvo $364,000 and was intended, so the company claimed, to ‘familiarize people with the Volvo way of thinking’. Gazette(Montréal), 6 December 1984.

4. Adler, P.S. and R.E. Cole, ‘Designed for Learning: A Tale of Two Auto Plants’,
Sloan Management Review, 34, 3 (Spring 1994), p. 90.

278

5. For a recent statement, see Forbes, E. and D. Muise, editors, The Atlantic Provinces in Confederation (Toronto: Univeristy of Toronto Press, 1993). For thewaning of labour militancy, see O’Brien, P.F., The Myth of Labour Instability:
Nova Scotia Versus Competing Jurisdictions (Halifax, 1980).
6. The details are provided in The Volvo Research Group, ‘“A Little Bit of Sweden”: The Volvo Story in Nova Scotia,’ New Maritimes, VII:5 (May/June 1989),
pp. 14–23.
7. Globe and Mail (Toronto), 24 December 1988.
8. Toronto Star (Toronto), 15 April 1987.
9. Toronto Star, 15 April 1987 and Financial Post (Toronto), 2 July 1983.
10. Financial Post, 19 November 1977.
11. Volvo Car Corporation. Facts 1991.
12. Globe and Mail, 24 December 1988.
13. Globe and Mail, 14 July 1992.
14. Chronicle Herald (Halifax), 10 June 1983 and Globe and Mail, 24 December
1988.
15. Some came and stayed, such as Volvo, American Scott Paper, Swedish Stora
Kopparberg AB, and the French Michelin Tire Corporation. Others proved
scams, or flighty ventures, which quickly closed and left. Social institutions
were also copied from abroad, such as the formation of a joint labour-management board (based on Swedish principles) and a joint stake-holder industrial
plannning forum (based on French precedent). These were largely unsuccessful,mainly because of the province’s accommodation of the transnationals. See
Earle, M., editor, Workers and the State (Fredericton: Acadiensis Press, 1990).
The most famous case is the so-called Michelin Bill of 1979, which prevented
the unionization of Michelin Tire, the largest private employer in the province.
M. Bradfield, ‘Michelin in Nova Scotia’, Canadian Forum, LXI (DecemberJanuary 1981-82), pp. 9–11.
16. Halifax is the capital of Nova Scotia, and possesses the closest North American
ice-free port to Gothenburg. Dartmouth, its sister city, lies opposite Halifax
Harbour, and is connected to Halifax by two bridges.
17. The details are provided in The Volvo Research Group, ‘A Little Bit of Sweden’.
18. Mail Star (Halifax), 15 April 1967.
19. Emphasis in original. Lindblad (Plant Manager) to Irving (Union President),
28 February 1969. United Auto Workers [UAW] Papers, MS 9, 5, File 12d,Dalhousie University Archives.
20. In 1980, the plant was reported to have ‘the best productivity of all Volvo’s
plants’. Absenteeism was reported at 5–6 per cent and the turnover rate at 6per cent. Financial Post, 2 August 1980. For identical claims, see Chronicle
Herald, 3 June 1983 and Volvo, Volvo North America Corporation, 1990, p. 9.

279

21. Globe and Mail, 24 December 1988.
22. Chronicle Herald, 11 June 1963.
23. ‘Collective Agreement Between Volvo Canada Ltd. and CAW Local 720’, 31March 1991, p. 56. No trades people or trades wages rates apply to the plant.
Comparative figures for the ‘Big Three’ automobile assembly plants in Ontario,
Chrysler, Ford and General Motors was $20.85 to $20.86 for an assembler and$25.03 for an electrician (trades rate). Information from CAW Office, Toronto,
29 June 1994.
24. ‘Collective Agreement Between Volvo Canada Ltd. and CAW Local 720’, 31March 1991, p. 56.
25. Statements of workers and union officials, unless otherwise stated, are basedon interviews performed in 1988 and 1994. I am especially indebted to former
President of Local 720, CAW, Percy Seel, and Maritime representative of the
CAW, Larry Wark.
26. Mail Star, 26 September 1963.
27. Grievance, 15 June 1967. UAW Papers, MS 9, 5, File 12a.
28. Shop Committe Report, January 1965. UAW Papers, MS 9, 5, File B1
29. ‘Notes of Meeting Between Management Volvo and Plant Committee’, 4 September 1969. UAW Papers, MS 9, 5, File 12d.
30. Irving to Durocher, 4 December 1967. UAW Papers, MS 9, 5, File F5.
31. Harse to McGrath, 8 November 1971. UAW Papers, MS 9, 5, File F12e.
32. Irving, 13 December 1965. UAW Papers, MS 9, 5, File F12a.
33. Shop Committee Report, 15 March 1965 and Irving to Hiller, 24 October 1965.
UAW Papers, MS 9, 5, Files B1 and F5.
34. Irving to Dean, 11 April 1969. UAW Papers, MS 9, 5, File 5
35. Chronicle Herald, 1 April and 19 June 1976.
36. Chronicle Herald, 11 May 1979.
37. Mail Star, 11 June 1977.
38. Chronicle Herald, 22, 26 June; 12, 22 August; 9, 11, 14 September; 1974.
39. Irving to Ostergren, 30 November 1966 and Irving to Lindblad, 30 April 1969.
UAW Papers, MS 9, 5, File 12a.
40. Seel to Plant Committee, no date but circa 1974. UAW Papers, MS 9, 5, File
A4.
41. Monk, 9 March 1976. UAW Papers, MS 9, 5, File B3.
42. Kennedy, 24, 25 October 1976. UAW Papers, MS 9, 5, File C1.
43. Cole and Adler, drawing on NUMMI, claim there is nothing intrinsically dehumanizing about narrow tasks performed in short work cycles. The Halifax
situation suggests that there is nothing intrinsically humanizing about more

280

complex work tasks performed during longer working cycles. Both are subject
to broader workplace conditions. Cole and Adler, ‘Designed for Learning’, p.
91.
44. See Mail Star, 26 August and 30 September 1988.
45. Though workers remain on recall lists for only two years after layoff.
46. Affidavit. Volvo Canada Limited, Applicant, and Mary Ritchie and the Nova
Scotia Human Rights Commission, Respondents. Supreme Court of Nova
Scotia, Trial Division, S.H. No. 66849, 1988.
47. ‘Terms of Settlement: Volvo, the Human Rights Commission and Mary Ritchie’,
8 May 1990.
48. Toronto Star, 9 May 1990; Human Rights Advocate, VI, 4 (May 1990), pp. 1,
6.
49. Nor is it necessary. This is readily admitted by the male workers and regrettedby the legal counsel for Ritchie and CAW officials.
50. Plant, 17 August 1992.
51. In Uddevalla, by contrast, 40 per cent of the workers were women. Sandberg,‘Volvo: Human-centred Work Organization - The End of the Road?’, p. 86.
52. Volvo Canada. Financial Statements, 1977–1992.
53. Toronto Star, 15 April 1987.
54. See, for example, Mike Campbell, ‘Where are We Heading?’, 720 Local News,
10 (April 1994), p. 2.
55. There are, for example, no provisions for early retirement.
56. Sandberg, ‘Volvo: Human-centred Work Organization - The End of the
Road?’

281

Volvo in Malaysia
Hing Ai Yun

Since its birth slightly over 100 years ago, developments taking placeover the past one and a half decades can be said to be amongst the mostdramatic in the whole history of the auto industry. The 1970s–1980s saw
major restructuring of industry on a scale as big as ‘the pioneering efforts inmass production in the USA in the 1900s, or Europe’s introduction of sharp
product differentiation in the 1950s, or Japan’s more recent innovations in
production engineering management’ (Mortimer, 1987). The tortuous pathtraversed by the global automotive industry has indeed impacted differentially on various regions around the world. The inception and growth of
Malaysia’s auto industry is a case in point.

Malaysia’s auto industry: inception
When Malaysia began thinking seriously about the production of automobiles in the 1960s, it had intended to use this to spearhead its industrialization
drive. As a first step, it announced in 1966 that high tariffs, stringent importlicensing and quantitative restrictions would be imposed to encourage theestablishment of local assembly plants. Meanwhile, the years between 1960s
and 70s were the high point of European car expansion. (Womack et al.,1990:44). With cheaper wages and new product features (like front-wheel
drive, disc breaks, fuel injection and unitized bodies), the Europeans, after
the Americans, had racked up success after success in foreign markets.
It was only logical that a European company would be amongst the first
assemblers to take advantage of Malaysia’s new tariff regime to establish
plants locally. In effect, Swedish Motor Assemblies Sdn Bhd, a joint venture
between AB Volvo and their local distributors Federal Auto Company Sdn
Bhd (on a 50-50 basis) has the distinction of being the first assembly plant
to be established in Malaysia. It is not coincidental that Volvo was the first.
283

In view of its very small population, Swedish relative to other European
auto companies had to push hardest for exports to survive, chalking up
between 80–90 percent of exports for 1986 (Malmberg, 1991). To keep its
plants running all year round, Volvo had chosen to sell its winter production
to countries with a different climatic regime. Additionally, to compete effectively, Volvo adopted the strategy of exporting only to countries without
domestic production.
Since Malaysian automobile assembly companies were mainly establishedby major local distributors (in some cases through joint ventures with foreign
automobile manufacturers) and in view of the fact that these distributors
normally handle more than one brand, the assembly plants they establishedgenerally produce a wide range of models and brands under manufacturing licenses. Moreover, the original limit set by consultants (numbering
5–6), to ensure the maximum viability of plants in the country, could not
be followed. Existing distributors were concentrated into the hands of theChinese, so were the ownership of parts producers. In its push to redress thebalance of economic power between the ethnic groups in Malaysia (which
has a GNP of $38,614 million [all denominated in Malaysian $ equivalent
to $0.4 US] and a population of 18 million comprising 62 percent Malays,
30 percent Chinese) after the 1969 racial riots, the Malays had to be encouraged to participate in this new strategy for industrialisation. Thus theoriginal number of six assembly plants set up in 1966–69, with the goal ofprogressive manufacture of component parts was later expanded to accommodate another five plants in 1977.
With a small market (Table 1 and 2), relatively large number of producers and an even larger range of models, the auto industry was operating
under severe ‘diseconomies’ of scale. On top of this, mandatory local
content increases (10 percent in 1972 to 35 percent in 1982), could not be
implemented, partly due to the wide differentiation of parts and components
which made it prohibitively expensive to produce parts locally. In 1980, the11 assemblers were producing 25 makes, 122 models and 212 variants. By
1979, local content had averaged only 8 percent and was limited largely
to tires, batteries, paint and filters (Malaysian Business 1 Dec 1984). One
estimate noted in 1971 that ex-factory Malaysian prices exceeded British
prices by as much as 22–52 percent (Lee 1971). Of course, part of the reason
for not forcing the local content schedule was to accommodate the Asiancomplementation scheme, whereby, the manufacturing of parts would beparcelled out among member countries to maximize the utilization of plant
capacity (Solidum and Seah, 1987).
Unfortunately, at that time the vehicle industry was not the only sector thatwas cumbersome and in need of a thorough restructuring. Indeed, the 1969
riots made it clear that the production organization of the country required284

a thorough shake-up to yield a return that can support a population growthrate of 3–4 percent per annum.

Reconstituting the auto industry
The first step towards rationalization of the national productive apparatus
was to transfer ownership of matured factors of productions (comprised
chiefly of plantations and mines), from foreign to local hands. Only the statewith command over rich resources like petroleum could buy and also initiate
new enterprises, especially in the nascent industrial sector. In this respect,
the Heavy Industries Corporation Malaysia (HICOM), was set up in 1978 toundertake the implementation of heavy industrial projects. The State’s sharein manufacturing value-added was estimated at around 24 percent, one of
the highest ratio in the non-socialist world (UNIDO 1991:39).
The national car project (Proton), is a major component in HICOM’s thrust
towards heavy industrialization. Proton was initiated in May of 1983, by thepresent Prime Minister and is a joint venture between HICOM (29 percent),
the Ministry of Finance (18 percent), and Mitsubishi Motor Corporation (17percent), with the rest of the equity shared out with two other Malaysian
institutions and the public. In a single stroke, it was hoped that with theestablishment of Proton which costs $230 million, the problem of low Malay
participation in the motor industry (State ownership is equated with Malay
ownership), and the moribund state of the auto industry could be repaired.
The Proton was extremely privileged, being exempted from the 40 per centimport tariff while taxes for other CKD – packs (completely knocked down)
were at the same time increased three times, leading to the treasury losing$120 million in foregone import duties. Proton, therefore, had unbeatableprices. A 1300c.c Proton costs around $21,000 while competitors were retailing for between $28,000 to $29,000. As a result, Proton’s market shareshot up from 47 percent in 1986 to 73 percent in 1988. Three assemblers
including Mitsubishi had to shut down. The others either reduced production
or even shifted to part exporting. In short, 3,500 workers lost their jobs.
Now, there are 10 assemblers producing 200 models.
The ethnic dimension of the rationalization process also filtered down to thelevel of the plant. Proton in 1988, employed 1,300 workers of whom 94 percent
were Malays. They were not unionized. Few of the experienced workers laidoff from the other plants (about half were Chinese), were hired. The experienceof mass retrenchment served as an effective deterrant and disciplinary chainthat immediately tempered the recalcitiant work force of the industry. On thepart of the management, uncertainties involved in the whole restructuring
exercise had bred such a sense of crisis and insecurity that they became evenmore authoritarian in handling the workers on the shopfloor.
285

Swedish motor assemblies Sendirian Berhad (SMA)The SMA was started in 1966 and in its first year of production in 1967,
had an output of 11 units. From this small number, the company proceeded
to expand production to a peak of 9989 units in 1974. From then on, thenumber of units produced declined steadily to a trough of 351 units in the1986 recession when the work force was down to 119 from a peak of 732
in 1975 (See Figure 1 and 2). Out of the 26 years for which data is available, the company was producing a higher proportion of non-Volvo cars
(contract assembly), for 11 years. Currently, the company’s production per
day includes 8 units of Daihatsu (Delta), 5 vans, 3 Suzuki (2 models) 2 unitsof Volvo (Models 850 and 940). In 1992 (August), it employed around 450
workers of which only about one-third can be described as skilled. Labour
turnover at the plant is about 7 percent.

The labour process and work organization
Material department
This department is headed by a manager who is assisted by a foreman, several charge hands and lower level ‘seniors’ who sit above the ‘handlers’, thenumbers varying at different time periods. One charge hand is in charge of
10–20 workers. 6 out of a total of 40–50 workers are involved in administrative work in this department.
On receipt of a new model, the foreman and the charge hand would discuss the details of work procedures. Once these have been established, theforeman would just issue the orders to the charge hand who would then passon the information/directives to the seniors, who would then pass it down
the line to the handlers.
In this section, the CKDs that arrive are opened up by the senior material
checker with the help of handlers. These are then arranged according tostation sequence found at the production line. The parts are sourced both
locally and from foreign suppliers. Daihatsu parts come from Indonesianand Japan, whereas, parts for the Volvo 850 come from Sweden. Renault
parts originate in France. Local components are made up of parts like glass,tires, exhaust and batteries. Due to the low volume of production, it has
become more expensive to source locally. Local content level is still low,at 40 percent for Volvo and 10 percent for the Daihatsu.
Production department
This is the largest department and covers several sub-divisions including:1.

Body Shop:
Welding Jig Area
286

2.

3.
4.

Metal Finishing
Paint Shop:
Electro Dipping
Underbody Spray
Sealing
Colour Spray/Dry Sanding
Paint Rectification/Plastic Parts Spray
CBU/Paint Rectification
Final Assembly Line
Rectification

Body Shop
About 60–70 workers are employed in the body shop. This department isdivided into two sections whose details are provided below:a)

Jig Area: The metal panels of the bodies are placed in specialized jigs
fixtures, manually assembled and spot welded to fuse specific sectionsof the panels together. Each spot weld is subject to continuous checking. Volvo Sweden provides the designs and specifications for manufacturing the jigs. This, together with SPC (Statistical Process Control)
combine to ensure that Volvo designated dimensions and tolerance arereached.
b) Metal Finish Line: The vehicle body is finish-welded here using arc
welding and brass welding. Joints and welded parts are then grinded in
special enclosed booths designed to reduce the noise level in the factory and to prevent metal dust pollution. Finally, doors, bonnets andboot-lids are bolted onto the body to specified tolerances, followed up
by SPC.
In the Body Shop, workers are grouped according to the models they work
on. Their numbers with corresponding car models are shown below.
Table 1
Body Shop: Workers by Vehicle Model (1992)
Vehicle Model
Volvo: 240
Volvo: 940
Renault 19
SuzukiDaihatsu
Total

Jig
No. of Workers

FinishingNo. of Workers

10
8
6
9
13
46

12

7
4
23
287

Paint Shop
In this shop, the body first undergoes pre-treatment: the body is degreased,
rinsed and zinc phosphated. It then is electrodipped (Cathodic Electro Dip
process), to provide perfect penetration of the paint after which the bodyundergoes sealing. The body then proceeds to receive an intermediate coating which is then followed by manual spraying of the top coat by skilled
painters. After passing through the topcoat oven it is inspected and any faults
are then rectified. The paint shop employs about 70 workers.
Final Assembly Line
This part of the work process comprises several segments: The Trim Line,
Body Drop, Final Line and Underbody Treatment. Here again, the workers
are grouped according to vehicle model as shown below.
Table 2
Vehicle Model

No. of Workers (Operators)

Volvo: 240
Volvo: 940
Renaulta) Sub total:
Daihatsu: Delta
Pick-up/Van
Suzukib) Sub total:(a) and (b) each with one chargehand

32
12
12
56
27
24
17
68

Trim Line is where the vehicle body is manually fitted with head-lights,
tail-lights, bumpers, mouldings, grills, windscreens, door-glasses etc. The
material handling system is designed to minimize the number of components
handled along the line to reduce damage to components and also to allow
for more room in the working environment. At the end of the Trim Line, thebody now passes through the Body Drop Section. Here, the body is ‘married’
to the engine, transmission, front to rear axles using a tilt device speciallydesigned by Volvo to allow a 90 degree tilt which permits easier assembly
and inspection of all under carriage work. The vehicle then passes onto the
Final Line where seats, carpets, trim mouldings, batteries and other accessories are fitted into the car. The carbon monoxide level is here checked
to the minimum level required by legislation and before the car leaves theassembly plant, it receives a final rust protection treatment which involves
spraying of anti-rust into the inside box and door sections of the car.
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Rectification
This is considered the last stage of the production line where defects andshortages are identified and rectified. Here again, workers are organized towork on specific models.
No. of Workers

Model

7
6
2
3

Volvo 240 and 940
Daihatsu
Suzuki
Renault

They are managed by a supervisor, charge hand and leadmen.
To understand the way work is organized and managed in Malaysia, one
has to take into account a few basic factors. First, is the country’s very
recent shift to waged work as a major mode of economic organization. As
recently as 1975, only slightly above half (55 percent), of the population
were wage earners. Second, the country has been struggling hard to stave
off foreign domination of its economy. Having succeeded in decreasing
foreign share of the agricultural sector, it is now trying to balance the needfor foreign capital and technology and national autonomy in its effort toindustrialize. Third, is the fact that, the auto sector is one of the oldest in
Malaysia’s manufacturing base. As such, we should expect it to possess moreof the moribund vestiges of old industries. Capital restructuring is one big
factor affecting the labour market and thus, is important in shaping worker
behaviour in this sector.
In view of the remarks above, one can understand why jobs in the auto
industry are therefore, generally specific, specialized, simplified, and highly
routinized and labour intensive. New recruits are thus, easily absorbed onto
the line with only a few days of on-the-job training. If a worker on the trimline has to fit the windscreen, that remains his job day-in-and-day-out until
he gets shifted elsewhere to replace some absent colleague or gets promoted
due to good/obedient behaviour. Job relationships are bureaucratic andhierarchical, with the foreman acting as the chief spokesman delivering
managerial directives. This constitutes the primary and most common formof management – labour communication. Before the appointment of the current personnel manager (acting), there appears to be very little interest in
training or what is now designated as ‘human resource management’.
It would appear that strict and tight supervision remains the primary
tool ensuring that production proceeds smoothly. In this, the foreman
constitutes the key. Using the leverage of overtime work (which brings inmore than the normal rate of pay-one and half times), the foreman is able
to get workers to toe the line by bestowing this ‘higher’ rate work on the289

favoured/selected few. There is very little joint-consultation. However,spurred by the introduction and ‘successful’ implementation of the Proton
project, SMA, like other auto assemblies will likely introduce new methods
into its management style. In fact, the foreman on whom much depends but
whose supervisory capabilities are widely recognized as conservative anddeficient, has become the first target for a new regime of training recently
initiated by the personnel manager.
In the past, hierarchical methods of management were justified on the
grounds that workers were largely uneducated and irresponsible. The average level of education of the workers is lower secondary schooling ofabout eight years. A strong national union had successfully gained benefits
and higher than average pay for its members. The monopolistic positionof the assemblers, prior to Proton, had also strengthened the position oflabour to such an extent that absenteeism and malingering has become aperennial problem of production. Part of the reason for this ‘undisciplined’
work behaviour could stem from the very routinized, nature of the work.
In fact, certain sections with heavy, arduous and unpleasant work, likewelding, paint shop, trim, final and body departments reported higher rates
of absenteeism. However, after the industrial fallout and retrenchment of
3,500 workers, labour problems have resolved themselves. With a trimmed
work force, total productivity had even increased – reports one plant whichprior to retrenchment had a work force of 800 people/workers producing 60
units, but with a reduced force of 400 in 1990, reached an increased output
of 70 per day!

Conclusion
The evolution of Malaysia’s auto industry was very much in tandem with
on-going developments of the industry at the world level. Malaysia’s auto
industry was initiated between 1966–69, in the form of joint ventures with
European producers just when the European auto industry has reached its
peak. Further down the road, when the world’s auto industries faced a major
crisis due to intense pressure from the Japanese beginning in the 1970s, theMalaysian auto industry also faced cataclysmic losses that had put countless
lives in disarray. The crisis of the Malaysian industry was further aggravated by state induced effort at restructuring which had perforce to embrace
Japanese technology and capital.
The SMA as one small player was carried along in this historical ebb andflow. And despite its fame as purveyor of hi-tech production technology andsophisticated management expertise, which were not reflected upon in its
local plant, the SMA in ordinary times had been quite incapable of influencing the direction of the industry. More importantly, as its fate is shaped by290international, regional and local forces, the company must recognize theneed for change on all sides and take reasonable steps to incorporate its
work force to forge a stronger initiative for change. Within the local context, rank and file workers and unions have relegated the leadership role tomanagement. They desire that management should create the environment
where workers can contribute to organizational goods. But management ishesitating to transform work relationships to a less hierarchical structure,
one characterized by a higher level of trust than distrust is needed to help
sustain mutual commitment to success.
This is particularly urgent in view of the state push for a second national
car project (600cc) with Daihatsu. The relative success of the Proton export
sales, localization programme (local content is 60 percent by 1990 with 125
vendors supplying up to 80 percent of local components in 1993), and plans
to assemble the car in Indonesia, Chile and Vietnam (Managing Director at
AGM of Proton Vendors Association in April of 1994), will ensure the auto
industry will be upgraded. Since the national auto market is too small andin view of the ASEAN complementation scheme, the larger assemblers havebegun switching to becoming parts exporters. To survive these developments, existing assemblers must make good use of its resources, including
its workers who are still holding back their productivity under conventionalmodes of hierarchial management.

References
Bhaskar et al (1986), Japanese Automative Strategies: A European and US Perspective, The Motor Industry Research Unit, Norwich, University of East
AngliaLee D. (1976), ‘How the Malaysian Car Distribution Network Operates’, Asian
Auto, March, Malaysian Business, Kuala Lumpur
Malmberg A. (1991), ‘Restructuring the Swedish manufacturing industry – thecase of the motor vehicle industry’, in Law C. (Ed) Restructuring the Global
automobile industry, Routledge pp 200–214, London
Mortimer J. (Ed.) (1987), Advanced Manufacturing in the Automative Industry,
IFS, United Kingdom
Odaka K. (Ed.) (1983), The Motor Vehicle Industry in Asia, Singapore University
Press.
Solidum E.D. and (1987), Decision Making in an Asean Complementation Seah
C.M. Scheme, Singapore Institute of Southeast Asian Studies.
UNIDO (1991), Malaysia: Sustaining the Industrial Investment Momentum., BasilBlackwell, Oxford
Womanck J., Jones D. and Roos D. (1990), The Machine that changed the world,
Rawson Associates, New York
Yearbook of Statistics (1991), Department of Statistics, Kuala Lumpur

291

Appendix
Worker Profile
Worker 1
Started work in 1974
Has 3 children age 9,5 and 2
Wife works in Toshiba, earns about $1,000/m.
Workers wage about $1,075/m.
Owns House and Car
Expenses for Car $200+/m.
Worker 2
Has worked for 10 years
Uses motorcycle, for transportation to work from home about 10 kilometres
away
Spends $5 per day outside home (mainly at workplace)
Drinks$1
Lunch$2
Petrol$2
Household expenditure: $400–600
Wife does not work, has two children age 11 and 7 years
Worker 3
Worked in company for 5 years
Wage amounts to $650/m.
Deducts $300/m. for car
Rent costs $250/m.
Wife has worked in Bata Shoe Factory for 10 years. Earns little, about$500/m.

292

The origins of team work at Renault
Michel Freyssenet

In 1991, Renault decided to adopt team work throughout its European factories, in the form of Elementary Work Units (EWUs) or Unités Elémentairesde Travail (UETs), before 1994. Team work is conceived of as polyvalentand multifunctional work undertaken by a team of 20 persons. The Unit isdefined by the component, mechanism or subassembly that it makes. It is
led (animé) by a Unit leader, who constitutes the first hierarchical level. It
controls and analyses its own production parameters. It enters into buyersupplier relations with the other teams upon which it depends, upstream anddownstream in the production process. What is expected from this form ofwork organization is an ability to react to problems, an improve-ment in thequality of products and of the functioning of machines, a greater flexibilityof production, a development of competencies, an increased interest in work,and finally the modification of hierarchical relationships.
The definition of EWUs, and the decision to organize the factories according to this mode, is explicitly inspired by the Japanese experience. Yet
one would not understand the specific traits and meaning of the EWUs, theconditions under which they were adopted, and the difficulties surrounding
their implementation, if one was not aware of the long maturation processof the team work idea in the company, of which they are the result. This
process consisted of three phases. In the first place, it has its origins in thecrisis of work at the end of the 1960s, and in the experiments at Volvo.
Several experiments in ‘modular’ work were made at this time, even though
this was opposed by elements within top management. These then served
as the basis for thinking about original forms of team work in the factory
areas that were automated after the late 1970s. These forms owe nothing
to Japanese team work, which was unknown then. The success of some ofthem, the need to mobilize the entirety of the personnel, and the desire tooffer career opportunities to all employees, led the company to consider
spreading team work to all factory areas, whether or not automated. The
293

Japanese example, which was becoming better known in the second half ofthe 1980s, then arrived to legitimate and confirm this direction. It allowed
Renault’s idea of team work to be enriched, without, however, causing thedisappearance of those aspects born out of Renault’s own experiences. The
theme of the enrichment of work remained, and constitutes one of the bases
upon which fundamental agreement with the unions was reached, whereas
it is absent from the original Japanese idea of team work.

1. The ‘crisis of work’ in the 1960s and the first experiments with team work
The crisis of work first emerged at Renault in 1967, through conflicts thatwere often spectacular, and through growing absenteeism, high levels ofturnover, and an increase in rectification work. Several types of solution
to these conflicts were found, some immediate and others long term, some
accepted by all and others contested.
The conflicts were ended on the basis of agreements dominated by wage
payments, with no real discussion of the problems of work organization
and work content which had set off the strikes. These agreements fitted inwith the strategy followed by the company since 1955. The guarantee ofincreasing purchasing power constituted one of the foundations of the ‘social contract’ that Pierre Dreyfus, the second Managing Director (Président
Directeur Général) of the Régie Nationale des Usines Renault concluded
with the unions on 15th September 1955.1
A second type of response, included in the multisector agreements negotiated nationally, was the reduction of working time2 and the development ofcontinuous training. This solution corresponded closely to Pierre Dreyfus’
philosophy. He believed that the only compensation which could make itworth working at the assembly line or specialized machine (work which
could never be different from what it was, that is to say economically superior
but alienating for human beings) was the gradual reduction of working time
and the development of training and learning activities, to allow employees
to discover activities outside work that would permit their cultural and social
development in a way that industry could never offer.
A third type of response, and the one that interests us, contradicted theview just discussed. Though supported by certain factory managers, it was
not unanimously accepted by top management and was regarded with adegree of suspicion by the unions. It involved the transformation of thecontents and the organization of work in ‘a framework of responding to
the new expectations of man at work … a permanent requirement for the
future of the company’.3294

Numerous forms of work organization were experimented with by certain
factory managers: rotation between two or three positions, assembly of acomplete mechanism by walking it down the assembly line, lengthening
the work cycle by including preparation and rectification, working on work
‘islands’, etc. Later, a company working group consisting of the Personnel
Director and the Director of Work Study proposed: ‘not only to humanize
technology, but also to explore new ways of organizing the factories andthe design of equipment and buildings … [from the viewpoint] … of thedegree of freedom and of initiative that would be allowed the personnel,of the utilization of its skills, and of the possibilities of working in teams’.
Several new operations resulted from this: the assembly of a complete engine
at a fixed position by one worker; four short assembly lines instead of one
long line at the new assembly plant at Douai; the widespread adoption at
the Le Mans factory of modular assembly of front and rear axles by three
to five workers, organizing themselves, responsible for the whole assembly
process as well as for watching over and maintaining the equipment, taking
on responsibility for quality, undertaking rectification work and ensuring
the cleanliness of machines and work spaces.
These experiments in the reform of work were also of interest to certain
manufacturing managers, who were concerned with the difficulties ofmanaging an increasingly diverse and varied output. Beyond the social attractions, they saw in these forms of work the possibility of altering manufacturing schedules more easily and more cheaply.
The most radical and novel formula, that of the modules, was nevertheless a subject of controversy at the highest level. Pierre Dreyfus’ AssistantManaging Director, Christian Beullac, encouraged the experiments andsuggested that an evaluation on financial grounds be undertaken. However,Dreyfus himself publicly declared that he did not see industrial solutions forthe future in this kind of work, which he thought harkened back to artisan
work. The work study departments were openly opposed. Taking accountonly of the theoretical times and manpower necessary in assembly work,
they easily demonstrated that modular work was not financially viable.4
The experiments that had been set in motion did not end, however. They
inspired the forms of work organization in the automated areas which weredeveloped when the choice was made to automate as a response to the crisesof work and of productivity. One of these experiments was particularly significant, since it extended the application of the principles of modular work
to machining, whereas this had previously appeared only to be applicable toassembly. A working group was established at Le Mans in 1975 to consider
the possibility of introducing ‘production units’ into the machining areasthat would be autonomous relative to upstream and downstream activities. It
would be composed of various machines, grouped geographically, in which295

the operators would be responsible for: running the machines, adjusting andchanging tools, quality control, dealing with minor breakdowns, and maintenance. This formula was applied in three areas, though operators did notin fact undertake minor maintenance tasks or deal with minor breakdowns,
and they remained under the supervision of a sub-foreman.5
Within this same type of solution one can classify the movement toimprove working conditions and to ‘re-value’ manual work which was
supported by the government of the time. It was also a continuation of theefforts made at Renault since the start of the 1960s to take account of working conditions when designing buildings, machines, and tooling.
The work study departments of the company opposed the modular solutions and remained unconvinced of the value of expenditure on improving
working conditions at work posts which, in their view, should have been
eliminated as soon as possible. Their favoured solution to the crisis of work
was a rapid movement towards automation that would permit the eliminationof difficult and repetitive work and the development of guidance-surveillance-maintenance functions, more attractive and more skilled. This is thepath that would be taken up at the end of the 1970s.
The final response to the crisis of work was brought about by the long-run
slow-down in economic growth and the rise of unemployment. There was aclose correlation between the reduction of manpower at Renault, beginningin 1978, and a steady fall in absenteeism and turn-over. From this point on,
the development of team work during the 1980s would not have its origins
directly in the crisis of work; rather, in the demands of, and the problems
posed by, the shift to the automation cum integration of production. At thesame time, the social necessity of enriching the content of work and of offering a career to unskilled workers would continue to be a constant andexplicit theme of those who were taking the initiative of organizing teamwork in the automated factory areas, even though all signs of a refusal towork had disappeared.

2. The relaunch of team work in the automated areas
The installation of automated means of production in the machining, stamping, welding and painting areas, starting at the end of the 1970s, led to therelaunch of initiatives on, and further consideration of, team work, though
now on a partly different basis.
The form chosen for the automation-cum-integration of machines in
production lines had in effect altered the scope of work in the areas concerned. Automation consisted of a significant technological leap and of
the integration in a single line of the machines necessary to manufacture
a component or subassembly. It involved both simple and complex opera296

tions, partially or totally, leaving the operators to undertake tasks that werepartial and heterogeneous. Regarding complex tasks, automation consistedof simplifying them and dividing them up; the repair of breakdowns especially. The machines and the production lines were equipped with automatic
apparatuses that stopped them in the event of an anomaly, that located theincident in equally automatic fashion, and that involved ‘standard exchange’of the failed component, fuller repairs being postponed to periods outside
production.6
Three new problems were then posed: how to make these costly integratedlines function continuously so as to reduce their number and the period of
their amortization; how to get the new mode of maintenance accepted; andhow to divide up tasks, none of which occupied a person full time, and which,moreover, required different levels of competencies. These three problems
raised questions about existing norms of work in the areas concerned. Production workers previously had daily quotas to fulfil, giving them relative
freedom to vary the pace of work. They had tasks that were relatively homogeneous, and were easy to classify according to their level of complexity.
Maintenance workers could take the time necessary for in-depth diagnosis
and repair of machines. The output of a defective machine could in fact beshifted to other machines, since they were not integrated into productionlines. The new scope of work in the automated areas, as it was perceived
at the time, was therefore to ensure: the continuous functioning of the machines despite absent personnel and rest breaks; the undertaking of tasks at
different levels by the same persons; and the rapid repair of breakdowns sothat production would be disrupted as little as possible.
The organizational solutions found for these three problems varied fromone factory to another, indeed from one factory area to another.7 They ranged
from a mixed group of production and maintenance workers responsible forthe entire process of running and maintaining robotized welding machines,
to homogeneous groups of former unskilled workers trained to undertake, inturn, the roles of feeding in inputs, operating installations, quality control,changing tools, primary maintenance and breakdown repair on automatedmachining lines.
These different formulae were no longer mere experiments, but could
involve whole departments of a factory: machining, welding, stamping, etc.
They did not, however, represent the implementation of an official strategy
by the company, but rather the fruit of local initiatives by area or department
managers. Time would have to pass before top management and the totalityof the management of the company would realize and understand the scopeand implications of these new ways of organizing work.
Paradoxically automation also played an important role as a result of its
dysfunctions. Expected to bring productivity, flexibility and quality, during297

the first half of the 1980s it caused numerous stoppages of production as
well as quality problems. Numerous causes lie at the root of this unreliability
and the slowness in rectifying it. They include: a lack of understanding of
the daily problems of production on the part of the designers, a desire to
pursue technological leaps and attain large improvements in a single step,and a mode of calculating the profitability of investments which favoured
manpower reductions. They are joined by: a weakness of links between thefactories and the central work study department at this period, an opaqueness and needless complexity in the first machines which hindered attempts
to make them reliable, and the fact that design technicians and engineers
less often came up through the factories by internal promotion than wererecruited directly from the major engineering colleges (Ecoles d’Ingénieurs)
or were highly qualified technicians. The active participation of those actually running the machines and the maintenance workers was therefore
required to analyze the problems and to find the solutions. Team work andcollaboration between production and maintenance consequently appeared
as self-evident.
Since 1982, it has been possible to observe four forms of team work. The
differences among them are related to the individual histories of the factory,
indeed the particular factory area, where they first emerged, as well as to different understandings of the problems that automation was going to pose.
The first formula appeared at the Le Mans factory, which, as we haveseen, introduced modular work for the assembly of certain mechanicalcomponents, and then developed team work in its machining areas. When
automated lines were put in place, the management of the factory decided
to apply this form of work organization systematically. Formerly unskilledworkers were trained for four months to become ‘controllers’ of automatedmachine lines. To understand the change of process and of principles incomparison to the 1970s, it is useful to review the debates that took placeat the time.
At the point when automated and integrated means of production werebeing installed for the launch of the R9 model, the Le Mans factory sought
simultaneously to ‘push the skills of the operators even further’, to sharethe ‘extra amount of skill’ among the whole team rather than concentrate iton an individual, to sanction this change through creation of a new personnel classification, and to gain acceptance for a new norm of production:‘to benefit from these improvements by obtaining a formalized agreementthat equipment should function continuously, even though this last aspect
is not related to skill’.
Management therefore proposed to create a new category of production
workers who would assure, as a team, the continuous functioning (despiteabsences of personnel, and minimizing stoppage times) of automated ma298

chines. This would be achieved by dividing among themselves the roles ofhandling, loading and unloading, certain tasks that remained parcellized
such as the trimming of castings, as well as the setting up and changing oftools, all the visual and physical controls, and certain maintenance tasks.
Management estimated the skill coefficient of this kind of work to be 195
points, which corresponded to ‘Second Level Professional’, a classification which at the time did not exist in manufacturing departments, only inmaintenance. Management wished to diffuse a wide technical knowledge(stamping, mechanical, assembly, casting) to the workers being promoted
into this new category, so that if necessary they could be transferred fromone department to another.
Discussions with the Central Personnel and Social Relations Directorate
at Renault, the only body permitted to create a new classification, resulted
in definitions of the competencies required and criteria for attributing the
new classification. The necessary ‘level of general, technical and practicalknowledge’ did not appear to the Directorate to have been demonstrated tothe point that it would justify a classification of Second Level Professional.
The Directorate feared that an overvaluation would later be challenged bythose in other categories and used in their demands for reclassification.
Two solutions were discussed. Challenge would be impossible if theworkers in the new category were authentically Second Level Professionals,
possessing a real and recognized mechanical or electrical skill. However,it appeared to be difficult and costly to raise unskilled workers to this levelof competence. It was also proposed to assign young maintenance professionals, who would have the required educational level, to the control of theautomated units. Yet this seemed to present two difficulties: these professionals risked finding their work under-skilled relative to their competence
and could therefore rapidly lose motivation; moreover unskilled workers
would not have the chance of developing a career and would be massively
affected by the reduction of manpower induced by automation.
The solution that was accepted was to recruit ‘controllers’ from among
the unskilled workers, but to make access into this new category dependent upon: prior success in psychological-technical tests; a theoretical andpractical examination following a four month period of training; an acceptance of certain working conditions (continuous working, three eight hour
shifts, new tasks, team working, etc.); and upon assignment to a specified
piece of equipment.
This formula for team work was therefore the result of several considerations: opportunities to a certain number of unskilled workers, the others
obliged to see their posts eliminated as automation progressed;8 and theoffer to these same workers of a professional classification, in exchange
for accepting polyvalent work composed of tasks normally classified at299

different levels and accepting that the production lines would function
continuously.
The second formula, adopted in a robotized welding area, consisted ofoffering to maintenance workers (Professionals and Technicians) to becomeline controllers for a fixed period, and to agree to certain quality standards
and a certain rate of downtime. The reversibility of this choice and thepromise of more rapid promotion elicited volunteers. However, under pressure from the production manager to repair breakdowns rapidly in orderto achieve production targets and to avoid hold-ups, they were not able totruly exercise their competencies in this function by organizing themselves
to make full repairs and to seek the fundamental causes of breakdowns inorder to eliminate them. A separate maintenance group had to be retained.
The third formula also appeared in a robotized welding area, though thistime in another factory. Production workers who carried out unskilled work,
but who already possessed technical diplomas, were trained full time for ayear, to be able to control and repair robotized installations. Organized into
groups of five persons, without a leader, they were classified as equivalent
to ‘Third level professionals’. It was not planned that maintenance workers
would come to their aid.
The last formula was adopted in a third welding area, where maintenance,
quality control and industrial engineering had been placed under the authority of the head of department. Each robotized line was controlled by amixed production-maintenance group, consisting of a technician, a leader,an elec-trician-mechanic, and three operators (former unskilled production
workers, classified as ‘Second level professionals’ following their selection
and a four month training period). The division of tasks among them was not
rigid, and so the operators sometimes participated in in-depth breakdown
repairs, even in modifications made by the technician and the electricianmechanic. This formula was by far the most original, and potentially themost far-reaching. It represented a good compromise between, on the one
hand, the need to make repairs swiftly, and on the other hand, not postponing
the search for the causes of problems and the activities necessary to makeinstallations more reliable.
Renault discovered the wealth of initiatives that had been adopted in its
various factories on the occasion of an initiative launched in 1983 by the top
management, which was aimed at mobilizing all possible energies in orderto deal with the deep crisis that had appeared. This initiative was called‘Industrial Restructuring and Social Dynamics’ (Mutations industrielles etdynamique sociale: MIDES). In announcing it, it was said that ‘the resultsof the firm are directly linked to its organization, to its management, to theprices and the quality of the products and services that it markets. Today,
experience shows us that these parameters are mostly determined by work300

relations and by the quality of life within the firm’. Management proposedto ‘all those willing’ and to the trade unions to participate in a joint processof analysis and reflection regarding future technological, social, economic
and commercial change.
This wide debate would most notably lead to the emergence of a numberof new concepts at the level of the whole firm: the basic production unit (300
persons), conceived as the basic cell of industrial activity and composedof sub-cells (8–10 persons); the idea of the ‘new function of the worker’;a structure for the firm allowing rapid circulation of information; training
considered as an investment; and the idea that techniques should meet theaspirations and expectations of the personnel concerning the content ofwork …
The progress of this organized and round-table discussion on the problems
and the future of the firm came to a halt with the 1984 financial crisis at
Renault and the resignation of the Managing Director. All the same, the ideaof team work, redefined on the basis of experience in the automated work
areas, was beginning to convince those who were reticent about or opposed
to modular work. It had became acceptable as soon as it was conceptually
separated from a fundamental threat to flow-like production in the form ofassembly lines or automated production lines.

3. The homogenization of different forms of team work
and its diffusion beginning in the second half of the 1980s
Several factors played a role in the homogenization of different forms ofteam work and its diffusion. The ambitious labour force reduction goals
adopted by management starting in 1985 were a first factor in favour ofpolyvalence, multi-functionality and team work, in as much as these allowed the elimination of substitute workers, ‘setters’, quality-control staff
and rectification workers, as well as a significant proportion of lower-level
managers.
Integrated automation, when it spread to machining, stamping, welding
and painting, and when it started to be applied in assembly, was a second
factor favouring diffusion. At the same time, homogenization of the various forms of team work that had emerged began. The homogeneous groupof operators, former unskilled workers, taking it in turns to undertake thetasks and functions necessary for integrated production lines, became themodel in the mechanical components factories. It could do this all the moreeasily since it revealed itself appropriate to the type of automation adopted.
The simplification of tool setting, quality control, problem-spotting andrapid repair allowed these tasks to be confided to operators with only a
few months training. In the robotized welding areas, the operating groups
301

formed only of maintenance workers disappeared, to be replaced by groups
similar to those which were favoured in machining. The gap between thelevel of work that had to be done and the competencies of the workers was
too wide. The formula of groups composed of former production workers
with previous diplomas, and who were trained for a year to operate andmaintain equipment, was not sufficient to obviate the need for intervention
by maintenance workers. As for the most developed form, that of the mixed
production-maintenance groups in the robotized welding shops, it cameup against two problems. The first was the manpower reduction, brought
about by the work to make the equipment more reliable that the groups hadthemselves undertaken. The lack of agreement with management to guarantee jobs provoked a growing reticence on the part of group members tocontinue their participation in these activities. At the same time, it became
more difficult to undertake these activities. The pursuit of automation in
the direction of automatic diagnosis for rapid repairs, coupled with theincreasing opaqueness of the machines, made it still more difficult for thegroups themselves to seek out and analyze the primary causes of events.
Moreover, the groups were increasingly composed of operators who wereformerly unskilled workers trained only to operate equipment and repair
minor breakdowns.
The third factor was the adoption of a new industrial relations framework.
Until 1984, Renault management had favoured the CGT trade union, which
had the most members, in its relations with trade unions. With the crisis,
the new management believed that this union constituted an obstacle to theresolution of the company’s problems. It decided to reduce the power andinfluence of the union and to negotiate with other trade unions. Following
a period of tension and conflict related to redundancies and the eliminationof jobs from 1985 to 1987, management simultaneously sought to promotea human resources policy as a strategic choice for the firm. Round-table
management-union groups met at the end of 1988. Their discussions led tonegotiations regarding skills, the management of working time, the organization of work, training, and internal mobility among skilled trades. Several
agreements followed: notably an accord on skills in automated areas, andabove all ‘the agreement for living’ (L’Accord à vivre), which defined thenew principles for contractual relations between the firm and its employees.
‘The agreement for living’ confirmed that Renault wanted to base its successin the competencies of its personnel and the relevance of its organization. A
plan to give production workers new skills was created. The work team wasviewed by the signatories to the various agreements as the framework for,and the means of, simultaneously advancing both the competencies of theworkers and the results of the firm, including in the assembly line areas.
Automation of assembly had progressed further at Renault than at other302automobile producers,9 Japanese especially, but nevertheless assembly remained mostly manual. The personnel managers who had supported modular
work during the 1970s (though without being able to convince others) now
consider that assembly line work is unavoidable for economic reasons, thesuccess of the Japanese serving as proof. But they believe that the assemblyline has undergone profound modifications which have changed its nature.
The modularization of vehicles, the possibility of off-line sub-assembly of
modules, the automation of the most awkward tasks, and the introduction of
more ergonomic work stations have rendered it far more acceptable. Above
all, team work, which adds quality control, management, and maintenancetasks together with a relative autonomy to the long-existing polyvalency ofworkers at Renault, should imply the partial elimination of the awkward,
parcellized, and pure-execution character of work at the assembly line.10
The fourth factor was the adoption of ‘Total Quality’ by management.
From 1987, quality became the core of Renault’s strategy. The Director of
Quality became a member of the firm’s board. The Renault Quality Institutewas established in 1988. Its objective was to provide training in the tools,
techniques, and procedures of ‘Total Quality’. When the R19 model had
been developed, the Director of Quality refused to sanction its launch, on
the grounds that its quality was too low. This refusal came as a shock to thefirm. It signified the need for profound changes in working methods and to
man-agement at all levels. As far as the factories were concerned, the participation of workers in the improvement of quality and of results required
the development of an organizational form allowing them to join in thisprocess and to be given responsibilities, as well as requiring redefinition ofhierarchical relationships and of the roles of foremen. It was at this pointthat better knowledge of the Japanese experience led to an understandingthat the work team was the organizational form that might encourage workers to participate and to take on responsibilities.
So it was that the Elementary Work Units (EWUs) became the unifying
and homogenizing organizational form for the team working on assemblylines or automated production lines which had first appeared in the 1970s,
giving it a precise definition and precise economic and social goals.
Unit Leaders have a hierarchical responsibility and do not work on theline themselves. They are not workers like the others, as in the Swedishgroup or the Japanese team. The unit is relatively large, 20 persons, though
this varies. The Unit Leader therefore spends time on personnel management tasks.11
In the assembly areas, the work of the team involves Taylorized tasks onmoving lines. The way that operations are divided up remains the responsibility of the industrial engineering department, even if the workers are
sometimes consulted; this is different from Japanese teams, which undertake303

their own line balancing activities. Workers are trained to be polyvalent, andare classified as first or second level ‘Production Professionals’ depending
upon their ability to do the various jobs on the line and to take on a few
associated functions. And yet, because of short cycle times, workers are
not able to fulfil these functions, except for the self-regulation which consists of declaring ‘my work is completed satisfactorily’. If workers noticea problem, they call for persons to intervene, whose responsibility it is tomake the problem go away. These are the unit’s Technical Assistants, who
are in charge of quality and tooling problems, of training for polyvalency,
and of relationships with maintenance workers. The Unit Leaders are in
charge of relationships with upstream and downstream production areas,
following formal procedures, though they can start these off themselves. The
units do not have budgetary objectives, nor their own budget. Evaluation ofworkers takes place annually by interview, and as necessary in cases where
too many mistakes are being made. There is financial reward as a functionof performance, which is calculated for the factory as a whole, within theframework of an annual agreement signed by the unions. Providing motivation is the job of the Unit Leader, via the presentation of statistics to the unit
during breaks, and via teams that are formed to resolve urgent problems.
Maintenance remains clearly distinct from production, so much so that it issometimes organized into EWUs itself.
In the machining areas, in cases where machines are automated and workers do not have to load and unload components at each cycle of the machine,
workers can more easily take responsibility for maintenance tasks, thoughthese are generally limited to cleaning, oiling, and to minor repairs when machines have stopped themselves automatically. Their activities correspondbetter to the definition of semi-skilled production workers than do those of
assembly line workers. We still see some attempts to create a new concept,that of the exploitant, a worker who fuses maintenance and production tasks.
But these remain limited, unofficial, and are very strongly resisted.

Conclusion
Team work emerged at Renault as an attempt to reform work, but it was
opposed insofar as it threatened the basic industrial principles of decomposition of work into additive operations and continuous flow of production.
The enrichment of work and the development of a professional career forunskilled workers have nevertheless remained significant themes. As a resultof the type of automation selected, new problems have become apparent:
ensuring continuous functioning, organizing tasks which are heterogeneous and do not occupy people full time, and rapid breakdown repair. Team
work was seen as permitting the introduction of these new norms of work304

into the automated areas, as well as offering an enriched type of work anda career path for workers. The success of some of the organizational forms
adopted, the Japanese experience, the need to mobilize the personnel toimprove results, and the need to form new alliances with the unions led tothe decision to spread team work to all factory areas, whether or not they areautomated. In this process, the definition and the application of team work
have led to the disappearance of the more audacious formulas adopted at
the start of the 1980s, as much regarding the function of the team motivator[animateur] as regarding relations with maintenance.
While for Japanese automobile producers team work was and remains ameans of getting employees to participate in improving productivity, quality and flexibility, rather than a means of responding to disaffection withindustrial work (which is more the case today), at Renault, the theme ofenriching work and offering a career path to workers remains one of theessential factors behind the choice of this form of work organization, evenif other considerations and imperatives have arisen to embed it, redefine it
and justify it for all.
The organizational and social dynamic which the EWUs are capable ofengendering, and which some managers hope for, will nonetheless reach alimit. If it begins to threaten the basic industrial principles of additivity andlinearity, and this ought to be the logical consequence of seeking the primarycauses of the dysfunctionalities of sequential production,12 then it will open
up a difficult debate within the firm, just as happened in the 1970s.
Translation from the French by Sybil H. Mair.

305

Notes1. Michel Freyssenet, 1979, Division du travail et mobilisation quotidienne de la
main-d’oeuvre: les cas Renault et Fiat.CSU, Paris. 133p.
2. Between 1968 and 1977, the length of the working week was reduced from 47
hours 30 minutes to 39 hours 10 minutes for those working shifts and from 48
hours to 40 hours for the other employees.
3. Renault-inter, no. 162, 25 Juin 1973, in Michel Freyssenet, op cit, pp.165–
166.
4. Christophe Midler. 1980. L’organisation du travail et ses déterminants. Enjeuxéconomiques et organisationnels des réformes de restructuration des tâches
dans le montage automobile. Thèse de 3ème cycle. Paris 1, pp.24–26.
5. Michel Freyssenet. 1984. Evolution du contenu et de l’organisation du travaild’usinage. CSU, Paris. 84p.
6. This form of automation was not the only one possible. However, its material
form makes it difficult for workers or work groups to seek the fundamental
causes of events or breakdowns in order to eliminate them, a formula which
would be both financially worthwhile and ‘skilling’ (qualifiant) for the workers.
Michel Freyssenet, 1992, ‘Processus et formes sociales d’automatisation. Le
paradigme sociologique’ Sociologie du Travail no. 4, pp 469–496.
7. Michel Freyssenet. 1984. ‘La requalification des opérateurs et la forme sociale
actuelle d’automatisation’ Sociologie du Travail no. 4, pp.422–433. On welding shops set up later than this period, Christophe Midler, Florence Charue,
1990, ‘Un processus d’apprentissage à la française: la robotisation des tôleries
automobile’ Colloquium: ‘Organization of work and technology: implications
for international competitiveness’, Brussels, 31st May–1st June, 27p.
8. Recourse to maintenance workers to run automated lines would have required
the hiring of workers in this category and an even greater and more rapid reduction in the number of unskilled production workers. The social context of
this factory and the pointed problems of reclassification which that would havecaused made this solution difficult.
9. The level of automation was estimated at 20 percent in 1992.
10. René Tijou, ‘La chaîne de montage: maillon faible de l’industrie de grandesérie?’ Gérer et comprendre. Annales des Mines, October 1991, pp. 79–82.
11. See Emmanuel Couvreur (1993). Comparaison du travail en groupe dans une
usine Renault et dans une usine Volvo. Document Renault. 30p.
12. Michel Freyssenet, 1994, ‘Volvo-Uddevalla, analyseur du fordisme et du toyotisme’, Actes du GERPISA. Paris, March, no. 9.

306

References
Benjamin Coriat (1978), ‘La recomposition de la ligne de montage et son enjeu:
une nouvelle ‘économie’ du contrôle du temps.’, Sociologie du Travail. pp
19–31.
Emmanuel Couvreur (1993), ‘Comparaison du travail en groupe dans une usine
Renault et dans une usine Volvo.’, Document Renault. 30p.
Michel Freyssenet (1979), Division du travail et mobilisation quotidienne de la
main-d’oeuvre: les cas Renault et Fiat. CSU, Paris. 133p.
— (1984), Evolution du contenu et de l’organisation du travail d’usinage. CSU,
Paris. 84p.
— (1984), ‘La requalification des opérateurs et la forme sociale actuelled’automatisation.’, Sociologie du Travail, no. 4, pp.422–33.
— (1992), ‘Processus et formes sociales d’automatisation. Le paradigme sociologique.’, Sociologie du Travail, no. 4, pp 469–96.
— (1994), ‘Volvo-Uddevalla, analyseur du fordisme et du toyotisme.’, Actes du
GERPISA. Paris, March, no. 9, pp 161–183.
Christophe Midler (1980). L’organisation du travail et ses déterminants. Enjeuxéconomiques et organisationnels des réformes de restructuration des tâches
dans le montage automobile. Thèse de 3ème cycle, Paris 1, pp.24–26.
Christophe Midler, Florence Charue (1990), ‘Un processus d’apprentissage à lafrançaise: la robotisation des tôleries automobile’, Colloquium: Organization of work and technology: implications for international competitiveness,
Brussels, 31st May–1st June, 27p.
René Tijou (1991), ‘La chaîne de montage: maillon faible de l’industrie de grandesérie?’, Gérer et comprendre. Annales des Mines, October, pp. 79–82.

307

Fait accompli?
A Machiavellian interpretation of the Renault–Volvo merger
Karel Williams, Colin Haslam and Sukhdev Johal… to maintain a balance between all the different stakeholders has … become one of the major responsibilities of any manager or business leader
in today’s world … (Pehr Gyllenhammar, People at Work, 1977)… to enjoy continued good fortune, it is necessary to change with thetimes … (Niccolo Machiavelli, The Discourses, 1531)

Preface (June 1994)
This essay is different from the others in this volume because it reprints inabridged form a public interest report which was written in late September
1993, when it appeared that the merger of Renault with Volvo’s automotive
interests was a fait accompli. The authors of the report then questioned thelogic of a merger which offered Renault control and subordinated Volvo
automotive in a way which safeguarded the interests of Swedish capitaland threatened Swedish jobs. The report was written as a political intervention and it acted as a catalyst that helped to trigger a chain reaction; in theface of growing opposition from Volvo managers and Swedish investment
funds, the merger plan was abandoned and its architect Per Gyllenhammar
resigned. Since then, events have moved on apace in the company and theindustry. The Volvo management has reversed the Gyllenhammer strategy
of exiting autos and now promises to concentrate on its core auto business;while the BMW takeover of Rover represents the next instalment of predatory restructuring in the European cars business.
The report is nevertheless of more than historical interest because, although its positions are obsolete, its form of analysis remains relevant. The
report’s analysis fused two key elements: classic Machiavellian politicaltheory and modern business analysis of cost recovery and cost reduction
based on financial, market and productive data. The Machiavellian concepts309

of virtu, fortuna and occasione were important because they undermined theorthodox business school assumption that management can master events
through strategy. The distinction between cost recovery and cost reduction was complementary, because the evidence showed that Volvo’s cost
recovery had failed to generate the cash for new model development, justas Renault’s cost reduction had not created a robust company which could
weather cyclical downturn. With or without the merger, further restructuring
was therefore a cruel but necessary process in which the interests of worker
stakeholders would be sacrificed.
Temporary good fortune has postponed the day of reckoning for Swedish
workers. Volvo Car’s profits have staged a cyclical recovery as the sales
success of the 850 loads the Swedish factories and a weak krona boosts the
profitability of export sales. But the fundamentals analysed in this report
have not changed and will reassert themselves when fortune changes. Volvo
remains a small car company whose problems about financing new model
development require more joint venture deals like the one with Mitsubishi
which allows replacement of the 400 series. The Swedish social settlement
makes Sweden an inherently high cost base for car production in a business
which is rapidly going global. When fortune does change, Volvo’s workers
cannot rely a second time on the investment funds and Volvo managers forwhom opposition to the Renault merger was a way of unseating Gyllenhammar. In the lull before the next crisis, Swedish workers should therefore lookto their trade unions and Swedish politicians should look to the European
Union, which is the only institution that can put a floor under destructive
social competition between social settlements.
If this preface summarises our position as of June 1994, the text which follows reprints our original report of September 1993 with only a few changesof tense and some minor cuts which were made to reduce length.

Introduction
Although the merger of Renault and Volvo’s automotive interests was subject to Swedish shareholder approval, when the two companies announced
their plan in September 1993 they effectively presented the merger as a fait
accompli. The French reaction was quietly triumphalist. Gerard Longuet,
the French Minister of Industry claimed the merger was ‘an industrial
event that comes once a decade’ (Guardian, 7 September 1993). Swedish
reaction was more muted. Prime Minister Bildt, like the opposition Social
Democrats, welcomed the merger as a development which would secure thefuture of motor manufacturing in Sweden. A Swedish investment banker
observed that Volvo’s loss of independence was ‘regrettable but inevitable’(Financial Times, 7th September 1994). Outside France and Sweden media
310

commentators struggled to find an interpretation which would make sense of
the merger. All agreed it was a result of the car wars which were making it
increasingly difficult for struggling companies to make profits in an industry
whose excess capacity feeds saturated and cyclical markets.
This report presents a hard interpretation argued within a Machiavellian
framework, where the proposed merger is an opportunity (occasione) for
two firms buffeted by fortune (fortuna) and lacking the ability (virtu) tomaster events in the cars business. It is an opportunity for both parties because their calculations are different: it strengthens Renault’s productionist
commitment to its core business, while for Volvo the merger represents afurther stage in the company’s metamorphosis into a diversified holding
company driven by the imperatives of financial engineering. The irony ofthis development will not be lost in Sweden where Swedish capital once
presented itself as the humane steward of the interests of the worker stakeholder, and Volvo figured as a model for the future of work. Through merger
Swedish capital would privilege its own interests and break its obligations
to the workforce while Volvo becomes a post-industrial firm just like theAnglo American conglomerates.
We argue this case in two sections which separately address the key
questions: why does the merger subordinate Volvo and what would happen
after the merger?

1. What determines the form of the merger?
The first essential feature of the merger plan is that Volvo will be subordinated as the junior partner. Renault will have a 65 per cent stake in the new
combine against Volvo’s 35 per cent. Louis Schweitzer of Renault becomes
chief executive of the combine whose headquarters will be at Boulogne
Billancourt. Volvo has obtained no guarantees on the maintenance or location of development, investment or production of major product lines. The
second essential feature of the merger is that Renault will get the Volvo cars
and trucks business through share exchange without paying any cash forthem. Renault is doing much better than Ford and GM did when earlier inthe cycle in 1989 they bought into Jaguar and Saab. Ford paid £1.56 billion
when it bought out Jaguar’s shareholders. In the Saab deal, the Wallenbergs
held back Scania trucks and offered GM a 50 per cent joint venture but on
condition that GM injected $100 million, assumed responsibility for partof Saab’s debt of SEK 3 billion (£300 million), and provided new product(Financial Times, 16 December 1989).
Why is Volvo subordinated and how is Renault able to buy into Volvo
without paying anything in cash? The answer is that in the period 1990-2,
when the basis for the present merger was being established, Renault was311

relatively strong and Volvo was relatively weak. In March 1993 Renault’sannounced 1992 profits which had doubled to FF 5.7 bill.; in dramatic contrast Volvo AB returned record losses of SEK 4.75 billion (Financial Times,
12 March 1993). Against this background, a Machiavellian logic determined
the outcome because Volvo Group, the car and truck division of Volvo AB,
was a weak company caught in a series of adverse power relations which
delivered it into the hands of Renault.
For the MIT team that wrote The Machine that Changed the World (Womack et al. 1990), Volvo figures as an example of inefficient ‘neo-craft production’. The book promotes the concept of lean production and explicitly
singles out the Uddevalla plant for criticism. Back of envelope arithmetic isused to set up a vague (and irrelevant) hours to build comparison between the
Uddevalla luxury car plant and Toyota Takaoka which produces the Corolla
at 40 times the volume (Womack, 1991, pp. 100-3). Much the same line istaken in Adler and Cole’s (1993) Sloan Review article which makes anotherapples and pears comparison between Udevalla and the American NUMMI
plant, a Toyota/GM joint venture. The condescension of posterity is alreadybeing brought to bear on Volvo’s two experiments in assembly without lines;
in Personnel Management (May 1992), these experiments were dismissed(without evidence) as attempts to control absenteeism and labour turnover‘with little regard to the effect on production, costs and efficiency’.
The ‘humanisation of work’ has gone out of fashion just like modernist
architecture. It is therefore important to make two points about Kalmar andUddevalla. First and generally, assembly plant efficiency and inefficiency
is not very important in the cars business because, as Womack admits,
final assembly accounts on average for just 15% of the labour hours in afinished car. Second and more specifically, Kalmar and Uddevalla are notbeing closed because they are inefficient but because they are branch plants
which are surplus to requirements in a firm which is producing at no morethan two thirds of capacity. They are both low volume plants which havetogether produced less than 40,000 cars in recent years; the famous plantat Kalmar employs just 800 workers. Like any other retreating company,
Volvo is closing branch plants so as to load the throughput down the lines
of its central plant at Torslanda’ where less than 75,000 cars were made in
1992 when it operated at less than half-capacity.
Against this background it is important to insist that Volvo is, in efficiency
terms, an average firm whose record is no better and no worse than thatof other European producers of specialist and luxury motor cars. All thesefirms through the 1980s pursued the same basic strategy of cost recovery(rather than cost reduction); the aim was to maintain or reposition theirproducts in the upper middle market segments so that existing costs could berecovered. As a comparison with BMW shows (Tables 1 and 2), none of the312European players in this game managed high levels or sustained increases
in productivity. BMW is the obvious point of reference, as the most closelycomparable European specialist producer which is also widely believed toperform better than other specialists.
Table 1: Volvo car productivity
Year

OutputEmployees

Cars peremployeeSpanadjusted cpe

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992

289,700
317,000
365,000
387,000
392,700
419,500
418,600
400,900
405,600
359,600
309,300
303,800

25,40027,95028,70031,00032,25032,85034,05034,10034,75033,55030,40028,453

11.41
11.34
12.72
12.48
12.18
12.77
12.29
11.76
11.67
10.72
10.17
10.68

2.9
3.4
4.4
4.6
4.4
4.5
3.9
3.4
2.9
2.8
2.7
2.2

Source: Volvo, Annual Report and Accounts, various years
Note: Process span adjustment is obtained by deflating cars per employee
using the value added/sales ratio as a proxy for process span.
Using the simple and intelligible cars per employee measure, Volvo’s 10–13
cars per employee is better than that of BMW in every year since 1981.
Even after adjusting for differences in the amount of each car built in-houseby the two companies, Volvo performs better in seven of the eleven years
between 1981 and 1991 and is more or less equal in three more; BMW only
pulls ahead in years like 1981 and 1992 when Volvo’s output is cyclicallydepressed. In retrospect Volvo car management made a major mistake inhiring 8,500 extra workers in the upswing between 1981 and 1987, and as
a result never managed better than 12.77 cars per employee at the peak in
1986. But the broader record of Volvo Group does not suggest that this is anorganisation which is unable to manage auto factories: the trucks division
managed a 50 per cent increase in labour productivity over the 1980s.
Volvo’s misfortune was not productive incompetence, but limited spacein the mid- market niches where Volvo traditionally sold its product, andwhere its sales are now increasingly blocked by better resourced German
and Japanese competitors. These larger competitors can improve their313

Table 2: BMW car productivity
Year

OutputEmployees

Cars peremployeeSpanadjusted cpe

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991

351,545
378,769
420,994431,995
445,223
446,438
461,340
484,120
511,476
519,660
553,230

39,77740,73843,16944,692
46,81450,71954,861
56,981
57,08759,544
61,617

8.8
9.3
9.8
9.7
9.4
8.8
8.4
8.5
8.9
8.6
9.1

3.4
3.5
3.6
3.5
3.2
3.1
2.8
2.7
2.8
2.8
2.6

Source: BMW, Report and Accounts, various years
Note: Process span adjustment is obtained by deflating the cars per employee by the value added to sales ratio as a proxy for process span.
product ranges faster than Volvo which had to persevere with out-moded
products like the old 300 and 200 series. In the late 1970s Volvo’s Germancompetitors consolidated their dominant position in the only two national
markets, Germany and the USA, which are large and affluent enough to support volume sales of luxury cars. Between 1974 and 1988 German luxury
car output increased by 20 per cent and real sales turnover by 114 per cent(Auer, 1990) as VW moved its product up market while Benz and BMW
found volume in the middle of the market. By the late 1980s, Volvo likeall the non-German European specialists was caught between a rock and ahard place in the US market, as the Japanese moved up market with luxury
ranges like Lexus and Infiniti which sold on price against the dominantGerman product. The Japanese effectively blocked any attempt to sell the
400 in the United States and will make it increasingly difficult to charge
premium prices for large Volvos.
In Volvo’s case the general problems about market space were compounded by a narrow market spread. Volvo’s volume sales are concentrated
in just three national markets (Table 3). Again the contrast with BMW isinstructive because BMW builds strength with a strong specialist position
in its large home market and a two per cent plus share of every other European car market. Volvo has only a small home market, whilst the UK and
USA were the only export markets where the company succeeded in selling
more than 50,000 cars a year at the height of the 1980s boom. Together with
Sweden these markets accounted for 50-60 per cent of sales in the 1980s.
314

The company has lost market share in each of them; the fall in the UnitedStates is particularly threatening since around one quarter of Volvo cars
output was sold there in the 1980s.
Table 3: Volvo car registrations (1000’s units) by market
Year

SwedenUSA

UK

France Germany

Italy

Other

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991

49.9
57.3
62.1
62.4
71.2
64.5
72.4
74.6
66.6
47.6
37.8

67.5
69.7
91.8
93.4
109.8
114.3
101.8
94.9
97.8
93.0
65.3

44.5
51.3
60.9
59.5
60.5
69.6
70.5
79.8
82.8
66.3
46.1

9.2
10.3
14.1
15.8
17.7
19.1
18.9
17.7
15.9
11.5
8.1

15.6
15.1
21.1
21.1
17.5
16.4
15.8
15.3
14.2
23.5
21.1

89.1
100.4
100.4
120.4
101.8
121.3
121.7
101.8
111.3
99.3
110.2

13.9
12.9
14.6
14.4
14.3
14.3
17.5
16.8
17.0
18.4
20.6

Source: Volvo, Report and Accounts, various years
If Volvo’s market spread was too narrow, its model range was too broadfor the strategy of cost recovery. Volvo is a relatively small car company
making just 420,000 cars at the cyclical peak in 1986 and only 304,000 in
1992. Such companies have characteristic problems about cost recovery,
because they have to recover the expense of developing the next generationof models over relatively short production runs and therefore need to generate a large amount of cash per vehicle sold. In Volvo’s case, this problem isaggravated by the way in which Volvo’s output is spread over the medium,large and luxury classes: the 1992 output of 304,000 consisted of three entirely different models, the 400, 850 and 900, which effectively do not sharemajor mechanicals. The contrast with BMW is particularly telling: BMWis basically a two model firm where the 3 and 5 share major mechanicals,
and the volume selling 3 alone generates sales of 300,000 each year. The
typical Volvo model sells closer to 100,000, insufficient to generate enoughfree cash from each car sold to cover the cost of replacement every seven oreight years. Volvo Cars’s most recently developed model is the 850 which,including an all new power train factory, cost SEK 16.5 billion (Financial
Times, 23 May 1991). Even if the 850’s successors could be developed morecheaply, the basic point remains: the arithmetic of cost recovery does not
add up for Volvo.

315

Table 4: Volvo car value added, labour share and cash flow
Year

Sales
revenue
SEK
millionNet
incomeas % of
sales

Value
added
SEK
million.

Labourcosts
SEK
millionLabour
as % of
value
added

Cash
flow
per carSEK

1981
13,569
1.5
3,532
2,519
71.3
2,280
1982
18,109
2.4
5,490
3,371
61.4
6,684
1983
26,262
4.8
9,210
3,960
43.0
14,383
1984
30,304
6.6
11,1194,831
43.5
16,232
1985
33,956
7.1
12,3895,476
44.2
17,604
1986
35,956
6.6
12,6495,844
46.2
16,224
1987
38,523
4.7
12,093
6,376
52.7
13,664
1988
39,462
3.7
11,542
6,695
58.0
12,092
1989
42,9442.1
10,856
7,452
68.6
8,396
1990
39,433
(1.0)
9,595
8,713
90.8
2,455
1991
36,079
(2.2)
8,104
8,442
104.2
(1,092)
1992
44,598
(2.2)
7,517
7,906
105.2
(1,280)Source: Volvo, Annual Report and Accounts
Notes:(1) Labour cost and depreciation figures are imputed on the basis of the
car operation’s share of employment and capital investment in Volvo
Group (ie Volvo’s automotive division).
(2) Value added is obtained additively as the sum of labour costs anddepreciation and net income.
(3) Cash flow is calculated by adding net income and depreciation.
The precarious fundamentals of the Volvo cars business were disguisedfor much of the 1980s because, like any weak car company, Volvo looked
good on the cyclical upswing. Like Jaguar and Saab, Volvo made money
as long as the American market boomed and the dollar exchange rate wasfavourable; in the boom years of 1983-6 Volvo got SEK 7-8.5 to the dollar
on its American sales compared with 5-6 in most other years (International
Financial Statistics Year Book, 1992). On the downswing, fundamentals
reasserted themselves and financial results became quite dire. The imputed
values given in table 4 are, in our view, accurate enough to illuminate thetransition from feast to famine.
From 1983 to 1987, Volvo car managed a return on sales of 5-7 per cent.
Labour’s share of value added was in the range of 45-55 per cent and, if
we define cash flow as sales minus labour costs, the company gushed cash;
in a good year like 1985, the company had a cash flow per unit of SEK
17,600 ($ 2,060). In this exceptional period model replacement was not a316

problem; the cash of the boom years covered the development expense of the
400 and 850 models. But as boom turned to slump the cars business madelosses. Labour’s share of value added always increases in car companies
as sales fall, and in weak Volvo the increase was disastrous: in 1991 and1992 labour costs accounted for more than 100 per cent of the value addedfund, leaving nothing over for depreciation, or any form of new investment
in plant, tooling and development. Shedding labour, market recovery andimproved exchange rates could probably restore labour’s share to the normal
manufacturing level of 70 per cent, but that would be insufficient. This kindof normal share in years like 1981 or 1989 had yielded a cash flow of SEK
3-8,000 which was inadequate to cover replacement expenditure. To coverdevelopment costs Volvo Car needed a labour share closer to 50 per centand that was out of reach.
Volvo Car’s operating position could be righted but, given its inability
to generate the cash for model replacement, the business was not self
supporting; it needed a cash cross subsidy from elsewhere. But corporate
reorganisation at the end of the 1980s had changed the relation between
Volvo Group, of which cars was a part, and Volvo AB, the quoted parent
company in which the public holds shares. By 1990, with divestment andcorporate reorganisation, less than 15 per cent of Volvo Group’s sales revenue was in non-auto activity: Volvo Group was effectively reduced to an
automotive rump of cars and commercial vehicles which were affected by
the same downturn as cars, so any cash cross-subsidy for cars would haveto come from Volvo AB. After 1989, Volvo AB effectively functioned as afinancial holding company with majority and minority stakes in a diverse
range of businesses including oil, property, foodstuffs and pharmaceuticals
as well as autos; 86 per cent of Volvo AB’s total assets currently consist ofinvestments in shares. Volvo AB did not have a strong cash flow because
it was simply a financial intermediary: all or more of the cash received as
dividends from the subsidiaries and associates of Volvo AB was paid out as
dividends to the shareholders of Volvo AB.
Whether by accident or design, Volvo’s corporate structure made crosssubsidy very difficult and that left Volvo with the one option of selling abusiness which was not self-supporting. It was, from the beginning, a distresssale and Renault took full advantage of this fact. Thus the original shareexchange of 1991 was not simply a paper for paper exchange but involved alarge balancing cash adjustment payment from Volvo to Renault. According
to the 1991 Volvo accounts (p. 41) the cash payment from Volvo to Renault
was FF 5,887 million; thus Renault got an ‘engagement present’ of roughly£500 million in cash, a sum which would go a long way to covering the
replacement cost of any model in the Volvo or Renault range. When thefull merger was announced in September 1993, Renault got its dowry not317

in cash but in the form of the balance of the Volvo heavy trucks business.
This was a potentially stand alone business which was really worth having
because it had a strong market position and a new heavy truck product line,
whose development cost had been paid for so that it was not necessary tothink about replacement investment for another decade.
If this seemed over-generous to Renault, the fact was that Volvo AB, as a
distress seller, had no bargaining position because it could not walk awayfrom the only buyer. At the same time Volvo hoped to win a risky longer
term financial game, which will be analyzed more fully in the second sectionof this report. Through merger Volvo AB would swap a majority stake in its
car and truck businesses for a minority stake in Renault Volvo. In financial
terms, this would get Volvo off the hook of sole responsibility for its cash
hungry auto business and leave it with a claim on anything which Renault
might distribute to its shareholders. From a financial engineering point ofview, there was also the prospect that, after privatisation, the Renault paper
would be tradeable and Volvo AB would in this case have a variety of exit
options.
Table 5, Sales price per unit (in FF) for various car companies
Year

Renault

VW

Ford (UK)

BMW

1990
1991

53,47853,28391,58179,30790,708
95,105

146,985
143,507

Source: Renault, Company Report and Accounts (cars division)
Renault’s emergence first as Volvo’s ally, and then as senior partner inthe merged combine, surprised many social scientists who tend to confuse
the companies with their products. Renault’s cheap and cheerful small cars
may lack the quality of the solid and dependable Volvo product but as acompany Renault is much stronger. Of course, Renault’s concentration on
small cheap motor cars raised problems. For example, Renault’s sales priceper unit is no more than two thirds of that realised by VW or Ford (UK)and not much better than one third of BMW’s selling price To this extent,
like other South European producers of small cars, Renault was trapped
downmarket. To combat this Renault embarked on a strategy of cost reduction, taking out assembly labour hours and costs and pressing its suppliers
to do the same.
Renault’s renaissance of the early 1990s owes everything to the aggression and intelligence with which it pursued these objectives. Renault claims
a 50 per cent improvement in labour productivity between 1985 and 1991
(Financial Times, 6 October 1991) and this claim is corroborated by table
6 which shows how Renault built the same number of cars with an everdecreasing workforce.
318

Table 6, Renault cars division vehicles per employee
Year

Cars

Employees

Cars per employee

1987
1988
1989
1990
1991

1,831,400
1,850,700
1,966,700
1,766,700
1,790,700

136,646
131,964
129,699
114,516
106,223

13.4
14.0
15.2
15.5
16.8

Source: Renault, Annual Report and Accounts, various years
The best efforts of car firms to reduce hours are regularly frustrated bymarket difficulties and cyclical declines in sales. Renault postponed thisproblem because the aggression it put into hours reduction was matched by
the intelligence of its marketing effort, which ensured that its factories weresteadily loaded with throughput. Besides being market leader in France witha steady 30 per cent share of a 2 million per year home market, Renault currently holds more than 5 per cent of every other European national market,
including the UK. A significant indicator was its 5.4 per cent share of theGerman market in 1991 which made it that country’s leading importer.
Nonetheless all this effort had disappointing financial results. The causes
and consequences of Renault’s poor financial performance will be analysedin section two; for the moment, all we need observe is that net income asa per cent of sales reached the respectable level of 5 per cent for only two
years in 1988 and 1989 before collapsing to 0.7 per cent in 1990 and thenrebounding to 3.2 per cent in 1992. But, after 1986, Renault did succeed in
putting six consecutive years of losses behind it, including the record 1984
loss of FF 12.6 bill. Renault’s managers were therefore free to consider thepurchase of another car company provided the owners of that company did
not want cash.
Table 7, Renault European sales and market share
Year
1987
1988
1989
1990
1991

EC total market French market
1000s units
share %
2,475
2,594
2,668
2,703
2,377

32.2
30.9
31.1
29.9
29.1

German market
share %

EC market
share %

3.1
2.9
3.5
3.5
3.5

11.5
11.1
11.3
10.8
10.7

Source: Renault, Annual Report and Accounts, various years.

319

The arguments for buying Volvo were productionist. The European volume
cars business was, by general consent, ripe for rationalisation. None of thevolume manufacturers could avoid losses in the cyclical downturns and the
problem of excess capacity would be aggravated by increasing Japanese
imports and transplant production. The European volume car business was
also highly fragmented with twelve companies competing against eachother. Against this background, any increase in size which did not weaken
Renault financially was likely to improve Renault’s chances of survival.
Furthermore, the Volvo brand name was recognised worldwide and had
a unique reputation for safety and durability. Business school academics
may debate the value of brands but they remain important in cars because
consumers around the world are reluctant to buy large expensive cars whichcarry the badges of mass market car companies; Renault’s recently launchedlarge car, the Safrane, is currently failing in the market place despite being
advertised across Europe. This is the reality which Volkswagen recognises
by developing the Audi brand and which the Japanese recognise by selling
their luxury cars badged as Lexus, Infiniti and Accura.
It was initially hard to see how cash hungry Volvo Car could do anything
but drain Renault’s financial resources. But, discussions about a common
large car platform (codename P4) and shared mechanicals showed that, on
this basis, Volvo’s requirement for development expenditure could be moreor less halved and that Renault needed to spend little more than it would
have had to do as an unsuccessful maker of large mass market cars. As longas Volvo car stood alone, its owners would need an impossibly low 50 per
cent labour share of value added to cover replacement, but Renault could
make a go of the same business on a shared development basis with a labour
share of 70 per cent. There was a downside financial risk because the market
for cars was saturated and unpredictably cyclical. But there was no risk ofFrench loss of control through hostile takeover since Renault was currently
nationalised and, even after privatisation, the French government intended
to take a ‘golden share’ which would protect Renault management.

2. Where would Renault and Volvo go from here?
If the form of the merger had been determined by Volvo’s relative weakness
and Renault’s apparent strength, by the time the merger was announced in
September 1993 the relative position of the two companies had changed.
In the previous month Volvo and Renault had announced their provisional
results for the first half of 1993. Volvo ‘confounded market expectations’when, instead of anticipated losses of SEK 500 million, Volvo AB reported
a return to operating profit and an overall surplus of SEK 166 million ($20.5
million) (Financial Times, 27 August 1993). Renault announced an 87 per320

cent year on year drop in pre-tax profits to FF 730 million ($123.93 million)(Financial Times, 27 August 1993).
Volvo’s return to profit did not reflect any change in the productive fundamentals of its auto business: the 13,000 or 19 per cent reduction in theworkforce since 1990 had been matched by a 15 per cent fall in sales. The
miraculous recovery owed more to good luck and creative accounting. Volvo
Group was benefiting from a temporary pause in replacement expenditure
because the company had just completed development of a new heavy
truck. A 25 per cent currency devaluation also brought a windfall gain ofsome SEK 200 million (Financial Times, 27 August 1993). And the decision to capitalise tooling costs brought a gain of SEK 400 million (Ibid.).
As for Renault, that had suffered a real profits collapse which exposed its
weakness; whatever the French managers had done, they had not created arobust company which was capable of withstanding the inevitable cyclical
downturns. The underlying reason is relatively straightforward: Renault
had taken labour hours out of its product over the 1980s but so had all its
European competitors in the small cars business (Table 8).
The German industry represents the strategy of cost recovery and nevermanages much above a 10 per cent improvement on 1981 productivity
levels. German success in the middle and top end of the market forces all
the other producers into making smaller cheaper cars and these companies
have no option but cost reduction through taking labour hours out. Unlike
Germany (and Sweden), the other European countries all manage substantial productivity gains, at least in the upswing. The French industry pulled
the hours reduction trick but the Italian and Spanish industries, which also
specialise in small cars, did even better. From Renault’s point of view as
the major player in the French industry, and a minor player in the Spanish
industry, the problem was that it had worked miracles but had not obtained
any competitive advantage.
Table 8, Motor vehicles per employee (percent change on 1981)
Year

Germany

Spain

France

Italy

UK

1981
1982
1983
1984
1985
1986
1987
1988
1989

0.00
4.86
5.88
1.62
8.71
9.52
8.89
9.25
12.76

0.00
23.49
25.81
28.13
35.38
40.71
44.67
49.69
52.35

0.00
7.90
13.07
8.92
13.54
23.51
32.15
37.08
41.82

0.00
5.00
19.26
25.38
29.56
42.27
44.88
49.14
50.55

0.00
10.16
25.37
18.04
32.14
32.71
40.11
44.47
46.99

Source: Eurostat

321Because Renault had no competitive advantage, its financial results werealways mediocre. This point emerges very clearly from any analysis of thefinancial ratios in the (non consolidated) accounts of Regie Nationale which
is Renault’s core operating business; the Regie accounts for nearly 70 per
cent of total Renault sales and car sales account for around 75 per cent of
the Regie’s turnover.
Table 9 covers the period when the financial benefits of productivity
reduction should have been coming through. But, as a seller of small cheapcars, even in the two best years, 1988 and 1989, Renault did no better thanrealise FF 5,200 (about £500) per vehicle sold; in its heyday in the mid
1980s Volvo could realise three times as much. ‘Small car, small profit’ was
an industry adage of the 1960s; twenty years later Renault’s cash recovery
still depended on its ability to shift large numbers of small cars. Worse still,
Renault was conceding nominal wage increases in the late 1980s so that thefinancial benefits of head count reduction were very modest. Thus, only in
two years, 1988 and 1989, did Renault succeed in getting labour’s share ofvalue added below 70 per cent; the very modest fall in the Regie’s output
after 1989 bounced the labour share back up above 70 per cent. This kindof variation suggests, and 1993 confirms, that a further output reduction ofaround 10–15 per cent would create real problems. In the mature cyclicalcar markets of Western Europe, peak to trough demand falls of 20 percent
plus are the norm: thus Renault had not created a robust firm because it
never achieved the financial ratios which would allow the firm to ride out
an average European downturn.
Table 9: Regie Renault value added, labour’s share and cash flow
Year

1987
1988
1989
1990
1991

IncomeEmploy- Value
pre tax and ment costs added
deprctn
FF million
3,620
8,201
10,166
4,745
5,768

14,165
13,85014,287
14,331
14,527

17,78522,051
24,453
19,076
20,295

Labourshare
of VA

Units Cashflow
1000s
per unit
vehicles
FF

79.65
62.81
58.43
75.13
71.58

1,831
1,851
1,967
1,777
1,791

1,977
4,431
5,169
2,671
3,221

Source: Renault, Report and Accounts, various years
Notes:(1) Value added is obtained additively by by summimg labour costs anddepreciation and net income.
(2) Cash flow is calculated by adding net income and depreciation.
(3) Labour costs include wages and salaries.
322

By autumn 1993 Renault was in the middle of an average downturn; in thefirst eight months of 1993 the EC car market was 13 per cent down on theprevious year. Renault’s output in the first six months of 1993 was 19 percent down on the comparable period in 1992; we estimate that if this sales
loss is sustained, labour’s share of value added will rise to 90 per cent in
the Renault group and cash flow will be halved. Although Renault, hovering around break even in the first half of 1993, was performing better thanloss making competitors like VW, Ford of Europe or Fiat, the newly elected
centre right French government has scheduled Renault for early privatisation
which requires a track record of profits rather than the avoidance of loss.
Renault is the most political of European car companies and knows it must
please its new political masters by finding profit and, inter alia’ the quest
for profit means turning the newly acquired brand into a winning business.
The company that plans to take over Volvo auto is not a strong company
but a desperate company.
At the press conference which launched the merger, it was claimed that the
combined automotive operations could make savings of FF 30 billion (£3.4
billion) before the year 2000 as a result of rationalisation and integration of
overlapping activities. No doubt this figure was plucked from the air but it
did express a truth because across large areas of their activity the merged
companies have duplicate development teams, product lines, assembly
facilities and supplier networks. By substituting one for two of everything,large savings could be made within seven years or so which is roughly
equal to one product life cycle. The crucial question is whose development
teams, product lines, assembly factories and supplier networks would bear
the brunt of the adjustment.
Table 10: Hourly labour costs in Sweden and France (in SEK)
Year

FranceSweden

1980
1983
1986
1989
1991

45.8
69.7
74.6
83.9
96.5

66.6
83.6
113.7
143.7
169.4

Source: VDA
Volvo’s Swedish workers and the 10,000 employed by Volvo’s Swedish
suppliers have reason to be fearful because the Swedish social settlement
makes Sweden an unattractive high cost location for auto production. Swedish workers in Volvo and its supplier factories receive high wages and work
short hours. Table 10 presents basic data on motor industry employment323

costs per hour in France and Sweden taken from the standard German VDA
source. French hourly employment costs are broadly comparable with those
paid in Italy or Britain but Swedish employment costs, in recent years, havebeen about 45 per cent higher.
If the Swedish social settlement imposes a large mark up for social welfare
benefits, the burden of social charges is increased by the very short hours
which are typically worked in the Swedish auto industry. Short hours mean
more workers and more per capita social charges to deliver a given quantumof assembly or supplier factory labour. This problem arises one not because
the standard working week is very short in Sweden but because the social
welfare system offers an assortment of leave arrangements for responsibilities such as parenting which are less provided for in other advanced capitalist countries. According to Riegler and Auer (1991, p. 234) Swedish blue
collar workers in car and engine production actually worked an average ofless than 1450 hours per year in the period from 1981 to 1986. Renault’s
workers in France and Spain are on a standard year of around 1800 hours
and most of those hours are actually worked.
The sale of Volvo’s automotive interests would thus presage a post modern
attack on the Swedish social settlement. As a trans-national, Renault Volvo
automotive would not need to demand wage cuts, provoke strikes and toughit out with the Swedish workforce; the combine could simply transfer its
supply contracts and assembly work to other advanced countries with lessgenerous social settlements, while Swedish workers go quietly into the dolequeue which already includes 13 per cent of the workforce. One informed
estimate by Kurt Syren of Gothenberg University predicts 10,000 job losses
at Volvo and supplier factories within three years (Guardian, 7 September
1993). Those who think this is alarmist should remember that since Jaguar
was taken over by Ford employment has been more or less halved from11,700 at the end of 1990 to 6,500 at the end of 1992 (Financial Times, 28
September 1993).
If the merger goes through, the job losses will not be a problem for
Volvo AB’s managers who will have passed the auto business on so that it
becomes Renault’s operating responsibility. At Volvo AB they will face the
new and different problems of running a diversified investment trust; thesale of Volvo’s automotive interests to Renault in return for a paper claimon the earnings of the combine would complete Volvo’s transformation intoa rentier holding company.
The sale of the Volvo auto business is a financial exercise in protecting
the interests of Swedish capital. Volvo AB managers who planned the sale
are imitating Lord Hanson and Jimmy Goldsmith, whose alchemy turns
illiquid and low yielding capital assets into cash for reinvestment in assets offering higher yields or capital gains. The merger would successfully
324

complete the first phase of this transformation. Before Renault came along
Volvo had large amounts of capital tied up in auto factory assets that nobody
wanted to buy for cash; worse still, the auto business offered no prospectof decent returns and was cash hungry. If the merger is completed, Volvo
will have turned its assets into paper which gives it a shareholder’s claim
on Renault’s earnings when Renault makes a profit without any downsiderisk because Volvo has no responsibility for Renault’s operating losses orcash requirement. The Renault paper which Volvo AB then holds may notof course offer a decent rate of return but, when or if Renault is privatised,
the paper becomes tradeable. That opens up the prospect of a second phaseof transformation whereby Volvo gets back to cash by selling its paper. On
28 September company sources confirmed that, after the merger, Volvo AB
would be free to sell all its holdings in Renault subject only to the condition
that it did not sell the stake to a competitor of Renault.
Such a sale is made likely because Volvo AB’s financial portfolio includes
too many low yielding problem investments. By 1994 its main interests will
include its 35 per cent stake in Renault Volvo; 25–35 per cent of Pharmacia,
the pharmaceuticals business of Procordia; a 100 per cent share of Branded
Consumer Products, the consumer goods business of Pharmacia; and a rag
bag of investments mainly in property and oil. The cash cows are Pharmacia
and BCP both of which have a starry return on sales of 10 per cent. The
problem investments include everything else because Renault Volvo will
never generate half that return on sales and Volvo’s non-auto investments
have generally performed badly. Volvo’s oil trading and investment subsidiary Beijerinvest, for example, cost it money for most of the 1980s andBeijerinvest was in many ways the symbol of a decade long unsuccessful
diversification strategy. The low yielding investments must now be replacedwith higher yielding investments or, like any other unsuccessful investment
trust, Volvo will trade at a discount to its net asset value and open itself totakeover and break up.
Renault and Volvo are both in their different ways changing with thetimes in the hope of enjoying continued good fortune. In both cases the
new directions represent the triumph of 1990s hope over 1980s experience.
Renault is the desperate productionist which must cut labour costs to rightits financial ratios; it can only become robustly profitable in the 1990s if it
succeeds in opening up an advantage over its competitors which eluded itin the 1980s. Volvo is the would be financial engineer which must pursue
shareholder value more successfully than it did in the 1980s. At the end of
the day the most likely outcome is that (more) workers will be unemployed
and shareholders will be the poorer. ‘Sauve qui peut’ is the law of late capitalism as the privileged social settlement of a country like Sweden collapses
under the burden of accumulating stresses which undermine responsible
325management’s ability to balance the interests of the different stakeholders
in the enterprise. Swedes may still believe their national form of capitalism
is different but the merger plan tells a different story about the pressures
which encourage mutation towards the Anglo-American form of dealing
and financial engineering in the interests of capital.

References
Adler P. S. and Cole R. E, (1993), ‘Designed for learning: a tale of two auto
plants’, Sloan Management Review, Spring, pp. 85–94.
Auer P. (ed.) (1990), ‘Workforce adjustment patterns in four countries’, WZB
Discussion Papers on Labour Market and Employment, Berlin.
BMW, Report and Accounts, various years, Munich.
Financial Times, London, various issues
Guardian, London, various issues.
Gyllenhammar, P. (1977), People at Work, Addison Wesley, New York.
International Financial Statistics Yearbook, various years, International Monetary
Fund, New York
Machiavelli, N. (1531), The Discourses, repubed. Penguin Classics, London.
Renault, Report and Accounts, various years, Paris
Riegler, C. and Auer, P. (1991), ‘Workforce adjustment and labour market policy:
Sweden’, WZB report no. FSI 91–4, Berlin.
Womack, J. Jones, D. and Roos, D. (1990), The Machine that Changed the World,
Rawson Associates, New York.
Volvo, Report and Accounts, various years, Stockholm.

326

Part IV

Beyond lean productionJapanese work policy:
Opportunity, challenge or threat?
Norbert Altmann

While the Massachusetts Institute of Technology (MIT) study of the automotive industry (Womack et al., 1990) had the effect of stimulating discussions of Japanese work policy, it also deprived these debates of a numberof important aspects. The tenets of ‘lean production’ continued to generate
equally lean debates while the picture provided by the ‘5 million dollar– 5 year study’ (as proclaimed on the book cover) succeeded in replacing
Japanese reality. In view of the fierce competitive environment within thetriad, the discussions on technology design, the organization of work andmanpower utilization revolved almost exclusively around productivity issues (‘half of everything’). The key issues discussed and pursued in Europe,
namely the humane design of work and its productivity effects, as well as
the democratic participation of employees in decision-making, were marginalized in this process. Even worse, however, was the fact that Japanesehuman resource management was not actually investigated, it was simply
assumed to be superior to its Western counterparts. The consequences oflean production for employees and the resulting problems arising for the
economy and society as a whole, as well as their repercussions on the individual enterprises and their manufacturing practices, were only discussed
to a very limited extent. The following section of my paper will be dealing
with precisely these issues. In doing so, some detail is sacrificed in favourof outlining structures.1

1. The unavoidable point of departure:
the lean production discussion
In Germany, as in many other countries, the summary of the MIT study
rapidly achieved the status of a cult book in management, as well as, union
circles. As the current debates on Japanese work policy are beset with a329

number of serious problems arising from the interpretation of the MIT study,
it is necessary to address this issue. A few examples should suffice:
1.

2.

3.

4.

5.

6.

The summary of the MIT study has been discussed as if it were an
accurate depiction of Japanese work policy although this only applies
to a very limited extent. The truth is that management perceptions aretreated as reality.
The MIT study deals with the concrete characteristics of work organization in a circumscribed way, instead of presenting a comprehensive
picture by considering the production process within the context of theeconomy as a whole.
There can be no doubt of the need to deal with productivity issues, which
undeniably play a pivotal role in problems relating to the economy andindustrial policies. The MIT study, however, turns a blind eye to theother side of the coin, namely the consequences for employees and theeffect this has, in turn, on productivity.
The study also gives no consideration to the distinct forms of hierarchical and functional divisions of labour in Japan. This results in a false
assessment of the actual forms of organization and respective measuresprevailing in Japan (keyword: ‘integration of work’).
Accordingly, in the ongoing debates of lean production, the Japanesetransplants are regarded as proof that Japanese management systems canbe successfully transferred, although the American and English transplants tend to document the very opposite. In fact, Japanese management
systems presuppose general political, economic and social conditions
that do not (as yet) exist in Germany or Sweden (such as the virtual
absence of unions). They also engender consequences which meet withlimited acceptance from an employee standpoint, and are therefore usually introduced only under specific labour market conditions (Berggren,
1991, p. 42 or Garrahan and Stewart, 1992).
In the end, problems affecting employees, companies and societies whicharise in conjunction with Japanese production modes (whether lean ornot), such as the problems of just-in-time logistics, on-the-job-training,etc., should be viewed in their entirety. In Japan, lean production has notbeen and still is not a topic of debate, rather it is the ‘crisis of Japanesemanagement’ that is discussed. One might infer that Sony’s ‘boss’ Akio
Morita was merely concerned with allaying trade conflicts when he remarked that Japanese enterprises ‘do not pay their employees adequately
for working hours that are too long’. However, there must be something
more to it when he added that Japanese enterprises ‘accept frugal profit
margins and appease their shareholders with meager dividends’. These
comments have given rise to much debate among Japanese employers(Satori, 1992; Takeuchi, 1992; Morita, 1992, p. 8).
330

All in all, it would be wise to submit the empirical foundation and theargumentation structure of the concept oft ‘lean production’ to a criticalassessment. There is one basic assumption made by the MIT study that theauthor of this paper ascribes to, namely that a totally culturist interpretation
cannot adequately deal with the question of transferring ‘lean production’concepts to other countries. While cultural, national and social traditions
may have varying effects on the design of work and work behavior, one
thing is for certain: the basic features of a respective production mode aretransferrable, provided that decisive functionally equivalent conditions are
given and the ensuing consequences are accepted (or have to be accepted).
Yet it appears that posing the problem in terms of a ‘question of transferral’is fundamentally wrong. The question should be whether worldwide converging rationalization strategies (as operational dimensions of productivity gains) are directed at similar or identical strategic goals. Also whether
given the same strategic goals, but different social conditions and norms.
other functionally equivalent ways of achieving these goals could be foundwithout having to elevate a very specific management concept beset withproblematic consequences to an ideology. This also raises the question of
the transferability of ‘Volvoism’ or other forms of productive work organization (Sandberg, 1993).2

2. The social division of labour: the basis of work policy3
2.1 Work policy with a segmented workforce
The (various forms of) Japanese production are based on a distinctive division of labour within society. This is manifested as a ‘segmented labour
market’ which is a key precondition of work and personnel policies inJapan. Segmented means that there are considerable differences between
employees with regard to their employment and social statuses and that theirworking conditions also vary to a great extent in all possible dimensions (foran overview see: Tokunaga, 1984; Ernst, 1986; Ernst, 1992).
In the industrial sector the core workers, the so-called ‘regular’ workers,
account for a maximum of 20 to 25 percent of all employees. These workers are recruited by the large scale and ‘large medium size,’ enterprises
immediately after leaving school. (In addition there are also those smaller
medium size companies who succeed in commanding a secure market
position within the supply chain; in most cases as specialized firms). The
core workers are the only workers who, in the long run, are able to rely on
enjoying secure jobs, training opportunities, possibilities for promotion andrising income. This group consists almost exclusively of male employees(Tokunaga, 1984, p. 34).
The marginal workers consist mostly of female workers. This is generally
331the case in mass production, although the automotive industry is an exception as very few women are employed on assembly lines, in contrast to
supplier firms and subcontractors to the automotive industry. The group of
marginal workers also comprises those female workers who were originally
hired by large enterprises as ‘regular’ workers. This was under the implicit
assumption that they would retire after marriage or the birth of their firstchild (with superiors exerting ‘gentle’ pressure in some cases), and who
reenter the labour market years later as part-time or temporary workers.
Apart from these groups, the marginal or ‘peripheral’ work force also consists of those workers (male and female) in small subcontractor firms who
sometimes work directly in the production plant of the large (automotive),enterprises and under their instructions (while remaining employees of thesubcontracting firm). In addition there are seasonal workers and unskilledworkers who change companies from time to time. These workers do not
enjoy the opportunities held by the core workers. As their wages are lower,
their employment security and working conditions are less favourable inmany instances and their interest representation by unions is either very poor
or non-existent. Moreover, they have very limited opportunities for further
vocational training. (For an overview see: Chalmers, 1989; for detailed
examples see Tamai, 1992). These marginal workers form the quantitative
employment buffer for lean production.
During the eighties in Japan, due to the tight labour market, this segmentation of workers had no effects on overall employment security, especiallyin the automotive industry. However, during the crises of the seventies, thesegmented labour market allowed Japanese enterprises to flexibly adapt the
number of employees (Ernst, 1988). In the current recession of 1992/93 themarginal workers are also used as a flexibility buffer (along with the prevailing practice of cutting back over-time among all employee groups). In otherwords, the marginal workers, who form the largest employee group by far, are
not treated as ‘fixed capital’ as the concept of lean manufacturing purports.
Marginal workers are one major component of the segmented labour
market in Japan. We will now turn to a discussion of two main features ofthe segmented labour market: special forms of recruitment and so-called‘life long employment’.
1. The segmented labour market manifests itself in prevailing forms ofrecruitment. The large and renowned enterprises (i.e., the automobile manufacturers and their first tier suppliers) recruit almost exclusively high schoolor university graduates directly after finishing school. As a result they arewithout vocational or job-related training (that means in most cases after
12 years of school, in one third of cases followed by two [female] or four[mainly male] year university programs). The decisive aspect here is the332

fact that these workers are ‘clean slates’, so to speak, and can therefore be
shaped and moulded to become readily integrated into a given corporate
culture. These employees – at least the men – will join the group of core
workers. The recruiting process, the efficiency of which has often been
overestimated, is extremely selective. (For an example from the assemblyarea in the electrical sector see: Tokunaga and Altmann et al., 1991, p. 96).
This highly selective procedure ensures that the large and powerful enterprises have choice access to a preselected manpower reservoir exhibiting
homogeneous skills.
Toyota and Nissan formed their core work-force somewhat differently fromother car companies. They also recruited junior high school graduates (atthe age of 15), training them in the company school for an additional three
years. After completing the company’s school, they were assigned jobs ineither direct or indirect production. Those who were deployed to the direct
production area were expected to become supervisors, while those who were
deployed to the indirect production area became ‘skilled workers’ (maintenance, tooling, inspection, and so on) by on-the-job-training. Both Toyota
and Nissan recruit thousands of junior high school graduates every year.
Previously, the majority of large companies had such in-house schools,
but in the 1960’s junior high school graduates increasingly began to seek
high school degrees (‘Senior High School’). Many enterprises abandoned
their policy of recruiting junior high school graduates and abolished the inhouse schools. Recently quite a few large firms began to establish in-houseschools for high school rather than junior high school graduates. A typicalexample is the school at Mazda. Mazda discontinued its in-house schoolfor junior high school graduates at the end of the 60’s, and at the end of the
80’s founded the in-house ‘Mazda Technical College’ which recruits seniorhigh school graduates for a two year training program.
It should be pointed out, that the car manufacturers in principle wanted torecruit only graduates right out of school. However, from 1959 to 1973, large
Japanese car manufacturers were compelled to promote also the marginal
work force (seasonal workers, temporary workers etc.) to core workers dueto the shortage of young graduates on the external labour market. After the
first oil crisis, the labour market became unfavourable for the workers andthe car makers began to recruit their core workers exclusively from graduates fresh out of school (also from Senior High School). In the economic
boom of the mid-80s, the workers again began to leave the car makers on a
massive scale. Only then did the car companies once more reluctantly hire
mid-career entrants as core workers.
Currently, changing attitudes to work have engendered increasing recruitment problems, even for the large manufacturing enterprises, particularly
333with regard to university graduates. Due to the poor working conditions, theautomotive industry has a particularly unfavourable position. According tostudies conducted by the Confederation of Japanese Automobile Workers’s
Unions, a mere 4.5 percent of the automobile workers would recommendthat their children choose a job in the automobile industry (Nomura 1992);
among university graduates Toyota holds the 27th place on a list of the ‘most
popular’ large enterprises (see a summary by Demes, 1992a, p. 484).
In comparison, smaller and less renowned enterprises – such as small andmedium size companies in the supplier sector – have only limited accessto better qualified individuals from the general school system at least intimes of economic growth. Looking at this issue from the perspective of the‘marginal’ workers, there is no access to core worker status (or at best only
access to less secure forms of core work with less scope for promotion andthe poorer working conditions that are offered in the small and medium size
company sector). Naturally, a lower social status is also tied to these jobs.
This segmentation caused by recruiting practices, results in long term
effects. The internal corporate labour markets (for regular employees) basically remain closed, careers and deployments take place within the company
and without any competition from the external labour market (with the
exception of some specialists). In contrast, the labour markets of the small
and medium size companies are open. Those who end up in these companies
will have, at best, the opportunity for further training, promotion, and higher
pay in this particular sector and will have to deal with competition fromthe external labour market, particularly from younger individuals. In spiteof the need for skills in small and medium size companies (see 2.2) the opportunities for further vocational training are limited. Those skills acquired,however, will only be valid on the labour market for similar companies withsimilar (inferior) working conditions.
During the period of economic growth up to 1991 the automotive industry
did provide some opportunities for entry from the external labour market insome cases even with core worker status. However, this development has
been discontinued due to the current economic downturn.
2. Given the considerable structural manpower shortage (see 5.2), and thedeclining attractiveness of working in the automotive industry, the question of employment security was not a pressing issue during the long phaseof economic growth. In the meantime, however, changes are beginning toemerge. In any case, the so-called concept of ‘life long employment’ wasalways applied with considerable restrictions. This concept is by no meansa Japanese ‘principle’ embedded in social or cultural convention or tradition(or even secured by collective agreements), its actual form arose out of thelabour shortage of the post war years. It was intended to help the enterprises
334

secure their investments in training and the utilization of experienced employees (for literature see Ernst, 1986, p. 21, fn. 23). The conflicts arisingin connection with (wage) demands made by younger workers with better(educational) credentials and the decreasing significance of work experience
due to rising levels of automation and other factors, led to segmentation andhad the effect of restricting life long employment to core worker groups. For
older employees, their career was basically over at the age of 55 (further
promotions were no longer possible even if the employee continued to workat the company – demotions were also not out of question). Currently, underpressure from the government, more and more employees are retained, withnormal status, up to the age of approximately 60 years.4
During periods of recession core groups are retained if possible as ‘inhouse unemployed’, estimated at 1 million workers at the end of 1992
(for large enterprises in all economic sectors: Handelsblatt 1993, no. 23),
which tends to increase the pressure for the peripheral worker groups.
‘Voluntary retirement’ of regular employees (known as ‘shoulder tapping’)is also expected to be put into effect if the need arises and is being madedemonstratively public (The Daily Yomiuri, 1993), the increasing publicity
of dismissal of managers in large companies is a hot topic of discussion in
Japan at the moment.5
In the relationship between buyer and supplier companies a special aspect of achieving flexibility is becoming relevant for employment security,
namely the transfer of (older and/or surplus) employees (primarily whitecollar employees) from buyer enterprises (large scale enterprises) to suppliers (small and medium size companies). On the one hand this practice
gives suppliers access to experience and skills that would not be available
otherwise. On the other hand, in times of recession or in the case of rationalization measures carried out in the buyer enterprises, supplier companies
are pressured to absorb workers who are not always adequately qualified
or capable of fully meeting their needs. Naturally, this hampers the dependent companies from carrying out independent personnel policies. This
problem also arises when qualified, (older) employees are transferred who
subsequently block the upward mobility paths for existing employees in thesmaller and medium size companies. (Apart from the supplier chain, thesame also holds true for transfers to various plants within corporations.)
Permanent transfers, even regional ones (especially for white collar employees), usually entail less favourable working conditions for workers, aswell as, negative social aspects (especially for families).
The lower the position a company occupies within the supplier pyramid
which is also dependent upon the particular branch of the given supplier– the more such firms will be dependent on female part-time workers(and other workers holding insecure precarious positions, including family335

members). This then makes it all the more difficult, or even impossible,
to recruit more highly skilled (male) workers. ‘Part time’ female workers,
who currently account for one seventh of all employees and whose numbers
are increasing, are defined more by their status than their working hours.
They receive lower wages than male workers or core workers and they do
not incur any training costs. (In this context, it should be pointed out thatthese employees also have a twelve year education and could be trainedin a short period of time). One must also consider that the term ‘part-timework’ does not mean half-time or something similar, but simply means lessregular working hours than a full-time job. Therefore, these workers canserve as an excellent buffer.
Particularly in supplier firms, the demands for the legalization and regulation of foreign workers are becoming increasingly vocal (although in theeconomy as a whole foreign workers play a minor role, they are indispensable
for many suppliers, see JLB, 1992, p. 4).
2.2 Intensification of the division of labour through the type of training
The organization of training within Japanese companies increases the division of labour, especially in direct manufacturing and assembly work.
1. In this context, training refers primarily to on-the-job-training. These
measures are not oriented to providing broad basic training in the senseof ‘vocational’ training, nor are they a ‘practice oriented’ variation ofsystematic professional training. However, this on-the-job-training is also
not, as is often assumed, training to become a ‘generalist’ (who, if selectedby their superiors, may be given opportunities for advancement). Even inlarge scale Japanese enterprises, training is basically adaptation oriented, inother words, adaptation to current and specific company needs. At least for
the large enterprises, the skills workers acquire have ‘enterprise-use-value’
but have no ‘labour market exchange value’ (Georg, 1990, p. 44). The time
devoted to training measures is often overestimated for the shopfloor level(but also for higher hierarchical levels), whereby the factor of training‘clean slates’, i.e., training employees with a total lack of previous vocational training must be considered. Training remains company-, process- oreven machine-specific and is derived from experience rather than formal
instruction. The chances employees are given to develop depend strongly
on the respective forms of work organization and if the worker will remain
employed within the (large scale) enterprise. It is, except for specialists, virtually impossible for individuals to derive any substantial financial benefits
from acquired skills (particularly in terms of a career) on the ‘open’ labour
markets, since wage increases depend on seniority and in-house personnel
evaluation (see 3.2).
336

In certain cases training measures are carried out off-the-job. These courses, which are available to core workers only, are usually of a very limited
duration and are oriented to adaptation or promotion (see Demes, 1992b).
Longer and more systematic training measures off-the-job are only available
to a limited group of employees. This applies to workers performing repair
and maintenance tasks not integrated into direct manufacturing work, or
workers implementing new facilities who are earmarked for their operation
at a later date, for example. (For a survey of training issues see: Dore and
Sako, 1989; Münch and Eswein, 1992; Georg and Sattel, 1992).
2. Generally, the access to corporate further training measures depends onwhether a worker belongs to the group of male core workers and on being chosen for such measures by his superiors. These measures, however,cannot be regarded as ‘further training’ in the sense of broadening basic
qualifications, since they are also oriented to company and operational
needs. The training measures are usually carried out by the company’s own
skilled workers or specialists and not by instructors having undergone didactic training. At the same time, these measures form the stepping stonesof individual careers and are limited accordingly. Individual or company
initiated private training activities outside of working hours are recordedin the personal evaluation (as an indication of motivation), yet are rarely
taken into account in workplace deployment (Tokunaga and Altmann et al.,1991, p. 149).
3. The ‘polyvalence’ claimed to be an important characteristic of lean
production, i.e. versatile and multi- faceted skills as the basis for flexible
manpower utilization is in reality more the competence to deal with tasks
belonging to the same level of work requirements. In other words, a broader
scope of skills but not higher ones. It is essential to understand that in Japan
training in general takes place within the context of a rationalization strategy,
based on a workplace and process design which follows the principle that thesimplest work place or process is the best (‘simple is best’). It is also believedthat all tasks should be standardized to the greatest extent possible until thenext changes become necessary. This also holds true, for example, for thefrequently quoted multi-unit tending or for the U-line organization: Apartfrom ensuring more intense utilization of employee performance by eliminating system losses without dispensing with the highly Taylorized form ofwork, these concepts offer companies considerable flexibility benefits (bybundling or separating short cycle operations and altering manning levels).
While such concepts do not translate into higher skills and qualifications for
employees, they do entail considerable physical and mental stress.
The claims made by Japanese scientists (Koike and Inoki, 1990), but also337

by their European colleagues (see Münch and Eswein, 1992, p. 152; Staudt
and Rehbein, 1988, as examples of German publications) that Japanese workers are highly skilled and command versatile skills thanks to a particularly
efficient company training system must be refuted for the entire industrial
sector and especially the automotive industry – at least for the shopfloor level(see Demes, 1992b; Demes and Jürgens, 1989; Tokunaga and Altmann et al.,1991, p. 139; p. 178, for an example from the electrical industry).
4. On-the-job training has several organizational preconditions, including
the explicit integration of training activities into the range of tasks to be
performed by experienced workers so that these workers are not subject toadditional burdens in performing their other work tasks, as well as, an appropriate wage system. (The wage system is more or less independent of theworkplace requirements and largely neutral in terms of work assignment; itis individually oriented and tends to be performance-related, whereby theterm performance comprises individual and collective parameters as wellas the demand for total work commitment (‘the entire person’)).6
Within the small supplier firms skilled work is frequently restricted to a
few individuals, in many instances to owners working in their own firms.
Due to time pressure and the lack of skilled personnel, as well as, the lack ofgovernment vocational training programs, it is virtually impossible to carryout extra training measures. Only the top tier suppliers receive support frombuyer enterprises in the form of training and in such instances the respective
measures are very specific and determined by current requirements.
One of the key preconditions ensuring that this system functions as awhole is the comprehensive twelve year school education that is not vocationally oriented and of which 90 percent of the present school graduates
have undergone. Although this educational system is not free of weak points,
the significance of the discipline it imparts, its strong group focus and thecompetitive spirit instilled in the individual are remarkable elements, toconsider as the background of work policy measures in Japan.
2.3 The organization of work and control of workers stabilize the divisionof labour
The concept of lean production defines company work organization as
integrative (work tasks), open (in functional and hierarchical terms), decentralized (units bearing responsibility) and codetermining and coresponsible(bottom-up decision processes, responsibility for quality). The MIT study,by the way, made little mention of these aspects and did not investigate them.
It is doubtful, however, to what extent these concepts are actually put into
practice. In Japan too, work processes are organized according to Tayloristic principles; in their pursuit for more rationalization, industrial engineers338cooperate closely with direct superiors. Quality circles and improvement
efforts routinely make use of work study methods – in other words, ‘theJapanese out-Taylor us all’ (Schonberger, 1982, p. 193). This holds true inspite of the fact that the organization of the manufacturing process as a wholedeviates from Taylorism.7 In the following, we will only be dealing withgroup or team work (‘the heart’ of lean production, according to Womack
et al., 1990, p. 99) and hierarchical structures as examples.
1. In Japan, task integration and team have a fundamentally different meaning in terms of contents and concepts than in European discussions (andparticularly those in Sweden and Germany); they involve different personnel
policies and have different consequences for the effected workers.
In German debates the topic of ‘team work’ refers to the interaction between different team members with different training backgrounds (suchas skilled workers and semiskilled workers), as well as, to the latitude forplanning and taking action with regard to work content and scheduling,
and the reduction of formal hierarchy (for an overview see Roth and Kohl,
1988). Designing technical facilities, control systems and programmes so
as to be compatible with team work is at least striven for (as evidenced in a
number of assembly processes or manufacturing islands8. The participationof representatives of employee interests is also intended (in the manning ofassembly groups, for example9).
Berggren called attention to special aspects of Swedish team work models
such as the scope they give employees to take action, the reduction of hierarchical control and the unions’ influence on forms of organization (Berggren,
1991, p. 302, p. 326); team work as ‘social compromise’ (1991, p. 327).
This elucidation of teamwork is important because the various points
have nothing to do with ‘group work’ as it is practiced in manufacturing
and assembly in Japan. Groups in these areas are defined in a highly formalmanner, and are strictly oriented to certain sections of the manufacturing
process (for example in the final assembly of automobiles; adjusting or
mounting special parts in an assembly process in the electronics industry;certain machine groups in manufacturing). Perhaps the MIT study’s claimsof the ‘widespread’ use of ‘team work’ in the automobile industry can be
attributed to the existence of the ‘Hancho’ (Krafcik, 1988), a group leader
without management responsibilities, who is more an assembly line leader,or ‘first’ man in the Western sense. A ‘Hancho’ is not to be confused witha team speaker (as at Volvo, for example) and he is naturally chosen bymanagement, not electedby his colleagues. Japanese ‘work-groups’ haveno scope for independent action, planning or scheduling and the individual
work operations are highly standardized and strictly monitored. In processes
with a higher degree of automation, the lack of decoupling from automatic339

stations or machinery, results in tight integration into short cycle times in
conjunction with high working speeds. The idea that workers can manage
their own time (in German: ‘time sovereignty’) is an illusion, especiallywhere Just-in-time organization is practiced.
In most cases, workers rotate only within a certain process area and byorders issued by superiors. The companies enjoy a very flexible utilizationof manpower as the tasks have been levelled out so that the demands madeon workers are more or less homogeneous, and low in the final assembly
sector.
Tight manning levels are a basic principle. In view of the zero buffer andzero defect requirements, this results in massive social pressure within thegroup. Absentees put a burden on their colleagues. The low absenteeism
rates have less to do with commitment or corporate loyalty than with thepressure exerted by colleagues and direct superiors.
As Jürgens aptly commented, ‘… it is doubtful … whether team work exists at all in Japanese plants’ (Jürgens, 1992a, p. 48; see also Jürgens, 1992b,
p. 27), especially if one has the European concepts in mind.
Division of labour also exists between groups performing different functions and with different skills. The so-called ‘integration’ of work tasks
exists only at a low level of work requirements. In Japanese industrial
mass production, those groups of specialists concerned with rationalization
measures or ‘improvements’, or the implementation of new technologies ormachinery, or difficult repair tasks generally operate as separate units. The
assignment of tasks to these groups of more highly skilled workers fulfilling functions that are not fixed, but are under strict control by superiors. In
these groups, time pressure generates an internal division of labour ensuringthat the varying skills and experience of the individual group members are
optimally used under the given time constraints. Flexible manpower utilization (in all group forms) tends to be more the result of process friction, thegiven product mix, or output volume than absenteeism.10
A highly developed personnel evaluation system which plays a decisiverole in promotion and wages, effects Japanese group work; in the orientation
to the group’s cooperative performance on the one hand, and competition
between the members of the group on the otherhand (see 3.2).
We do not doubt the existence of a basic social orientation among theworkers involved in group work, yet we do not view this orientation as
being solely determined by cultural-historical factors, as a ‘typical Japanese trait’. Rather educational and company personnel policy socialization
measures strategically promote and sanction this orientation (see Eswein,1988). Within the existing social and economic structure this orientation alsotranslates as measurable benefits to the individual (in terms of promotion
or career development, for example).
340

2. ‘Flat’ hierarchy is a word often heard in the discussions of lean production (see the literature on team work). The German discussions are basedon a long tradition, which is characterized – at the level of manufacturing
and assembly work – by the so-called ‘Meister crisis’ (loss of function) on
the one hand, and by a ‘return’ of direct management tasks to their ‘real’
function (i.e., personnel management), on the other hand. Recently, thedrive for leaner organizations has resulted in attempts to eliminate ‘entire
levels’ from hierarchical structures, although it remains unclear where thegiven functions (and the employees) will wind up, insofar as it is possible tointegrate the functions into direct production work, the question of copingwith these functions in terms of skills and their remuneration remain open.
In this respect, the general conditions of ‘old’ industrial locations and plants(brown-fields) and new factories in non-industrial areas (green-fields), arenaturally very different.
As a generalization, it can be stated that the management pyramid inJapan is anything but flat (in manufacturing and assembly processes, thispyramid frequently comprises, with the foreman, four or more steps). On
the shopfloor, the number of supervisors is high, thereby ensuring very tightcontrol. Management positions, especially foreman and Meister (Kumicho
and Shunin, but not the Hancho), have all decision making power.11
To a very limited extent, considerations aimed at ‘flattening’ hierarchicalstructures are currently emerging in a number of leading enterprises suchas Toyota, although their orientation is completely different from what isbeing discussed in Europe. These experimental concepts envisage individuals assuming a management position for a specific project over a limited
period of time, while retaining their former social status and title (Nomura,
1993, p. 43).
In general, however, the number of supervisors is comparatively highand there is a dense span of control. There are numerous and very subtle
hierarchical levels. It must also be considered that some positions do notentail any management functions or rights, but represent formal promotions
created in order to absorb some of the competitive pressure among the core
employees. (The status positions with their respective titles, symbols andwage groups also serve to classify specialists and other employees withhigher skills). Within the extremely authoritarian structures of Japanesecompanies, superiors fulfill more far reaching social functions than supervisors in Western countries. In Japan for example, superiors exert influence
on young workers’ parents, concern themselves with private affairs and apply pressure if necessary. They wield highly effective sanctions to this end,
particularly those related to personnel evaluation (see below).
The frequently quoted bottom-up decisions play no role at all on the production levels, and their role on higher, ‘white collar’ levels is very limited.
341

Participation in decision making processes is primarily geared to securing
acceptance; it is virtually impossible to deviate from basic decisions thathave been already made.
To summarize, on the ‘dual labour market’ the social division of labour
is intensified by the differing opportunities of gaining access to training.
This means the forms of work organization tend to stabilize this division oflabour more than eliminating it.12

3. Work policy instruments:
securing the integration and utilization of manpower
3.1 The improvement process enhances motivationand secures process stability
The improvement process is regarded as one of the key elements in the concept of lean production. In it, aspects of rationalization policies and personnel policies converge in such a way, that the one can no longer be separated
from the other. There are different perceptions and interpretations of theconcept of ‘improvement’. The definition of ‘improvement’ ranges from thephilosophy of production policy as a whole (‘Kaizen’; Imai, 1992) to more
concrete terms denoting employee suggestion programmmes. ‘Continuous
improvement process’ covers the concept in the most neutral way.
The authors of the MIT study refer to the ‘creative tension’ (Womack etal., p. 102) in which workers are placed (given the zero defect/zero buffer
situation) in a production process that is susceptible to breakdown. Improvement activities are primarily intended to smooth and facilitate the process
and are measured solely in terms of productivity gains (and to a much lesser
extent in terms of work safety). From this situation improvement activities
certainly have the effect of stabilizing the ‘fragile’ work process divestedof all personnel and material buffers in order to achieve the determinedschedules, volume and quality demands. Improvements, however, only define new work and performance parameters, but do not create any new scopefor employee action or reduce strain on the workers (until the next changes
occur, operations are standardized and deviations not tolerated – this is a
declared objective of Kaizen).
Particularly in mass production, Japanese middle management regards
the special function of the improvement process on the shop floor level as
primarily consisting of workers identifying flaws in the production process.
Workers are not involved in solving such problems. In Japanese mass production, anything that lies beyond the correction of minor issues is placed in
the hands of specialists. Secondly, Japanese managers repeatedly point out
the fact that participation in the improvement process plays a significant rolein terms of motivation, while the rationalization effects actually achieved342

are rather limited. Thirdly, the number of improvement suggestions brought
forward by individual workers is an important factor in personnel evaluation(the target number of suggestions is actually specified).13
The improvement process is also characterized by a pronounced divisionof labour. This applies primarily to manufacturing workers and the lower
level supervisors. Apart from the manufacturing workers there are alsofunctionally separated groups of indirect workers in the manufacturing area(‘improvement teams’, ‘engineers on site’), whose main task is to carryout improvement measures in the sense of incremental rationalization andsmoothing out of manufacturing sequences (in connection with the processof problem identification, not problem solving by production workers).
What are the consequences for the workers? On the one hand, they attain– through the productivity orientation of the entire system – continuously
reduced standard times and increasingly ‘leaner’ work content with tighter
manning levels. Financial premiums are minimal. Apart from recognition in
the personnel evaluation, the most important effects of participating in the
improvement process are the feeling of being heard and accepted. Thanks
to this involvement, the workers experience that ‘the hierarchy’ reacts totheir input – regardless of the concrete effects for them.
It should be kept in mind that the motivation behind the ‘continuous improvement process’ (‘CIP’) tool also includes the permanent monitoring of
behaviour on the job and working attitudes. (This may make workers afraidof making mistakes which may hamper their creativity.) The identificationof points of friction within the manufacturing process and their eliminationby specialized rationalization experts results in a considerable intensification of work. ‘Kaizen’ does not imply any ‘participation’ (or co-design orcodetermination!) at the workplace; and finally Small Group Activities do
not translate into significant training effects for the workers since the topics
are handed down by superiors and the process is closely controlled.
Staff cutbacks, such as dismissals, which are the result of rationalization suggestions, are very rare occurrences. It is the core workers that are
the employees mainly involved in the improvement process, but naturally
there are ‘abstract’ reductions in the total number of jobs, at least in timesof economic growth.
There is one decisive organizational trend in Japanese work policies that
I would like to call attention to and briefly summarize: It is not the muchquoted integration of job tasks, the comprehensive scope of skills, or thecontinuous improvement process that secure process flows and their efficiency. It is far more the cooperation between the different functional areas,skill levels and hierarchical levels that achieve this degree of efficiency.
This involves, for example, the permanent contact maintained by ‘engineers’(this term must be understood in the broadest sense), and technicians with343

the production level and their willingness to ‘get their hands dirty’ if needbe. Moreover, it is the existence of a multilayered and closely knit networkof middle and lower level supervisors and specialists, capable of listening
and reacting swiftly which secures the production flow. Thus, in Japanesemanufacturing, a high division of labour does not necessarily imply thatbarriers are erected between different workers, functions and manufacturing areas. There are many aspects of training and culturally determinedsocialization, as well as disciplinarian measures, which address this basic
willingness to cooperate. Also, it should not be forgotten that this willingness – or pressure – to cooperate has very definite effects on the personnel
evaluation the individual worker receives.
3.2 Evaluation as the ‘heart’ of work policy
1. While the features of Japanese work policy we have outlined thus far are
indeed key characteristics of lean production, a main instrument of control,
sanctions (or incentives) of the Japanese personnel policy often is not adequately represented in such discussions – that is the personnel evaluation
system. If it holds true, as Womack et al. claim, that the ‘workteam is theheart’ of manufacturing activities, which I can neither confirm nor contest,
then the personnel evaluation system is, in our analysis, the ‘heart’ of Japanese personnel management.
Historically, the personnel evaluation system has played a pivotal rolein the enterprise, in teams of both the interests of control on the part ofthe company as well as the interests of younger employees in the period of
manpower shortages during the sixties14. The personnel evaluation system
was initially used as a countermeasure to the prevailing ‘seniority wages’
that were oriented solely to the employee’s length of service. Accordingly
this measure met with a great deal of acceptance from some workers, while
it engendered conflicts with senior employees as both aspects (performanceand period of service), retained their tense relationship with one another.
The personnel evaluation system is certainly the strongest personnel policy
instrument Japanese management commands.15
Presently personnel evaluation has considerable effects on the assignment of jobs, individual careers and income. The criteria applied are highly
differentiated and are often dealt with as ‘highly confidential’ in many
enterprises (Special Enquête, 1988; Tokunaga and Altmann et al., 1991,
p. 153; Demes, 1989a; Endo, 1991; 1992a). In spite of a number of corrective mechanisms the personnel evaluation of workers by supervisors is
systematically subjective. A considerable amount of effort is invested in thisprocess which ‘… is reminiscent of the effort expended on work studies
and workplace related performance profiles in Western companies’ (Demes,
1989a, foreword by Jürgens).
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Here I would like to refer once again to Japanese group work, as themethods utilized in employee appraisal solve one of the central problemsof these groups, namely generating cooperation, and ‘harmony’ while at thesame time promoting individual competition among the workers within thegroup (an aspect we will not be dealing with in greater detail). As personnel evaluation is a continuous process and is partially oriented to potential
individual performance in the long run and in part is closely related to shortterm productive performance (normally only applied to the core workers
and enterprise internal), this rating is exceptionally important for the employees. This evaluation leaves an ineradicable imprint on further careers
and thus, on the work and life situation. It also determines, amongst otherfactors, the (in some cases) considerable deviations in company-related andage-determined income increases.
2. In Japanese industry, wage systems exhibit a similar basic structure, while
their individual, enterprise-specific forms deviate widely. In all instances,wage systems are very complex and closely linked with the employee appraisal systems (Nomura, 1987; Takagi, 1987; Demes, 1989a; Tokunaga andAltmann et al., 1991, p. 187). Although seniority (period of service) plays
an important role, especially for the core workers in large scale enterprises,
the individual appraisal and performance rating is also of considerable significance. Toyota’s wage system change of 1990 offers one example: Apartfrom the objective of achieving greater wage stability for the individual (byreducing the share deriving from productivity effects and introducing a fixed
rate according to age) and establishing more transparency, the new concept
tends to give more weight to individual performance than to collectively
generated productivity (through competition between different groups or
production ‘segments’; Nomura, 1993, p. 44).
In our present context one must also consider the wage difference between
automotive manufacturers and suppliers and also within the supplier pyramid, which is more pronounced in Japan than in other industrial nations.
These differences, however, are less due to personnel evaluation systems,
which are only rarely systematically applied in the case of second andthird tier suppliers, as to other factors. Within Japan’s dual economy there
are many factors determining wage differentiation that are relevant in thiscontext (see Ernst and Laumer, 1989, p. 28) and exert negative effects on
the workers in the supply companies. Within large scale companies malecore workers receive better pay than the female marginal workers (at theratio of about 2:1).16 A comparison of wages according to company size, andtherefore, regarding workers’ income in supplier firms,17 also brings sizable
differences to light. The widespread utilization of female and ‘de facto marginal’ male workers in small and medium size supplier firms as well as the345employment of older workers also plays a role. In enterprises that are end
producers the wage increase based on the length of service comes to an end
between age 55 and 60. However, in many cases such workers are transferredfrom these companies to dependent supplier companies. Moreover, due
to the low retirement pensions and the period of time between retirementfrom a large scale enterprise and the first retirement pension payments,18
there is a considerable amount of pressure for retiring employees to seek
further, usually lower paid employment on the open labour markets. To amuch greater extent than in other countries, individuals continue to work
far beyond the age of 65 (JIL, 1992, p. 74).
Generally speaking there are considerable wage and income differences
between individual employees due to the use of personnel evaluation systems when measured over the entire life working time.19 The slight company
internal income differentiation between ‘normal’, male core workers andmanagement level employees (approximately 1:2), which is so frequently
stressed in the lean production concept, appears in a completely different
light in a comparison by company size: There is an inverse ratio of up to 2:1
and more, based on hourly wage, between the (core) manufacturing workers
in large and those in small companies (see Yearbook, 1990, p. 116). Differences also exist between benefits such as health care, social facilities, etc.
3.3 Virtually unrestricted duration and flexibility of working hours
Long working hours are a well-known aspect of Japanese working life; inthe automotive industry, the hours worked lie above the industry averageand totalled an annual average of 2,291 effective working hours in 1990
(Bosch, 1993). In producer companies this figure is not so much the resultof standard daily working hours as it is the many hours of overtime workers put in (1990:450 hours and more on the production level). This figure
is possible due to the two to three hour ‘gaps’ between the first and second
shift which are regularly filled by employees working overtime. In addition,
many workers do not take their holidays (which are short by international
comparison) and the rate of absenteeism is very low (all in all, Japanese
workers take approximately half of the average annual holiday of 15 days;
Yearbook, 1990, p. 268). Gerhard Bosch offers this concise summary ofcompany working hours policy:
In spite of some minor differences, the working and operating hours
adhered to by most Japanese automobile manufacturers are so similar,that it is legitimate to speak of a specifically Japanese type of time
management: As the number of core workers is very limited, working
hours must be continuously extended by overtime and beyond the collectively agreed standard working time; in addition, overtime is also
used to cope with fluctuating demand. Japanese production planning,346

yet also the negative sanction mechanisms in personnel planning, reflect
the fact that companies take unpaid work in the form of unclaimed holidays for granted. Absenteeism due to illness or accidents is completely
compensated for in the individual’s holiday … Thus Japanese companies are able to count on an attendance rate of approximately 95%.
Even without overtime, operating periods of almost 4 000 hours per
year are achieved, as manufacturing operations are only interrupted on
paid holidays, but not on additional holidays … the intensity of worker
performance (is) exceptionally high. Their flexibility … is remarkable.
By drawing on overtime, manufacturing operations can be stepped up
by 15 to 20% and more … (Bosch, 1993, p. 19).
Moreover, employees in smaller and medium size companies, and especially
supplier firms, are subject to additional disadvantages. In small supplierfirms of the automotive industry, working hours are 25 percent longer thanin final assembly companies and in the large first tier supply companies(Handelsblatt, 3.2.92) in spite of the many part-time workers employed insuch companies. This also shows that part time workers are defined more by
their status than by their actual working hours. In addition, it can be assumed
that a great deal of statistically unrecorded overtime occurs in small (family-owned) companies.20 During periods of economic decline this situation
may temporarily change, but the contrast between the buyer and supplierremains just as intense.
One of the consequences of long working hours in small and medium size
supplier firms is the restricted opportunity for recruiting qualified employees
from the labour market. Long working hours are one factor which makes suchcompanies less attractive for highschool graduates and further aggravates
labour shortages for small and medium sized firms. This is also increasingly effecting the large automobile manufacturers. The production policies
pursued by buyer companies (especially the demands for strict adherence
to supply schedules and short term delivery of small batch sizes) forces the
suppliers, despite staff shortages, to react to their customers’ fluctuating
volume demands. This is handled particularly by extending working hours
and overtime. As Japanese law permits very small companies to work more
hours per week and there is no union organization in such firms, workers
do not receive better pay for additional working hours. Naturally, this isalso the case with the part-time workers who are generally paid according
to a fixed hourly wage (the hourly wage is roughly one third of the hourly
wage paid to core workers in buyer companies).
The only alternative to extending working hours, or maintaining the existing working time, would be the introduction of additional, manpower-saving
automation, which is difficult for small companies to finance. Even in cases
where this is possible, the implementation of such facilities would require347

skilled workers which small firms cannot recruit from the labour market. It
cannot be assumed that the reduction of long working hours that has been
going on since 1991 with the onset of economic crisis, will actually be maintained once an economic recovery sets in. In the segmented Japanese labour
market, economic growth will translate into greater working hour burdens
for marginal worker groups and workers in supplier companies.
The ‘bufferless’ and synchronous integrational production entails a very
tight link between the working hour structure in the buyer and suppliercompanies. Apart from supplier firms, the transport companies serving the
supply network are also affected (see page 24). In this context, the consequences for workers (shift work, weekend work, etc.), the topic of muchdiscussion in Europe, must not be overlooked (see page 21)).
All in all it is evident that the comprehensive, almost unrestricted control
that enterprises are able to exercise over working hours constitutes a decisive
precondition for other work policy measures. The present recession demonstrates the high flexibility arising from Japanese working time policies andraises doubts whether the targeted reduction of working hours throughout
the entire economy (‘1800 hours’ per year) will actually be attained once
economic growth resumes.

4. The representation of employee interests:
no participation in the design of work
In Japan the representatives of employee interests are not involved in thetechnical-organizational design of work. These issues, at least up to now,
have remained outside of the orientations and activities of Japanese unions,and this can be regarded as a basic condition of Japanese work policies.21 So
far, the unions have neither attempted to influence the technical-organizational design of work nor developed independent work policy concepts. The‘Guidelines on Rationalization Policies’ developed by some large enterprise
unions and by the union umbrella organizations (in the electrical and metalindustries) in the eighties were solely oriented towards the protection of
employees from potential rationalization effects and not at all with the codesign of work. The guidelines have been applied, if at all, to a very limited
degree in Japanese companies.
Only recently, under the pressure of increasingly intensive forms of work,
decreasing corporate profits and trade conflicts22, and especially within
the Japanese Automobile Workers’ Union (see Confederation of Japan Automobile Workers’ Union (eds.) 1992) massive criticism has been voiced
regarding the prevailing working conditions. Moreover, new concepts havebeen formulated that address ecological and product related questions, the348

problematic relationships between buyer and supplier companies and theissue of shorter working hours.
All of the union’s activities up to now have revolved around the formulation of demands and not in concrete suggestions on work design. It is possible, however, that changing union attitudes, tentative at present, may gain
further momentum to the extent that in the medium term it will no longer bepossible to deal with Japanese rationalization strategies in major industries
without considering employee interest representation. An indication in thisdirection is the activities of the Nissan union in response to the closing ofthe Zama plant in 1993.23
In discussions on industrial labour the term ‘participation’ has had, andwill probably continue to have, an entirely different meaning and content
than in a European context for some time to come. It must not be confusedwith union representation of employee interests, nor with worker participation in the design of the actual manufacturing process, aimed at securing
individual and collective interests.
As already outlined in connection with the continuous improvement
process, participation refers to including workers in a largely predecided
consultation processes, aimed at obtaining personal acceptance. Smallgroup activities, quality circles, various motivation and incentive methods,
as well as the previously mentioned cooperation between functional areas
and across hierarchical levels, will create the necessary ‘consensus’ (in thesense of acceptance, not compromise!) and motivation. However, the designof technology and organization and personnel policy questions, as basic issues that could lead to codetermination rights, will not be up for debate. In
Japan, there is a total absence of concepts relating to a ‘socially compatible’
design of work as discussed in Germany or as seen in the Swedish model.
Workers regard given forms of rationalization and their effects as ‘natural’(particularly the ‘typical’ jobs for female workers, for example). In thiscontext one must consider that all of these factors have come about in a
climate of strong economic growth and with the legitimation of providing
a high degree of employment security.
While the company unions do not interfere with management decisions
on work policies and rationalization issues, there are three areas in which
the unions are active. To begin with, the unions play a role in negotiating
the annual wage increases. In this context, the unions of large automobile
manufacturers even try to exert a restraining influence on the company
unions of supplier firms (insofar as such unions exist), so as not to endanger the buyer company’s competitiveness and thus, the wages of its core
workers (Nomura, 1989).
The second area of union interest pertains to working hours. While theunions of major manufacturing enterprises do not push for any relevant349

reductions of working hours, they are active in achieving a slight shift froma decreasing number of collectively agreed standard working hours towards
an increasing number of overtime working hours. This means they work forachieving higher wages by increasing the number of working hours withextra allowances (usually 30 percent). In the present recession, these modest
union policies (working hour policies as wage policies) are achieving exactly
the opposite of what was originally intended. As overtime is being cut back,workers are losing those allowances that made a major contribution to theirincome (in the automotive industry 25–30 percent in many cases; Bosch,1993). The last field of union activity focuses on health and work security
measures and other material benefits. From the second tier on, most of these
activities are absent in supplier companies.
This particular aspect of lean production as a form of work organization(‘of the 21st century’, according to Womack et al. 1990; p. 278), without
the participation of elected and institutionalized representatives of employee interests and in the final instance without direct ‘participation’ at
the workplace is not given adequate consideration in current discussions.
One result is that in union discussions, in Germany for example, a numberof misconceptions concerning Japanese labour market structures, teamwork, training and ‘participation’ in the continuous improvement process
have also lead to the misconception of the existence of progressive formsof direct worker participation in Japanese industry. At least up to now, awork policy which is based on the absence of strong unions has not beena model for European work policies. The question that should be asked is,which functional equivalents for work policy measures can be found that
achieve acceptable and necessary goals such as increased productivity, but
do so in cooperation with the unions. To this end, the experience gained in
Sweden and Germany offers ample points of departure.

5. Japanese work policy: consequences and problems
5.1 Human resource management remains limited
Japanese work policy, that mixture of rationalization and personnel policies,
does not utilize labour, even in terms of productivity, as effectively as the
MIT study and the ongoing discussions in Europe would suggest. To put it
bluntly, Japanese human resource management wastes a large share of its
labour potential.
To avoid any misunderstanding, I would like to emphasize that this basic
assumption is by no means meant to infer that we should no longer take thequestion of competing with Japanese (automobile) industry as seriously as
we have done so far. On the contrary, I would like to draw attention to the,as of yet, unused labour potential, waiting to be unleashed in Japan.
350

1. Even in the large production companies (final assembly), Japanese formsof work organization do not succeed in allowing labour to unfold to its fullest
extent. This applies for practically all female workers and other membersof the marginal workforce. The assignment and utilization of core workers
is largely characterized by the intensification of work and the extension ofworking hours in many areas. These are necessary preconditions for, andinevitable results of, Japanese manufacturing methods and work policies.
Personnel policies are consciously and consistently geared to the principleof coping with friction arising in increasingly mechanized and automated(lean meaning ‘fragile’) processes, by ensuring the most comprehensive useof manpower possible, such as ‘allround utilization’ (Deutschmann, 1987),
in a process specific perspective. Central to this approach, however, is not
occupational skills, creativity or even participation, but much more the control over working time, the acceptance of work intensity, and the integration
into the ‘philosophy’ of the corporation (or management).
2. One aspect of limited human resource management can be seen in theconsequences Japanese manufacturing methods engender for employees
in the supply industry. According to the concept of ‘lean’ production, theJapanese forms of supplier relations are a central condition for increasing
productivity (Womack et al. 1990: p. 146). In lean production, buyer/supplier
relations are characterized by ‘rational forms’ of coordination and cooperation (which places a considerable strain on suppliers). Other interpretations
assume the existence of a long term ‘partnership-oriented’ cooperation between buyers and suppliers (Sabel et al., 1991). The work policies pursued
by the majority of the supply firms, however, is without question highly
restricted or predetermined by their dependency on buyer companies. These
Japanese forms of cooperation are not only based on a refined (lean) systemof coordination and organization in the value added chain, but also dependon different labour and employment standards prevailing on the different
supplier tiers. For example, these forms of cooperation draw on long working hours, low wages and ‘outsourcing’ of poor working conditions (seeDemes, 1989b; Asanuma, 1988; Sakai, 1990; Ikeda, 1987; 1988). While
the MIT study contests the above, it does not succeed in documenting the
opposite case due to an inadequate consideration of personnel policy issues,
especially the conditions in the supplier industry.
In Japan, the organization of work is based on the segmentation of thelabour market and on the dual structure of the economy, both of which aretotally underestimated in the West. The segmentation of the labour market
brings with it a representation of employee interests divided both acrosscompanies and within companies, where it is oriented only to parts of theworkforce (core workers). The divergence of working standards across the351

value added chain which is associated with this system, is a necessary precondition for Japanese production modes.
3. Japanese human resource management is also limited and sub-optimal ina macro-societal perspective. The almost complete exclusion of marginal
and female workers from company training and personnel development
measures and the lack of public vocational training measures naturally
limits and segments potential supply from the labour market. The negative
physical aspects of the way labour is used, such as long working hours, highworking speed, etc., also prevents the full utilization of labour and mostcomprehensive extent; this holds particularly true in view of the increasing
aging of Japanese society (see below). Thus, apart from the individual negative effects, there is the general loss of potential labour within society as awhole, which in turn has an especially strong effect on the weak companies
within the supplier system.
4. In the general discussion on lean production, besides the MIT study, it isfrequently overlooked that mechanization, automation and inter-company
networks by means of information and communication technology, remain
central objectives of Japanese rationalization strategies. There is a tendency
to forget that the MIT study accredits considerable productivity gains toautomation and product design geared to manufacturability (see The Boston
Consulting Group Ltd., 1991). Moreover, it is frequently overlooked thatcriticism directed at the United States and Europe is not aimed at technology and automation as such, but at forms of work organization that do notmake adequate use of them. Personnel policy remains a dependent variableof rationalization policy, in which even in Japan, the potential of labour
only plays a role for narrowly defined groups of the workforce. The authorsof the MIT study reach the conclusion that there is a need for increasing
automation so that ‘only’ the highly qualified problem solvers will be left
(Womack et al. 1990: p. 102). The question remains open as to how large
the share of workers eliminated in the process will be, and how productive
such a system will be from a general economy perspective.
There are very few branches, such as the automotive industry and consumer electronics, in which Japan’s productivity per employee is actuallyhigher than in the United States and a number of European industrial nations(Dollar and Wolff, 1993; Handelsblatt, 16.10.1992). The average productivity per employee recorded in the Japanese economy is below that of Germany(see Deutscher Industrie- und Handelstag (DIHT), 1992).
By concentrating on fragile manufacturing concepts it is easy to lose
sight of the Japanese manufacturing modes in their entirety. They are not‘best practice’ for two reasons: they entail a loss of individual and societal352

working capacity in the long run and cannot be regarded as productive whenviewed in the context of the economy as a whole.24
5.2 The repercussions of work policy for enterprises and society
In almost all instances, and especially in the case of the MIT study, theefficiency of Japanese personnel and rationalization strategies is assessed
in individual production units and branches of the economy. Supported byfrequently overrated assessments of the industrial policies of the Ministry ofInternational Trade and Industry (MITI), sweeping statements on Japanesecompetitive strength are subsequently derived. In the process, the increasingly manifest effects of Japanese work policies for the enterprise itself andfor society are hardly considered.
As I mentioned earlier, the Japanese challenge to world markets should
not be underestimated. What I would like to call attention to, however, isthat the emerging discussion of ‘Japanese management’ in Japan itself,
indicates that precisely those areas where work policy actually was ‘lean’,new developments are being undertaken or have to be undertaken.
1. Even during the current recession, the labour market situation and industrial working conditions pose considerable problems for companies recruiting
personnel. The Japanese economy, and particularly the automotive industry
and its suppliers, are confronted with a twofold, structural problem. (a)Given almost stagnating population growth and a strong rise in the ratio ofelderly citizens in the total population, the share of the working age population is decreasing to a greater extent than in other industrial nations (Japan Institute of Labor (JIL), 1992: 10; Japan Productivity Center (JPC), 1992–93,
p. 80). At the same time, the existing quantitative manpower reservoir has
been largely exploited and working hours are extended almost to their limit(criticized, yet a still accepted practice). Working hours reduction are caused
more by the recession than by altered work policies, and finally there is very
limited availability of foreign workers (JLB, 1992, p. 4). This situation isclosely linked (b) with the allocation problem: companies with physicallydemanding, dirty and dangerous work are met with less acceptance fromyounger and better qualified workers or university graduates (JLB, 1991a,p. 4, for example). The automotive industry has a particularly poor image
in this respect, while the same also holds true for long working hours (seeabove 3.3). All the while, higher social status is an increasingly importantfactor for job seekers (White Paper, 1992, p. 40). Generally speaking and to
somewhat oversimplify, one could say that current trends are leading awayfrom the manufacturing industry in favor of the service sector and whitecollar jobs. This holds especially true for those employee groups who havebeen of particular significance to date for the rationalization process in the353

automotive industry and its suppliers (graduates of technical disciplines orcomputer scientists, for example).
During growth phases, the ‘normal reactions’ of enterprises would havebeen to change wage forms and level, create openings for new employee
groups from other companies, and utilize the flexibility buffer provided bymarginal workers. However, in the present situation this is no longer possible in the automotive industry. There is increasing pressure on companies
to improve working conditions, and especially to reduce working hours (fora summary see Demes, 1992a, p. 483). At present it is completely unknown
whether the so-called ‘new factories’ (such as Nissan’s ‘Humane Land’ inKyushu, and Toyota’s ‘worker friendly’ assembly hall at the Tahara plant),
with their forms of organization departing from the lean production model
as reported in the MIT study will ever prove to be successful. The newconcepts are characterized by such features as a high degree of automation in the assembly area, consideration of ergonomic aspects (for the firsttime), longer work cycles, buffers and stocks, more space, and shift systems
without overtime, etc., in conjunction with changes in wage and hierarchy
structures (International Metal Workers’ Federation (IMF), 1992; Demes,
1992a; Nomura, 1993). The decisions for these new work structures andthe considerably higher investments they involve over traditional plants
were made during the last growth phase. However, considering the existing
recruiting problems and the basic structural labour market problems that lie
behind them, and given their only modest improvement during the current
recession, there will be some pressure to ensure the further developmentof such concepts. Labour saving rationalization measures (the top priority
corporate measures in 1991, the last boom year; White Paper, 1992, p. 23; p.
64), such as further automation, as well as, the pressure to improve working
conditions will both have to increase in order to secure manpower recruitment
for the manufacturing sector and ensure the loyalty of core workers in large
enterprises. Demes even raises the question of so-called ‘Europeanization’ in
his summary written for the volume by Tokunaga, Altmann and Demes, 1992.
The traditionally comprehensive, allround utilization of labour in Japan has
generated its own winds of change for the work policy of the future.
There are three other problem constellations in which work policies also
play a causal role, which will be briefly outlined below:
2. At present there are considerable problems in the supplier sector, especially in companies below the first tier. In Japan, these small and medium
size firms generally have very little potential for providing training, yet
are subject to considerable pressure to carry out rationalization measuresrequiring skilled workers (as the required investment volume makes rationalization measures increasingly difficult, the number of bankruptcies
354

has risen accordingly, see Asahi Shimbun, 1992). Due to their working
conditions, these suppliers already suffer from a shortage of skilled workers, and the latter are also subject to marked stress (working hours) due tothis shortage. This results in a vicious circle lending additional momentum
to the recruiting problems of such firms. Training opportunities outside of
the companies (by prefecture administrations, for example), are rare andworkers whom are already putting in a great deal of overtime have difficultyattending off-the-job-courses. Personnel transfers from the buyer companies
rarely reach down to the lower tier suppliers and the transfers from higher
tier suppliers frequently fail to meet the labour demand. In any case, thesetransfers are more or less measures for shunting off older and less productive
workers to deal with the recession. Demands for publicly funded vocational
training measures are becoming increasingly vocal (White Paper, 1992, p.
58; ISF-material). Most likely, the recruiting and training problems of thesmall and medium size companies will remain and generate friction and/orchanges within the supplier system (for an overview see JLB, 1990, p. 5).
Such problems are already in evidence in larger suppliers in connection withshort development periods and the problems of recruiting R&D personnel
and the stress these employees are subject to.
3. In the concept of lean production, as well as in discussions of competitive
advantage, short model cycles and thus short development in general are
regarded as essential. Particularly in the automotive industry and the buyersupplier chain, simultaneous engineering is viewed as a special strength of
the Japanese way of linking rationalization and personnel policy (Womack
et al. 1990, p. 112, 146; Clark and Fujimoto, 1992, p. 205). However, evensuppliers with considerable R&D potential (large, direct suppliers), but especially the small and medium sized firms with limited potential, are presently
incapable of coping with the short development cycles in terms of personnel,
work organization and manufacturing technology (a complaint voiced by allof the Japanese suppliers we surveyed; ISF-material). The vicious circle ofrecruiting remains a problem. While R&D personnel are ‘hoarded’ by buyer
companies as well as production engineers, technicians in the company’s
service area are dismissed during recession periods. The segmented labour
market makes it nonetheless difficult or even impossible for small and medium size companies to recruit these individuals. As a result, the automotive industry has already started to extend model cycle periods (from 4 to
5 years at Nissan; the same also applies to the consumer electronics sector,
where cycles had been cut down to periods of several months). The numberof variants is also being reduced, while the products themselves are being
simplified (in the electronics industry advertising refers to such products as‘easier to operate’).
355

At the same time, discussion of these issues has gone beyond management
circles to the public arena. The still existing working hour burdens standin stark contradiction to the 5-year plan developed by the government, employers and unions to reduce working hours. According to this plan, which
has already been delayed several times, 1800 working hours are aimed forby 1996. In addition, the MITI and the Ministry of Labour are pressing toaddress the wasteful use of resources (material and personnel resources) associated with short model cycles and give greater consideration to recycling
issues. Even inter-company oriented work policy – i.e. the organizationof the supplier system – is reaching the limits of what is viable in spite ofproductive methods such as simultaneous engineering. At the same time,
the supplier system holds no more potential for further rationalization andcost reduction (according, for example, to the corporate report by Toyota,
Handelsblatt, 15.12.1992).
The supplier system is subject to additional burdens arising in the context of the highly praised, purported ‘partnership-based’ cooperation forms
between manufacturers and their suppliers (in matters such as simultaneous
engineering, know-how transfers, direct personnel cooperation, as well as
increasing utilization of information technology, etc.). On the one hand, suppliers are becoming increasingly transparent for buyers, on the other hand,
the latter expect suppliers to diversify their customers. This is not only an
attempt to reduce ‘responsibility’ for suppliers in times of crisis. Buyers areprimarily interested in suppliers being exposed to international competitionin order to draw on their enhanced rationalization and product know-how
at a later date. The problem of how suppliers will be able to generate thenecessary synergy effects in the R&D and rationalization process under theconditions of greater diversification and transparency is the topic of muchdiscussion (ISF-material). The balance between autonomy and control, andthus the distribution of productivity gains throughout the value added chain(Bieber and Sauer, 1991; Sauer, 1992, p. 187) remains unsolved in Japan as
elsewhere, with necessary consequences for employees in supplier firms.
4. The JIT system is regarded as the pivotal element of Japanese manufacturing methods in the automotive industry. At present, this concept has alsoreached its limits in several respects, including work policy (JLB, 1991b,p. 4). The fact that other branches (especially the wholesale/retail sector)
have adopted JIT principles has placed such an enormous strain on underdeveloped traffic infrastructures that reliable just-in-time deliveries canno longer be guaranteed. If the present developments progress in a linear
manner, traffic will increase by an estimated 20 percent by the year 2000.
Large assembly plants erected in remote regions, distant from metropolitan
areas (in Kyushu, for example), as a response to the labour market situation,356

naturally create longer delivery channels. It is being overlooked that it isprecisely the jobs in the transport and haulage trade that are among thoseno longer meeting with acceptance (due to factors such as long and irregular working hours, night work and work on holidays, long absence from
home, heavy physical work, poor working conditions and low wages; Japan
Trucking Association 1991) and that this could have severe consequences.
Given the further extension of the JIT system and considering the targeted
reduction of working hours, the government estimates that between 800,000
and one million drivers (an increase by 66 percent) will be required by theyear 2000. A figure that the Japanese labour market cannot provide (Demes,
1992a, p. 482). At the same time, the transport companies find themselvesconfronted with increasing economic problems such as: smaller loads, demands for shorter delivery times, negative sanctions imposed in the eventof delays, and rising personnel costs. All in all, these are burdens that thetransport companies cannot or will not be able to cope with. Here too, The
Ministry of International Trade and Industry (MITI) and the Ministry ofTransport are pressing for the introduction of new logistics concepts (evenkeeping stores) and especially the consideration of ecological aspects! Thisis another area in which inappropriately lean rationalization concepts haveoutstripped themselves, not least for personnel policy reasons.
In conclusion it would seem that Japanese work policy, integrating personnel policy and rationalization policy, perhaps have not reached their limits,
but it is currently confronted with considerable problems in a number ofrespects. Reflections of alternative forms of work policies which achieve
productivity gains and thereby enhance competitive strength, should not be
blocked through a fixation with the past success of the Japanese automobile
industry. Our brief look at the effects of Japanese work policy has revealed
problems for workers, enterprises and society, which, in the end, will result
in consequences for the production mode itself.
The unique challenge we are currently facing in Europe consists of meetingworldwide converging rationalization objectives by developing work policies that adequately cater to the needs of society and the economy, while atthe same time providing more humane forms of work. In view of the problematic aspects of Japanese work policies, neither the social nor economic
goals can be adequately met by limiting solutions to the European statusquo, nor by merely seeking to catch up with the Japanese. In conclusion,
one must consider the fact that Japan has a tremendous latent potential oflabour capacity that has remained relatively underdeveloped thus far, but
one which surely will be mobilized in the future.

357

Notes1.

This papers refers to the mass production sector (not just the automotive industry) and to production and assembly work on the shop floor level, while
omitting the white collar sectors (such as R&D, for example). Although it would
be most desirable, the current paper does not differentiate between different
industrial branches or enterprises. The supplier industry is only dealt with interms of its basic structures. The text was completed in early 1992, therefore
the consequences of the current economic downturn in Japan (1992/1993) are
not discussed.

2.

The following treatment is based on research of Japanese work policies conducted at the Institute for Social Research, ISF Munich, since the beginning of
the eighties and focusing especially on mass production (automotive industry,
particularly the supplier industry, but also the electrical industry). These projects
were conducted in connection with research on the automotive supplier industry
in the FRG and theoretical work on ‘systemic rationalization’. Apart from theauthor, the team of researchers includes Daniel Bieber, Manfred Deiß, Volker
Döhl, Dieter Sauer (Altmann and Sauer, 1989; Bieber and Sauer, 1991; Deißand Döhl, 1992; Sauer, 1992; Altmann, 1992a; Tokunaga and Altmann et al.,
1991; Tokunaga, Altmann and Demes, 1992). gI would also like to thank Klaus
Semlinger, who is investigating the same issues especially in the small size
company sector, for his valuable insights, Pamela Meil (also from ISF) and
Masami Nomura (University of Okayama, Japan), for their helpful comments.
The literature referred to in the following is selective and consists mainly of
publications from German speaking countries and associates of the ISF Munich.

3.

The term ‘work policy’ denotes all of the design measures pertaining to personnel and rationalization policies (technological and organizational) affecting theregulation of work within companies, as well as, that of dependent companies(suppliers).

4.

Naturally small and medium size supplier companies also seek to retain theiremployees, which results in peripheral workers also serving the firm for a longtime. Due to the tight labour market, the repercussions for the company’s image
and for reasons of social responsibility, Japanese companies try to avoid laying
off employees. Concerns which are by no means so ‘typically Japanese’ as tobe conspicuously absent in other industrial nations.

5.

Above a certain hierarchical level, such managers can no longer be membersof the (company) union and thus are not represented by the union.

6.

It should be noted that there is no formal division between ‘employees’ and‘workers’ and therefore no division of the respective training forms. Naturally,‘white collar’ and ‘blue collar’ workers perform different functions, as well as
treading different career paths, etc. While a certain scope for permeability is
pre-served in principle, it is soon restricted by the way in which individuals
enter the company, as well as by personnel evaluation and task assignment. In

358

the follow-ing we will not be dealing with these issues. In Japanese enterprises
there is also no differentiation between ‘skilled’ and ‘semiskilled’, although inmany large enterprises this is identical with the differences between male andfemale jobs.
7. See Tokunaga and Altmann et al., 1991, chapters IV-VI; and Jürgens et al.,
1989, p. 39, with a different emphasis.
8. An example is Mercedes-Benz Rastatt, see Automobil-Produktion, 1992, p.
128; Springer, 1992; for Opel see Minssen et al., 1991; Gesterkamp, 1992.
9. The company agreement Nr. 179 at Opel-Werke, 1991.
10. Naturally, skilled team work is also to be found in other sectors, such as inmachine building. Team work is primarily encountered where male workers
are employed (core workers!). In these areas, teams are formed comprising
members with different training backgrounds (with 2 and 3 year training,sometimes off-the-job training), as well as workers with differing amounts, butnevertheless company specific experience. In all processes organized according
to line principles, and especially those with female workers, such teams do notexist.
11. See for mass production in general: Tokunaga and Altmann et al., 1991, p. 79
and p. 123; Jürgens, 1992b, p. 28; and Clark, as early as 1979, p. 104.
12. In view of the social division of labor (and considering the additional relevanceto the working time issue (see 3.3)) a paper dealing with the supplier system
alone would be justified. The Japanese supplier system is a precondition for
the work policies that exist in the automotive industry, as well as a work policy
instrument in its own right which allows the buyer companies to shift problemsof flexibility, loyalty and cost reduction, etc., to the supplier chain. In this context, the work policy measures and limited scope for independent action in the
supplier firms should also be investigated. For reasons of space, however, we
will not be able to discuss these questions. The consequences for employees insupplier firms will be summarized at the end of this paper (see 5.1).
13. There is a profusion of material available on this topic; on the one hand thecomprehensive concept of ‘quality orientation’ is dealt with, which in turn isregarded as a Japanese ‘characteristic’. De facto, however, this concept was
adopted as the result of work policies (introduced by American management
consultants) and implemented by management circles in conjunction withstrategic sales market policies. The available literature also discusses ‘quality
circles’, a widely employed tool in Japan (Beriger, 1986). The practice anddesign of quality circles is conceptionally well known in the West, while its
concrete aspects are largely unknown (Yahata, 1987).
14. Personnel evaluation was first introduced in the twenties in the large companies.
During the war, evaluation was discontinued in light of the very tight economic
situation. Only after economic stabilization in the 50’s, personnel evaluation
was once again intensified and further developed.

359

15. The powerful position of authority that direct supervisors hold over production workers has been based in large part on the personnel evaluation systemsince the second half of the fifties (after the traditional ‘feudal’ structure of the
prewar period fell under a great deal of criticism from management circles andthe still powerful unions). As a result of rapid technological developments the‘new foreman’ was no longer integrated into a potentially militant union, as was
the case following democratization in the early fifties; the new foreman was
called on to fulfill more personnel policy functions, particularly in conjunction
with the implementation of new manufacturing methods and new products. This
involved employee training (for which the forman was prepared using mainly theAmerican methods of ‘training within industry’) and the personnel evaluation
system. This development was also advanced by management interests in curbing union activities, or guiding them in a direction that would serve corporate
interests (employee activity in unions is recorded in the evaluation - negatively
if necessary - although not official (see a case study from the wholesale/retailsector reported by Endo, 1992b).
16. In view of the overwhelming proportion of male workers, this factor does notplay a decisive role in automobile companies.
17. The difference in wage costs between manufacturers and lower level suppliers,
exhibits an average ratio of approximately 3:1, Handelsblatt, 3.2.92; for an
overview see: Hirasawa, 1990.
18. This period has become increasingly shorter over the last few years, and is an
important issue of debate in social policy.
19. For an example from the electrical industry see Tokunaga and Altmann et al.,1991, p. 192, p. 220.
20. See for example the detailed case studies by Tamai, 1992, p. 398; for information on structures and an assessment of working time see Deutschmann, 1987;
Altmann, 1992b; Bosch, 1993.
21. Japanese unions are enterprise unions. At present there are more than 70,000
individual unions. Normally, only the core workers hold union membership,
while the union organization and interest representation of the marginal workers
is rudimentary at best. In many cases, medium size companies have no representation of employee interests, and small firms usually lack such representation
altogether. In Japan the total percentage of workers organized in unions has
dropped below 25%.
As institutions and in terms of union personnel, the individual enterprise
unions are autonomous bodies which can conclude collective agreements. The
umbrella organizations, and their programs and guidelines (such as agreements
on protection against rationalization) are of very limited relevance for the enterprise unions. (There is a great deal of literature on these issues, see referencesin Kawanishi 1992; I will quote only a few examples relating to my own workin this field: Tokunaga and Bergmann, 1984; Bergmann and Tokunaga, 1987;
Bergmann, 1990; Tokunaga, Altmann and Demes 1992).

360

22. Decreasing profits and trade conflicts are regarded as threats to future wage
developments.
23. Nissan planned (June 1993) to reassign 1500 out of 4000 employees in Zama toother workplaces (for example, machine building), and to transfer 2500 to otherplants. The majority of the employees are resisting the transfers. The company
union is trying to assure that no one is dismissed (see also JLB, 1993).
24. In this context the question of the control systems governing industrial policies
and market policies in Japan and their underlying strategies should be dealt
with in more detail.

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365

Lean production in the automobile
industry: Second thoughts
Dan Jonsson

1. Introduction
Recently, so-called lean production has been heavily promoted as the ultimate manufacturing method in automobile assembly, especially in thebook entitled ‘The Machine that changed the world’ (Womack, Jones &Roos 1990; henceforth MCW). This book, based on the International Motor
Vehicle Program at the Massachusetts Institute of Technology, is the firstto reveal, according to the cover: ‘… How the Japanese have been able tomove ahead of the rest of the world in the global auto war … Their secretweapon: a manufacturing method called lean production … What industry
everywhere must learn about lean production to succeed in the 1990’s.’
The following citations, beginning on the first page of the first chapter– ‘The Industry of Industries in Transition’ – reflect the missionary zeal
guiding the authors:
After World War I, Henry Ford and General Motors’ Alfred Sloan moved
the world manufacture from centuries of craft production – led by European firms – into the age of mass production. Largely as a result, theUnited States soon dominated the global economy.
After World War II, Eiji Toyoda and Taiichi Ohno at the Toyota Motor
Company in Japan pioneered the concept of lean production. The rise ofJapan to its current economic pre-eminence quickly followed, as otherJapanese companies and industries copied this remarkable system. …
This book is an effort to ease the necessary transition from mass
production to lean. By focusing on the global auto industry, we explain
in simple, concrete terms what lean production is, where it came from,
how it really works, and how it can be spread to all corners of the globe
for everyone’s mutual benefit. (MCW, pp. 11–12)

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This is powerful rhetoric, but sweeping statements such as these can also
evoke scepticism. In view of the strong impact this book has had on Western
manufacturers, there seems to be a need for a dispassionate analysis of thelogical structure and empirical validity of arguments presented therein. This
chapter provides an explication and assessment of MCW’s main message
relating to assembly plant practices.

2. An explicated causal model
The schematic causal model in figure 1 represents an explication of thecomplex of ideas in MCW that will be analysed below.

Figure 1. A schematic causal model explicating an important complex ofideas in ‘The Machine that changed the world’Note that ‘lean production’ is a so-called intervening variable in the causal
model, so if this production method is established in plants that are not necessarily Japanese-managed, the same benefits with regard to ‘productivity’,‘product quality’ and ‘success’ should be expected there. This is in fact oneof the main messages in MCW.
The causal model may be expressed in terms of the following theses:(1) The assembly plant practice of Japanese automobile manufacturers
differs significantly from that of Western manufacturers.
(2) Japanese automobile manufacturers achieve significantly higher productivity than Western manufacturers.
(3) Japanese automobile manufacturers achieve significantly higher product quality than Western manufacturers.
(4) Japanese automobile manufacturers are significantly more successful
than Western manufacturers.
(5) Japanese automobile manufacturers achieve significantly higher productivity and product quality than Western manufacturers mainly because the assembly plant practice of Japanese manufacturers differs
significantly from that of Western manufacturers.
(6) Japanese automobile manufacturers are significantly more successful
than Western manufacturers mainly because Japanese manufacturers
achieve significantly higher productivity and product quality thanWestern manufacturers.
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Theses (1)–(5) are argued explicitly and forcefully in MCW, whereas thesis(6) constitutes an interpretation of an implicit message. Since statements
similar to thesis (6) have been made by many journalists and managers
obviously inspired by MCW, and also because the relevance of theses (2),(3) and (5) is largely based on the truth of thesis (6), there are good reasons
to consider this thesis as well.

3. The state of the industry
In this section, two questions concerning theses (1)–(4) will be addressed,
namely ‘What are the meanings of the key terms in these theses, and how
are the key concepts measured?’ and ‘What is the evidence for these theses,
and what is the evidence against?’(1) The assembly plant practice of Japanese automobile manufacturers
differs significantly from that of Western manufacturers.
Table 1 reflects different assembly plant practices in Western as comparedto Japanese-managed plants; practices in MCW referred to as ‘mass production’ and ‘lean production’, respectively.
Table 1
Some indicators of assembly plant practises
in Western and Japanese-managed plants (MCW, p. 92)

Size of repair area
(as % of assembly space)
Inventories(days for 8 sample parts)% of work force in teams
Job rotation(0 = none, 4 = frequent)
Suggestions/employee
Number of job classes
Training of new production
workers (hours)

Japanese
in JapanJapanese
in NorthAmerica

American All Europe
in NorthAmerica

4.1

4.9

12.9

14.4

0.2
69.3

1.6
71.3

2.9
17.3

2.0
0.6

3.0
61.6
11.9

2.7
1.4
8.7

0.9
0.4
67.1

1.9
0.4
14.8

380.3

370.0

46.4

173.3

The data in table 1 should not be accepted uncritically. For example, theteam concept as used in Japan does not correspond to the concept of autonomous teams as used in Europe, so the differences with regard to team work369

reported in table 1 should be interpreted with caution. Even if importantdifferences between assembly plant practices do exist, some claims about
these differences in MCW seem to be exaggerated – e.g. the claims thatlean production is ‘an entirely new way of doing things’ (MCW, p. 47) andthat the introduction of lean production constitutes ‘a revolutionary leap’(MCW’s cover). Such statements disregard the fact that lean production has
retained or even reinforced traditional elements such as the assembly line,
short work cycles, standardised work methods and hierarchical organisation
principles (Ellegård et al. 1992).
(2) Japanese automobile manufacturers achieve significantly higher
productivity than Western manufacturers.
According to measurements made in the International Motor Vehicle Program World Assembly Plant Survey, Japanese automobile manufacturers
achieve remarkable productivity and product quality (see figure 2). Notethat ‘assembly plant’ activities include welding and painting of car bodies
as well as final assembly of automobiles.

Figure 2. Productivity and product quality achieved in assembly plants(MCW, p. 93)
The productivity figures reported in MCW have been widely cited. Unfortunately, the way they have been presented and interpreted has often revealed
an inadequate understanding of these figures. Several basic points concerning
the meaning and measurement of productivity have often been overlooked.
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First, sufficient attention is not always paid to the fact that ‘productivity’ in
MCW refers to assembly plant productivity. This concept encompasses onlya small fraction of all value-adding activities in the automobile industry.
Second, the measurement of assembly plant productivity poses several
problems and involves some dubious or at least debatable decisions.
It is important to note that the productivity figures reported are not basedon the number of automobiles produced and the number of man-hours spentin the assembly plant as observed during some specific period or periodsof time (e.g., one year or a random sample of shifts). Instead, productivity
figures are based on a standardised number of automobiles produced by astandardised number of employees during a standard shift (Krafcik 1987,
p. 18; Krafcik 1988, pp. 57–58).
As a consequence of this measurement approach, insufficient attention ispaid to overtime. Unpaid ‘voluntary’ overtime, a common practice in Japan,
is not included in the man-hour counts. Nor is paid overtime included, apparently, since total working hours per shift are calculated from the (nominal)
length of shifts and the (adjusted) number of workers in each shift (Krafcik
1988, pp. 57–58).
Neglecting overtime may introduce a serious measurement bias in favourof Japanese manufacturers. As an illustration, visitors to the Toyota starplant in Takaoka, Japan reported an actual working week of 60 hours in
1988, whereas the nominal working week was only 40 hours (Williams etal. 1992, p. 16).
Furthermore, the number of vehicles produced in a standard shift can becalculated by (1) dividing the number of minutes per shift by the stipulated
number of minutes per work cycle for each assembly line and then adding
the assembly-line capacities thus calculated, or (2) dividing the number ofvehicles produced per year by the number of shifts per year. The first method(which presupposes that conventional line assembly is used) provides ameasure of nominal production capacity, whereas the second method also
reflects capacity utilisation. It is not clear which one, if any, of these methods
that was used in the World Assembly Plant Survey.
An issue raised here concerns the relationship between productivity andcapacity utilisation. Japanese assembly plants have attained high and stablelevels of capacity utilisation; for example, the quarterly capacity utilisationin the motor vehicles and parts manufacturing sector as of 1991 varied from
96 percent to 101 percent in Japan versus from 67 percent to 76 percent in
the United States (Williams et al. 1992, p. 20). Since low capacity utilisation affects productivity negatively, there is again a risk of introducing aconsiderable bias in favour of Japanese automobile manufacturers.
It should also be noted that all employment figures used in the calculationof productivity measures were ‘based on the number of employees required371

to operate, not the total roll-on’ (Krafcik 1988, p. 57), implying that employees required due to absenteeism were not included. Furthermore, only asubset of all activities performed in the assembly plants are included in the
man-hour counts reported. This subset is designed to consist of activities
performed in all plants, the purpose being to improve comparability between
plants performing more or less assembly work in-house.
To further improve comparability, correction factors were used to compensate for the effects of relief time, welding requirements, product sizeand equipment content. While such corrections are motivated, given themeasurement approach, the choice of correction factors necessarily involves
debatable decisions.
One concern, then, is whether the definitions and adjustments describedabove really permit fair comparisons between different assembly plants.
Another concern is based on the fact that the man-hour counts reported in
MCW are substantially lower than the gross assembly hours calculated by
dividing the total hours of effort in the plant by the total number of cars
produced there. In popular discussions of assembly plant productivity, thestandardised net assembly hours reported in MCW are often interpreted as– and compared to – actual gross assembly hours. Specifically, fictitious
man-hour counts from Japanese assembly plants have sometimes been compared to actual man-hour counts from Western assembly plants, resulting ingrossly exaggerated productivity differences.
(3) Japanese automobile manufacturers achieve significantly higher
product quality than Western manufacturers.
Thesis (3) is supported by the product quality data reported in figure 2.
However, the measures of product quality presented in MCW can be misinterpreted unless certain crucial aspects of the measurement procedure areborn in mind.
First, product quality is measured by the number of defects, that is quality
refers to deviations from a standard. The issue of the quality of automobiles
that adhere to this standard is not addressed. Second, only those defects thatcan be attributed to work in the assembly plant are included, specificallywater leaks, loose electrical connections, paint blemishes, sheet metal damages, misaligned exterior and interior parts, and squeaks and rattles (Krafcik
1988, p. 74). ‘Product quality’ thus means assembly quality as measured
by the number of assembly-plant-related defects, not product quality in a
wider sense.
Third, the number of defects reported are based on North American
customers’ responses to a mail questionnaire. While it is useful to obtaincustomers’ opinions, this procedure does also involve several problems. It
should be noted that quality measures were obtained only for automobiles
372

sold in the United States and that the questionnaire response rate was very
low, about 31 percent in 1990 (Armstrong 1991). In addition, psychological factors will inevitably influence customers’ assessments of defects. For
example, what is seen as a defect will probably differ depending on whether
the automobile is a luxury car or a compact car, and the customer-dealer
relationship is also likely to affect the number of defects reported.
(4) Japanese automobile manufacturers are significantly more successful than Western manufacturers.
As shown in table 2, the Japanese share of world automobile production
increased from about 1 percent in 1960 to about 25 percent in 1989, an
extraordinary performance.
Table 2
Japanese share of world automobile production (Lööf 1991, p. 2)
1960

1965

1970

1975

1980

1985

1989

World
production
12 766 19 232 22 578 25 215 29 216 32 728 36 015
Japanese
production
165
696 3 179 4 568 7 038 7 647 9 042
Share ofworld production 1.3% 3,6% 14.1% 18.1% 24,1% 26,9% 25,1%
In terms of profit margins, return on investments, dividends paid and similar
measures of economic success, Japanese automobile manufacturers have notbeen equally successful as they have in terms of growth of market share,
however (e.g., Helling 1991). This is hardly accidental. Japanese automobile
manufacturers have pursued a long-term strategy, where they are willing tobuy market shares in order to gain a strong market position. As they put itthemselves: ‘First win, then profit’. This strategy has been stimulated by thekeiretsu system, which provides for financial stability, and by the extended
pay-off times for investments tolerated in Japan.
Second, even if ‘success’ is interpreted as ‘successful market performance’, some concerns remain. Note that the Japanese share of world automobile production has not shown an upward trend since 1980. A further
sign that the tide may have turned is that Japanese companies have beensignificantly hit by the recent down-turn for the global automobile market,
while the down-turns in 1969, 1975 and 1982 did not affect them to thesame extent.
Such observations suggest that the factors explaining the fast growth of theJapanese automobile industry may have been present and effective mainly
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during the 1960s and 1970s. It is not obvious that because of Japanese automobile manufacturers’ success yesterday, Western manufacturers shouldemulate tomorrow what the Japanese are doing today.

4. Determinants of assembly-plant productivity
and assembly quality
Correlations thus exist between assembly plants’ national affiliation (Japanese vs. Western) and their reported productivity, and also between national
affiliation and reported assembly quality. These correlations are in MCW
interpreted as evidence of causal relations as stated in thesis (5).
(5) Japanese automobile manufacturers achieve significantly higher
productivity (i.e. assembly plant productivity) and product quality (i.e.
assembly quality) than Western manufacturers mainly because the assembly plant practice of Japanese manufacturers differs significantly
from that of Western manufacturers.
As discussed in section 3, the reported correlations may be exaggerated
due to measurement errors. In addition, it will be argued here that even if
the correlations are accepted at face value they do not demonstrate causality. The main part of any productivity and quality advantage exhibited by
Japanese-managed assembly plants is probably due to other factors thanlean production understood as a manufacturing method.
Four types of factors that affect productivity and quality may be distinguished: ‘materials’, ‘machines’, ‘men’ and ‘methods’ (e.g., Krafcik 1988).
The salient question is to what extent productivity and quality are affected by
the first three of these factors and to what extent they are affected by the lastfactor, ‘methods’. This question is important because, to be specific, easy-toassemble cars (’materials’), extensive automation (’machines’) and skilled
and hardworking employees (’men’) are not defining features of lean production systems whereas a certain assembly plant practice (’methods’) is.
4.1 Assembly plant productivity
As noted in MCW (pp. 96–97), the ‘materials’ factor, which concerns the
manufacturability of automobiles, is an important determinant of the numberof man-hours required for assembly work. In spite of that, manufacturability
was not taken into account when assessing assembly plant productivity, withthe exception of a rather crude correction for automobile size as discussed
above.
‘Answering the manufacturability question definitely is difficult’, say theauthors of MCW in defence of this omission, ‘because we would have toperform what automobile manufacturers call a tear-down analysis on every
374

car being assembled in every plant we surveyed. Only then could we see how
many parts the car has and how easily they can be assembled. This analysis
would be staggeringly expensive and time-consuming.’ (MCW, p. 96)
This is not very convincing, though. Standard assembly times based ontime-and-motion analysis are required in all line assembly plants in orderto perform capacity calculations and line balancing. Therefore, it seems
reasonable to believe that such data should have been rather easy to obtainfor all plants in the study. As an alternative, or a complement, data extracted
from product data bases can be used to estimate required assembly times. In
a study by Engström (1983, p. B6:6), the number of parts to be assembled
and the type of fasteners used were found to account for 85 percent of thevariation in standard assembly times.
In the absence of more adequate data, MCW refers to two minor studies on
manufacturability (p. 96). In one study, eight automobile companies ranked
19 manufacturers according to the manufacturability of their products. The
rankings agreed fairly well, and in terms of average rank the six Japanesemanufacturers won positions 1, 2, 3, 5, 8 and 9. In another study, conductedby General Motors, it was estimated that 40 percent of the difference inproductivity between one GM assembly plant and one Ford plant was due
to a difference in manufacturability.
Second, a considerable part of the variation in productivity is due to someassembly plants being more automated than others (the ‘machines’ factor).
While the actual assembly work is difficult to automate, the welding andpainting of car bodies can be automated to a great extent. Fortunately, thedegree of automation was assessed in the World Assembly Plant Study, andas expected automation proved to be related to productivity. Specifically,
about one third of the variation in productivity could be accounted for byvariation in the level of automation (MCW, p. 94).
Third, the work intensity and the qualifications of the employees (’men’)also affect productivity. Obviously, if operators work harder they will complete the job in less time, and a more qualified worker will in general also do
the job faster than a less qualified one if they work equally hard. If strong,healthy, tenacious, skilled and highly motivated workers are hired it is reasonable to expect higher productivity irrespective of production methods.
Again, MCW reports no data that could be used to assess such effects.
Some tentative conclusions can however be drawn from reports concerning
Japanese assembly plants in North America and Europe, so-called transplants. According to such reports (e.g. Fucini and Fucini 1990; Berggren,
Björkman, and Hollander 1991), the work pace in these plants is quite high.
More importantly, the recruitment of employees shows a clear pattern. Assembly plants have been established in regions with high unemployment,very competitive wages are offered, and a no lay-off ‘guarantee’ is issued.
375

As a result, each position in the plant attracted a large number of applicants
who were subjected to an extensive screening and testing procedure. It may
be argued that these plants would not have taken such trouble and accepted
additional costs unless it had enabled them to recruit a labour force unusually willing and able to work hard and skilfully.
Also, Japanese-managed assembly plants are characterised by a minimal
work-force (leading to much overtime work) and small variations in capacity utilisation. As a result, workers’ idle time is minimised. As mentioned
earlier, it is not clear whether the productivity measure used in the World
Assembly Plant Study is biased by this effect.
Now, if (1) manufacturability accounts for a major part of the observed
difference in assembly plant productivity between Japanese and Western
manufacturers, (2) automation accounts for about one third and (3) factors
such as workforce selection and work intensity account for a significant partof the difference, there is not much variation in assembly plant productivity that remains to be accounted for by the fourth factor, ‘methods’, which
includes the lean production assembly plant practice.
In conclusion, there is not much real evidence presented in support of thethesis that superior Japanese assembly plant productivity is mainly due tosome powerful, ingenuous ‘secret weapon’ manufacturing method practisedin Japanese assembly plants. Correlation is no proof of causality, and there
are other plausible, indeed rather obvious, explanations of a major part ofthe observed difference in assembly plant productivity.
4.2 Assembly quality
The same type of analysis as in the preceding subsection may be performed
for assembly quality. There are reasons to expect that product design as wellas component quality will affect assembly quality. Similarly, automation andskilled and well-motivated employees can be expected to improve assembly
quality by reducing process variations.
Unfortunately, it is difficult to quantitatively assess the magnitude of thesethree types of contributions to assembly quality – they may be decisive,
but they may also be of minor importance. Consequently, it is difficult toassess the contribution of the ‘methods’ factor. In any case, thesis (5) is notproved in MCW.

5. Effects of assembly plant productivity
and assembly quality
As mentioned in the introduction, the following thesis fits in with thoseconsidered above and is also worth investigating.

376

(6) Japanese automobile manufacturers are significantly more successful in terms of market performance than Western manufacturers mainly
because Japanese manufacturers achieve significantly higher productivity (i.e. assembly plant productivity) and product quality (i.e. assembly
quality) than Western manufacturers.
The notion that assembly plant productivity and assembly quality are sufficient to explain the market performance of automobile manufacturers
neglects many other important factors. This becomes evident in asking thequestions ‘What determines total production costs?’, ‘What determines
customer-perceived product value?’ and ‘What factors in addition to total
production costs and customer-perceived product value determine market
performance?’
5.1 Total production costs
In the absence of a critical discussion of the relevance of the man-hourcounts presented in MCW, readers are prompted to believe that the reported
man-hour counts accurately reflect total production costs per automobile.
For several reasons, this is not the case, even if it is assumed that man-hourcounts do reflect assembly plant productivity accurately.
First, man-hours do not equate labour costs; man-hour reduction is a means
rather than an end. As noted in section 4.1, man-hour counts may be reducedby raising wage levels, thereby making it possible to recruit an elite labour
force. Such man-hour reductions will obviously not result in proportionate
reductions of labour costs. Furthermore, reduced man-hour counts may
also be achieved through measures that increase non-labour costs, e.g. theintroduction of automatic equipment to replace manual labour.
Second, the labour costs in the assembly plants constitute only a small
percentage of the total production costs. In a Swedish final assembly plant
recently studied, the labour costs amounted to less than 10 percent of thecosts for materials alone. Even though labour costs for welding and paintingof bodies have to be added to this figure, the assembly plant labour costs’
share of the total production costs was in the vicinity of 5 percent. This meansthat even if labour costs in the assembly plant are reduced dramatically,
the resulting total cost reduction will be marginal. The cost contribution ofassembly plant man-hours is not sufficient to merit the amount of attention
paid to them in MCW.
In a broader perspective, on the other hand, there are many significant
elements of the total production costs that may have favoured Japanese
automobile manufacturers. For example, (1) Japanese designers have apparently required less time and resources to design new car models, (2)Japanese manufacturers seem to be have been able to obtain components
more cheaply than Western manufacturers and (3) capital costs have been377

low due to low interest rates and low inventory. Capital costs (as well as
administrative overhead) have also been reduced by the high capacity utilisation attained in Japanese assembly plants.
Especially during the 1960s and 1970s, the main expansion period for theJapanese automobile industry, lower domestic wages, particularly amongsuppliers, created a cost advantage. In 1990, labour costs per hour in theJapanese motor industry were 90 percent of those in the United States, but
as late as 1980 Japanese labour costs were only 58 percent of those in the
US (Williams et al. 1992, p. 33). In 1989, Japanese motor industry firms
with less than 100 employees – a category where the lower echelons ofsuppliers are found – paid wages equal to only 53 percent of those in thelargest firms (ibid., p. 34).
Ironically, statistical data suggest that the productivity in the Japanese
motor vehicle industry was lower than that in the United States at least until
the mid-1970s (ibid., p. 18), so thesis (6) does not explain why the Japaneseshare of world automobile production increased from 1.3 percent in 1960
to 18.1 percent in 1975. Nor does thesis (6) explain why the Japanese shareof world automobile production ceased to grow when assembly plant productivity reached the level of excellence reported in MCW.
5.2 Customer-perceived product value
As noted above, ‘product quality’ as defined in MCW is measured in termsof defects attributable to the assembly process, i.e. assembly quality. Whileassembly quality is one determinant of customer-perceived product value,
it is hardly a major one, for several reasons.
First, the quality of the assembled automobile derives not only from theassembly process but also from the quality of the components assembled.
Japanese automobile manufacturers have a reputation of demanding highquality from suppliers. How much component quality contributes to over-all
product quality is an important question; unfortunately, it is not discussed
in MCW.
Second, the customer-perceived product value depends not only on objective product features but also on how these features match customers’
needs and preferences. Originally, Japanese automobiles were designed toappeal to customers that wanted small and cheap cars, then dependability
became an important selling point, and lately stylish appearance and ample
equipment have characterised Japanese-designed automobiles. Whether
Japanese automobile manufacturers have been particularly successful indesigning cars that match customers’ needs and preferences during eachperiod is another important question not discussed in MCW.

378

5.3 Market potential and market presence
Other important factors that affect market success are market potential,
primarily the size and rate of growth of a market, and market presence, i.e.
availability and customers’ awareness of products. Japanese automobile
manufacturers have certainly been fortunate to possess a domestic market
with great potential and weak presence of foreign competitors.
The Japanese automobile market is today second only to the North American market, and 45 percent of all automobiles produced in Japan were soldon the domestic market in 1991. It may be argued that the growth of world
market share for the Japanese auto industry in part only reflects the phenomenal growth of its sheltered domestic market. For example, the numberof motor vehicles sold in Japan increased from some 200,000 in 1960 toabout 7,000,000 in 1989.
The increased Japanese share of the world motor vehicle market of course
also reflects an increased market share abroad. But again this successful
market performance partly reflects market potential and market presences
at home. In other words, profits generated at home but used for market investments abroad have contributed to the growth of market shares abroad(MCW, p. 208).

6. Conclusions
The main conclusion of my analysis may be stated in two parts:••

There do exist important differences between Japanese and Western
automobile manufacturers with regard to economic success, productquality, productivity and assembly plant practice. These differences
are, however, somewhat exaggerated and distorted in MCW. (Theyare even more exaggerated and distorted in the general debate on lean
production.)Contrary to what is implied in MCW, the ‘lean production’ assemblyplant practice does not have a decisive influence on assembly quality andassembly plant productivity; there are many other important contributing factors. Moreover, assembly quality and assembly plant productivity
do not have a decisive influence on economic success (even if economic
success is narrowly defined in terms of market performance); there aremany other important contributing factors.

The last point can be clarified by comparing the simple causal model infigure 1 with the amended model in figure 3.

379

Figure 3. An amended version of the original(the shaded boxes are those included in figure 1)

causalmodel

From a scientific point of view, the oversimplified message about the virtuesof lean production presented in MCW must be questioned and criticised inseveral respects. The presupposition that the factors that explain productivity, product quality and market performance today did also explain them 25
years ago is historically naive. Procedures for measuring productivity andquality are incompletely documented, the validity and reliability of the measures is questionable, and the concepts measured have minor relevance. The
causal interpretation of observed correlations is methodologically naive.
But it would also be naive to assume that the book’s impact outside thescientific community is determined by its level of scientific rigour and methodological sophistication. The big and difficult decisions facing managers
in the automobile industry today are potentially anxiety-arousing. Simple,
forcefully stated diagnoses and prescriptions that relieve anxiety have great
appeal in this situation, whereas a scientifically solid, carefully qualified
analysis may fail to impress decision makers.
Unfortunately, MCW’s analysis of the Volvo Uddevalla and Kalmar plants
seems to have been affected by this logic of persuasion. The Uddevalla plant
is dismissed as ‘neocraftsmanship … almost certain to be uncompetitive withmass production, much less lean production’ with neither any empirical data
nor any understanding of its mode of operation to support this conclusion.
Elaborating on the ‘neocraftsmanship’ interpretation, the authors speculatethat ‘[t]he real satisfaction presumably comes in reworking and adjusting
every little part so that it fits properly’ (MCW, p. 102), as if standardised,interchangeable parts were not used in the Uddevalla plant! The Kalmar
plant is also misrepresented: the statement that it ‘reintroduced craft techniques by giving small groups of workers responsibility for assembling awhole vehicle’ (MCW, p. 47) is false. While a more careful assessment of380the Uddevalla and Kalmar plants would have made the message about lean
production as the ultimate manufacturing method less compelling, it would
simultaneously have made the story told more interesting and credible.

References
Armstrong, L. (1991), ‘Who’s the most pampered motorist of all?’, Business
Week, June 17.
Berggren, C., T. Björkman, and E. Hollander (1991), Är dom oslagbara?, Institutionen för Arbetsvetenskap, Kungliga Tekniska Högskolan, Stockholm.
Engström, T. (1983), Materialflödessystem och serieproduktion, Chalmers University of Technology, Göteborg.
Ellegård, K., T. Engström, B. Johansson, M. I. Johansson, D. Jonsson, and L.
Medbo (1992), ‘Reflective Production in the Final Assembly of Motor Vehicles – An Emerging Swedish Challenge’, International Journal of Operations& Production Management, vol. 12, no. 7/8: 117–133.
Fucini, J. and S. Fucini (1990), Working for the Japanese, Free Press, New York.
Helling, J. (1991), Världsmästarna. En ny generation av tillverkningsföretag, Sellin & Partners, Stockholm.
Womack, J.P., D. Jones, and D. Roos (1990), The Machine that Changed theWorld, Rawson Associates and MacMillan International, New York.
Krafcik, J.F. (1987), Trends in International Automotive Assembly Practice, The
International Motor Vehicle Program.
— (1988), Comparative Analysis of Performance Indicators at World Auto Assembly Plants, Sloan School of Management, MIT, Cambridge, Mass.
Lööf, H. (1991), ‘Klarar Svensk bilindustri den japanska utmaningen?’, Fakta/
Debatt, no. 4, TCO, Stockholm.
Williams, K., C. Haslam, J. Williams, T. Cutler, A. Adcroft and S. Johal (1992),‘Against Lean Production’, Economy and Society, August.

381

Humanization of the production system
and work at Toyota Motor Co andToyota Motor Kyushu1
Koichi Shimizu

In the mid 1990s, when it appears that ‘lean production’ is being adopted by
all automobile producers, Toyota has been reorganizing the very production
system upon which ‘lean production’ is based.
After encountering a crisis of work during the late 1980s in the midstof Japan’s ‘bubble economy’, the management and the union at Toyota
began to question the production system and the social relations of work insearch of a radical way to tackle the problem of work that had been posed.
The conclusion was that the principle of ‘just-in-time’ should not be applied to people. In modifying the organizational principles of production(just-in-time and autonomization, the latter meaning that machines switch
themselves off automatically when a problem arises) and the managementof work, and in developing a new conception of the assembly line and ofteam working, Toyota decided to humanize its production system to enrichwork, thereby making work more attractive. It is clear that Toyota wants
to create a new Toyotaism, far removed from the ‘factory of despair’ image
presented by Satoshi Kamata in the early 1970s.
And yet, radical as it is, reorganization at Toyota is still influenced by the
old Toyotaism. The new assembly line has only been installed at the fourthfactory at Tahara. Moreover, it remains difficult for Toyota to make a clean
break with its previous method of managing work, especially since thisproved so effective as a means to mobilize and develop its human resources.
On the other hand, the experiments currently being undertaken at Toyota
Motor Kyushu, the new Toyota subsidiary in Kyushu, suggest a clean breakwith the old Toyotaism as far as the management of work is concerned. At
this factory, a different concrete expression of the new Toyotaism can beobserved, one which appears to reveal the future of Toyota.
In this chapter we will discuss the following points:
1. The crisis of work and its causes, which led Toyota to question its
production system and its social relations of work.
383

2.
3.

The problems of crisis of work that the management and the union
discussed during 1990–1992, and the measures they decided to adopt.
The new assembly line and social relations of work that can be observedat Toyota Motor Kyushu.

1. The crisis of work and its causes
For the Japanese automobile producers, the crisis of work emerged during
the ‘bubble economy’ period, especially around 1990. It was already latent,
since there were external and internal causes already leading to a shortage oflabour. Then the overheating of demand due to the ‘financial bubble’ playeda catalytic role in the appearance of a crisis of work.2
In the first place, the labour market had become increasingly tighter, somuch so that Toyota and the other automobile producers were faced witha problem of recruitment by the end of the 1980s. This was due in part tothe shrinking of the working population, due in turn to the lower birth rate.
It was also in part due to the fact that young high-school leavers who constituted the labour force for Japanese industry were tending to avoid jobs
characterized by the ‘3 Ks’ (Kitanaï, or dirty; Kitsuï, or difficult; Kiken, or
dangerous), and were looking for employment in the service sector.
In the second place, the rate of turnover amongst young production workers was high in the automobile industry because of the very nature of workon the assembly line, which was fragmented, monotonous, and repetitive.
Even if recruitment targets were being met, the high turnover rate was threatening to cause a shortage of labour. If that happened, production workers
would be obliged to work long hours of overtime, all the more so as output
was growing rapidly.
In the third place, and finally, the ‘financial bubble’ appeared to overheat
the automobile market. Not only did output increase rapidly, but purchasers
wanted top-of-the-range cars and a wide variety of choice. The producers
were already tending to diversify their product range and increase the variety of their models, and the ‘bubble economy’ accelerated this tendency.
Yet the Japanese automobile producers did not possess sufficient capacity
to respond fast enough, partly because they were unable to hire enoughlabour (due to the labour shortage), and partly because they had been trying to introduce a ‘lean production’ system since the first oil crisis in theearly 1970s. Accordingly, their employees (not just production workers but
also engineers) were so overloaded that lead-times and replacement cycles
had lengthened. While the producers were able to resort to the employmentof temporary employees on a massive scale to reduce the labour shortage,
this only led to a reduction of productive efficiency, since the temporary
employees did not possess the abilities that were necessary even though384

their salaries were very high compared to other employees of their age.
Obliged thus to work long hours, employees became exhausted, and foundthemselves not so much paid considering their extra work load. There arosea certain disaffectedness amongst the hard core of the work force towards
assembly line work.
The crisis of work which thus emerged found its root causes in structuralchange in the labour market, the nature of assembly line work, and Japanese-style ‘lean production’. The behaviours of the automobile producers
when confronted with this crisis of work were not, however, identical.
Some producers decided to construct highly automated factories, such as
the second Nissan factory in Kyushu in 1992, and the Mazda factory at
Hofu in 1992. During this period Toyota also constructed its fourth factoryat Tahara, opened in October 1991, which manufactures top-of-the-range
Toyota models (Celsior, Lexus LS400, Crown-Majesta and Aristo GS300) on
two assembly lines. However, Toyota put into practice a new conception of
the assembly line, because it recognized that the cause of the crisis of work
lay in its production system and its method of managing work.
The Toyota production system tended to intensify work, because it managed productive efficiency in a way that was closely linked to the salarysystem.3 As the term ‘lean’ indicates, the objective of the Toyota production
system was to reduce production costs. ‘Just-in-time’ production was one
means (production without stocks), but management also managed costs
scrupulously, especially variable costs, from upstream to downstream. As
far as labour costs were concerned, its method of managing productive efficiency had as its goal the reduction of production times (Ko-Su-Teïgen) andthe number of production workers (Sho-Jin-Ka) through the mobilization of
employees towards improvement (Kaizen) of production tasks and procedures. This management method was based upon payment for production.
Payment for production, which accounted for about 60 percent of thestandard salary in the late 1980s, was the product of the basic salary andthe coefficient of production remuneration (CPR). While the calculation of
the CPR for each shift is complex, the factors included are the real time of
production, the volume of production, and the standard time. In principle, areduction in the real time of production and an increase in production volume
have a positive impact on payment, and a reduction of standard time has
a negative impact. In this system, it is necessary to reduce the real time of
production in order to increase productive efficiency, and thereby payment
for production, with a given standard time and production volume.
The management of productive efficiency is therefore focused on the realtime of production (which is the product of working time and the numberof production workers), and the standard time (which is the point of reference for measuring productive efficiency).4 In monitoring changes in the385

productive efficiency of each shift, management imposes the factories toreduce the standard time and the number of production workers, and these
become the norms for Kaizen activities. Thus a Kaizen-productivity-salarychain is established.

<Figure 1, Page 386, Part IV, Shimizu>

Figure 1. The relationship between kaizen, productivity and salaryThrough Kaizen activities, the productive efficiency of each shift is increased, so that its coefficient of productive efficiency (CEP) rises, which
in turn brings higher payment for production. Once the CEP has passed acertain threshold, the standard time and the number of production workers
in each shift will be reduced, and as a result its productive efficiency will
be lowered since it has to function with fewer production workers. Each
shift, or rather the section which manages this shift (a section manages twoalternating shifts) will then attempt to increase its productive efficiency
through Kaizen activities on production tasks and procedures, so as toincrease its CEP.
This mechanism was able to function well over nearly forty years to increase productivity and contain the growth in numbers of production workers
because the following conditions were fulfilled:
1.
2.
3.

Stable social relations of work based upon mutual trust between employer and union (employees beneath section leaders are all unionized).5
Adequate training for supervisors in Kaizen activities, including methods of determining the standard task and the standard time.6
Creation of sound human relations in the factory, so that everybody
participates in, or at least accepts, Kaizen (this is also one of the functions of supervisors).
386

4.

The principle of sharing the benefits of Kaizen activities (system of
payment for production); etc.

However, the outcome of this management system was that the factories
worked with the minimum number of production workers and at a very fast
pace. Their Kaizen activities led them to work increasingly faster and harder.
This method of managing work can be interpreted as the application of ‘justin-time production’ principles to people. During the era of stable economic
growth, the Toyota production system, managed according to this method,functioned so well that it was considered to be a model for post-Fordism. Not
surprisingly, it provoked a high rate of turnover amongst younger workers,
especially in the assembly factories.7 Nonetheless, a labour force could beassured, one way or another, until the second half of the 1980s.
The ‘bubble economy’ hit the Toyota production system hard, bringing thelabour shortage to the surface. Having become too ‘lean’, and experiencing recruitment difficulties, the production system was unable to respondto growing demand for products. To counter the labour shortage, Toyota
hired temporary employees on a massive scale from 1987, so that they accounted for 11.59 percent of production workers in 1991, the apogee of the‘bubble economy’.

<Figure 2, Page 387, Part IV, Shimizu>

Figure 2. Proportion of production workers who are temporary
employees
Source: Toyota, Personnel Management Departement
Despite this policy, the crisis of work in the form of a shortage of labour
could not be resolved. The massive entry of temporary employees within-adequate abilities disturbed the organization of work, not to mention
lowering productive efficiency. In the worst cases, there were groups of387

workers (Kumi) of whom two thirds were temporary employees (according
to the personnel management department). This forced their supervisors
to work on the assembly line to help them rather than undertake their ownfunctions. The result was increased overtime. Annual working hours in the
production department increased from 2,224 hours in 1987 to 2,315 hours
in 1990. Thus the labour shortage crisis was transformed into a crisis forthe whole work force: the hard core of employees, including supervisors,
were exhausted.
Facing up to the labour shortage and to the exhaustion of the whole workforce, the management and the union at Toyota began to question the production system and the method of managing work. They concluded that aradical resolution of the crisis of work could only be found in a reorganization of the production system to make work more attractive, for they were inagreement that the cause of the labour shortage was the nature of assemblyline work and the Toyotaist method of managing work.

<Figure 3, Page 388, Part IV, Shimizu>

Figure 3. Hours worked per year
Source: Toyota, Personnel Management Departement

2. The questioning, and the outlines of a new Toyotaism
In June 1990, in the midst of the crisis of work, union and management
set up a committee to discuss ways to make factory work more attractive.
Between 1990 and 1992, the committee discussed several problems whichreached right to the heart of Toyotaism: 1) the management of productive388

efficiency linked to the salary system, in particular to payment for production; 2) personnel management methods to do with promotion, training andabilities; 3) uncomfortable working conditions that prevented older people
or women from working; 4) the assembly line work in the assembly factories
that lay at the root of the high turnover rate amongst younger employees.
Modifying the management of productive efficiency
Regarding the payment system and the management of costs, the committee
questioned the method of managing costs, the system for evaluating productive efficiency, and the determination of the standard time. The central
problem in managing costs lay in the fact that it was too focused on the
management of productive efficiency, unilaterally imposing the norm for
Kaizen activities on the factories. What was needed, therefore, was to makeit appear more rational to employees.
As has just been explained, the basis for the management of efficiency
lay in the reduction of the number of workers, which was accomplished by
Kaizen activities on production tasks and procedures. This in turn was based
upon the ideas of ‘just-in-time’ and ‘autonomization’ (labour saving) which
had been sustained and developed by T. Ohno. But the underlying cause of
the crisis of work that Toyota was experiencing was precisely this system
for managing productive efficiency. Therefore the idea of ‘just-in-time’
was questioned. ‘Just-in-time should not be applied to people’, according
to a section leader at the Motomachi factory. ‘If the number of production
workers is increased, productive efficiency will be lowered. But we should
not think solely about productive efficiency’, according to the personnel
management department. The implication is that the reduction in the numberof production workers should not be pushed too far. In other words, ‘lean
production’ should not be applied to production workers. Otherwise, work
will continue to be detested by the younger generation and will continue totire production workers and supervisors. Hence the committee proposed tomodify the management of costs.
The practice had been to set labour cost objectives when a model was
launched or updated, according to the best costs obtained in the past, while
the cost of raw materials was set by estimates. To resolve this contradiction,
the cost goal would now be set according to results achieved three months
after model launch. Moreover, management had imposed the Kaizen norm
uniformly, without taking the characteristics of the factories into consideration. Henceforth, management would set Kaizen objectives taking into account objectives that the factories set for themselves voluntarily. Moreover,
Kaizen objectives would be set for a year, instead of six months, since with
six-month periods it was difficult to undertake Kaizen activities with longterm impacts.8 Simultaneously, management promised to focus more on
389

trying to reduce the costs of raw materials, parts and components instead ofcompelling the factories to increase their productive efficiency. As a result,cost planning during the design phase becomes a more important way oflowering costs. Simply put, management has renounced its authoritarian andunilateral power to manage costs, and above all productive efficiency, andhas given the factories autonomy in the pursuit of Kaizen activities. With
this autonomy, however, comes more responsibility.
At the same time, the system of payment for production as a tool for
managing productive efficiency has been made more rational. Under theold system, the coefficient of production remuneration (CPR) for the direct
section was calculated according to a classification of every shift together.
However, the productive efficiency of the more automated factories tends tobe higher than that of the less automated factories such as assembly factories.
To correct this imbalance, the calculation of the CPE is to be undertaken
according to groups of homogeneous factories: a group for foundries, forges,
stamping and sheet metal plants; a group for mechanical components; agroup for body construction, painting and plastic moulding; and an assemblygroup. Henceforth, management is to evaluate the productive efficiency and
the Kaizen efforts of each shift by group, taking the characteristics of thefactories into account. Furthermore, management has reorganized direct andindirect sections to enable the factory as a whole can improve its productive efficiency. The two sections are thus regrouped into a single section‘P’ (plant).9 Now the productive efficiency of the whole factory is to beevaluated rather than that of the direct section. Accordingly, cooperation
between the two sections has become more important.
Regarding the management of working time, in other words the numberof production workers and the working hours per person, several modifications have been made. For the standard time in the assembly factories, only
the time required to attach parts to the automobile body had been measured,
but management now allows other factors to be taken into consideration, tomake the process seem reasonable in the eyes of the production workers.
Tasks undertaken by older or female production workers can also be taken
into account in determining standard times. Moreover, with the lengthening of the initial training period, and the establishment of a new vocational
training scheme (see below), employees who are taking part in them are
excluded from the CPE calculation during their off-the-job training (theirsalary is of course still paid), for as long as their training lasts. Finally inrespect of the management of working time, management and union arerecommending to employees that they take all their paid holidays, so thatthe planned reduction in annual working hours is met.10 Simply put, themanagement of standard time and the length of working time have becomeless of a constraint and appear more reasonable to employees.
390Questioning personnel management: training and hierarchical position
In the area of personnel management there have been a number of modifications: initial training aimed at reducing the high rate of turnover amongst
new recruits; a new vocational training scheme to broaden the abilities of
production workers; a reorganization of the hierarchial positions of supervisors; and changes to the system of obligatory renunciation of the functions
for which a person is responsible at the age of 55.
To resolve the problem of the rate of turnover amongst new recruits,
which reached 25 percent for the first time in 1990, in 1993 Toyota mademodifications to their initial training. Formerly, new recruits were assigned to the factories as production workers after two weeks of training atcompany headquarters. Management has now eliminated this training anddevolved it to the factories, at the same time making it longer: nine weeks
in the stamping, sheet metal, body and assembly factories, six weeks in theothers.11 Generally speaking, the factory gives new recruits two weeks ofgeneral training, then assigns them to their work area where they receiveon-the-job training whilst undertaking half the tasks of production workers
and rotating to different posts within the work area. Their first post will thenbe determined after training. It is too early to evaluate the results, but the
prolongation of initial training appears to be having a favourable impact inreducing the rate of turnover. In the assembly factories, the rate of turnoverhas been reduced by 9 percent. The same effect can be seen in the factories
which spread training over nine months, while turnover in the other factories
has increased by 5 percent.
For production workers, the new vocational training scheme was introduced in February 1991. Management allocates production workers to fourlevels (C, B, A and S) of vocational competence, according to the resultsof a test given after they have received off-the-job training followed by onthe-job training. For production workers in the direct section, there are 40
hours of off-the-job training for candidates at each level. For maintenancetechnicians, there are 280 hours of training for candidates at level C, 360
hours at level B, and 460 hours at level A (there is not yet a level S). As an
example, the case of production workers in assembly areas at the Motomachi
factory can be examined. A level C production worker is able to undertake
two or three tasks with a minimum seniority of two years; a person at level
B is able to undertake tasks extending beyond those of his work team (Han),
including repair, with a minimum seniority of five years; a person at level
A is able to undertake tasks extending beyond those of his work group(Kumi), with a minimum seniority of ten years; finally, a person at level S,
with more than fifteen years seniority, should be able to undertake every
task in the assembly area, in other words be able to assemble a whole carby himself. In this way task rotation too is made systematic as a means of391

implementing the new training. Toyota has adopted this training scheme forthe following reasons:
1.
2.

3.

4.

The need to systematize abilities training for production workers which
had previously been included in on-the-job training.
The need to broaden the skills and knowledge of production workers
who only knew how to undertake limited tasks: there were no production
workers who knew every task in their area (for instance, an operator in
the stamping area might have known how to change dies better than his
western counterpart, but he did not understand all the tasks involved instamping).
The need to give opportunities for vocational training to production workers who could not be promoted to supervisory posts where
they would have received increasing training as they attained higher
grades.
The need to give production workers training which would enable themto enjoy their work.

Thus, the goal of the new training is to give production workers ‘enjoyment at work’ through greater recognition of their know-how concerning
their work. While Toyota does not intend to introduce the Uddevalla model,
there are certain resonances with this model. Certainly, the new vocational
training scheme has been much welcomed by employees in the production
department.
Toyota has also introduced minor modifications to the structure of hierarchical positions and employee careers. As a result of mechanization andautomation in areas outside assembly, during the 1980s there was an increasein the number of team leaders (Han-cho) without any subordinates, and in
the number of group leaders (Kumi-cho) and sub-section leaders (Ko-cho)with few subordinates. To be a supervisor with no subordinates was demoralizing. Since at Toyota salary increases have traditionally been linked tohierarchical position-rank-post, the posts could not be eliminated. So Toyota
has changed their status, respectively to expert (EX), senior expert (SX)
and chief expert (CX), retaining the hierarchical position-rank that they had
occupied. Henceforth, team leaders, group leaders and sub-section leaders
are only to be found in assembly areas.
The system of obligatory renunciation of the functions for which a person is responsible at age 55 has also been revised. The system has not beenabandoned, but supervisors considered to have the required abilities and whowish to remain can continue to undertake their functions until they are 60,
the age of retirement. Between March 1991 and August 1992, 60 percent of
sub-section leaders concerned kept their posts, though only 12 percent ofteam leaders and group leaders kept theirs. Moreover, after the age of 55,
392

Table 1:
Holders of vocational training certification, December 1st 1993.
Factories
Level A
Headquarters
Motomachi
KamigoTakaoka
MiyoshiTsutsumi
Myochi
Shimoyama
KinuuraTaharaOthersTotal

9Persons
Level B
239
602
231
718
145
732
78
166
93
1,096
750
4,850

Level C
239
448
214
465
81
711
93
108
165
875
1,156
4,555

Source: Toyota: Personnel Management Department

the same salary increases as for other employees are guaranteed, whereas
they had been only half the average increase since 1982 (and had been zeroprior to 1982). This of course is designed to provide a source of motivationfor employees over 55 years old.
Improving working conditions, and a new concept for the assembly line
The committee decided to make investments to render the production system
more humane and therefore make work more attractive. In fact, during thecurrent long recessionary period, management has not reduced investments
which are designed to improve the work place, even if investment in new
capacity has been reduced. Symbolically speaking, the aim of this investment is to make the work place fit for older and female production workers:‘If older workers are unable to work there, it is the factory which is bad. It
must therefore be changed so that they are able to work there’ (the directorof the production design department). The assembly factories are examined
below, since that is where Toyota encountered the crisis of work.
As far as the assembly line is concerned, the first step was taken at the
Tsutsumi factory. The first of the final assembly lines was selected to be amodel line. By dividing the line, which is more than a kilometre long, into
four zones, and installing separate lines to prepare sub-assemblies (doors,
engines, seats12), the factory is now able to maintain buffer stocks between
the zones and between the assembly line and the preparation lines. The
393

Table 2: Numbers of Supervisors and Experts in 1993
Hierarchical Rank
Senior Group Leader
Group Leader
Team Leader
Direct Workers

Supervisors
Kocho 1,400
Kumicho 3,920
Hancho 1,930

Experts
CX 320SX 1,100
EX 9,580

Total
1,720
5,020
11,51022,220Source: Toyota, Personnel Management Department
rationale is that it was believed that all the problems related to work were
due to zero-stock production, or the rigid ‘just-in-time’ principle establishedby T. Ohno. This minor modification to an old factory is already being welcomed by the production workers. With buffer stocks, the work pace can be
adjusted by line segment, so that the workers can even finish their allotted
output before the set time (albeit only 10–15 minutes) while work on theadjacent, traditional assembly line continues.
Management is currently investing 500 million yen to modify the traditional assembly lines, 200 million yen to improve their working environments (mini-conveyors, lighting, etc.) and 1.1 billion yen to modify theirprocesses (automation of the most arduous tasks, etc.).
However, the real innovation in the design of the final assembly line wascreated by the third division of the production technology department for theconstruction of the fourth Tahara factory.13 The assembly line is divided into adozen mini-lines, and it is possible to keep buffer stocks between them. With
wide rectangular platforms linked together in place of the normal conveyor,
production workers are able to undertake their task while remaining on theplatform and not having to walk along. Moreover, automation has been pushed
as far as possible to eliminate tasks which are considered arduous from anergonomic viewpoint (the level of arduousness of tasks has been quantified),
and to resolve the labour shortage problem. With stocks between the minilines, which was considered wrong by T. Ohno, each mini-line now possesses
a relative autonomy and independence in terms of the management of production. Productive efficiency has been increased, since if one mini-line has tobe stopped because of a certain problem, the other lines continue production,and the line affected can catch them up later by increasing its work pace.
In terms of team work, four production workers form a work team whichis responsible for a segment composed of a series of connected tasks (threeor four tasks). The work team takes responsibility for the quality of its
tasks, whereas on traditional lines, each person is responsible individually.
Finally, some of the final quality control tasks have been transferred to themini-lines (‘in-line control’: seven of the lines have a quality control post,and each has a rework post).
394

Thus the fourth Tahara factory, which is called a ‘factory for the man as“principal actor”’ was developed in order to bury the image of the ‘factory of despair’, in the words of its vice-manager. This new concept of theassembly line was to be developed even further in the construction of the
Toyota Motor Kyushu factory.
But it remains difficult to make a clean break with the old Toyotaism
Simply put, Toyota is undertaking a humanization of its production system.
But does the current reorganization spell a clean break with the old Toyotaism? It appears that Toyota’s goal is to give a more humane dimension to
its production system and to its management methods. However, this does
not imply that Toyota is throwing away everything that has been created in
the past on the basis of the two ideas of ‘just-in-time’ and ‘autonomization’.
What Toyota is doing currently is to correct the way these ideas are put into
practice to make them more reasonable from the human viewpoint. Moreover, it is difficult for Toyota to make a clean break with the old Toyotaism.
Without going into detail, the recent alterations to the salary system canbe examined to show how difficult it is for the company to make a clean
break with the past.
In April 1993 Toyota adopted a new salary system. The old salary system
had already been modified in April 1990, with the introduction of payments
corresponding to age and hierarchical position, each weighted at 10 percentof the standard salary. Correspondingly, the weight of the payment for production was reduced from 60 to 40 percent, with the remaining 40 percent
accounted for by the basic salary. However, the method of calculating thepayment for production was not changed by these reforms. Moreover, asingle system continued to be applied to all personnel. By contrast, in the
new system, Toyota does not include payment for production in calculations
for white collar employees and engineers (only employees in the Plant andEngineering sections now receive payment for production, which has beenrenamed ‘payment proportional to productivity’). Further, not only is theweight of this element in the salary reduced from 40 percent to 20 percent(the shares of payment accounted for by age and hierarchical position in
the average standard salary now being 20 percent each), but the calculation
method has also been modified: the CPR is no longer multiplied by the basic
salary, but is applied to a payment grid linked to hierarchical position.
Hence payment for production is retained, under the pretext that its effectis to encourage production department employees to participate in Kaizen
activities: it represents the salary system, in the sense that one is paid moreto the extent that one puts effort into Kaizen activities aimed at increasing
productive efficiency. This was precisely the goal of T. Ohno when he introduced it at the start of the 1950s. While there has been a certain radical395

reorganization of cost management and of the production system, Toyota
remains a captive of its past. At Toyota Motor Kyushu, however, an entirely
new system for managing work has been introduced.

3. A new Toyotaism at Toyota Motor Kyushu
Toyota Motor Kyushu is a subsidiary of Toyota which started production of
the Mark II model in December 1992. Its relationship with Toyota is parallel to that of Saturn with General Motors. Toyota Motor Kyushu, in otherwords, undertakes experiments that would be audacious for Toyota, whichfinds it difficult to sever its links with the past. What is most remarkable
is that Toyota Motor Kyushu has not adopted the payment for production
sys-tem,which means that it no longer manages productive efficiency inthe same way as Toyota, and that employees are encouraged to undertake
Kaizen activities by other means. In fact, there is not a policy of reducing
the number of production workers in order to increase productive efficiency.
Moreover, in further developing the concept behind the assembly line at the
fourth Tahara factory, Toyota is giving team work a new dimension.
Salary and incentive
The salary system is very simple (the figures in parentheses are proportionsof the average salary): Monthly salary = basic salary (60%) + salary related
to hierarchical position (40)%Since employees work in two successive shifts (6:00–14:50 and 15:05–
23:55) without overtime, there is no overtime payment. The basic salary isdetermined by the Sateï (evaluation), but mainly follows seniority and thecost of living, and is revised each April. The part corresponding to hierarchical position is basically determined by the hierarchical position of employees, which is revised by Sateï three years and five years after recruitment,
then every two years. It is also revised each April, following the results ofSatei and of negotiations between management and the union.
In the place of payment for production as a mean of giving incentives
to workers, Toyota Motor Kyushu has introduced a new system called the‘Performance Incentive of Toyota Motor Kyushu’ (PIT) to encourage employees to produce, and to encourage Kaizen activities bearing upon costs,
quality, and safety. This is done in order to stimulate an emulation between
the sections (Ka) with the purpose of reducing the costs and assuring thequality. The evaluation of these activities is then reflected in an increasein the size of the bonus. For the first of these, the sum paid per employee
amounted to 50,000 yen for the first six months of 1994.
These new systems have been introduced to avoid the negative effects ofthe payment for production system:
396

The effect of the payment for production system is to push the work
teams to increase their productivity. But if they are pushed too much,there will be negative impacts rather than positive impacts. (Quality
control sub-section leader)
When we were discussing the problem of work at Toyota, the major
problems were payment for production, which was suffocating us, andthe principle of zero-stock production which forced supervisors to workon the assembly line and prevented them from undertaking their ownfunctions. (Member of the general affairs department, former memberof the executive committee of the Toyota union)
Thus, Toyota Motor Kyushu is trying to adopt a new incentive systemthrough a new salary system, even as the management of Toyota does notdare to make a clean break with the system established by T. Ohno.
A new production system and a new way of working
The new assembly line at Toyota Motor Kyushu is a further developmentof the assembly lines of the fourth Tahara factory, but with less advanced
automation, since in Kyushu the third division of the production technology
department has concentrated upon technologies for semi-automation, taking
into account profitability and the quality of the man–machine relationship.
The new characteristics of this line are as follows (see Figure 4):
1.

2.

3.

4.

5.

The platforms used (the same ones as at the fourth Tahara factory) are
equipped with a base that can be adjusted for height, depending upon
the height of the worker, so that production workers do not have to workin a difficult posture.
A working group is responsible for a mini-line, each of which has aquality control post so that the group can assure the quality of its products.
Moreover, with three car bodies before and after the mini-line, the groupleader can regulate the work pace of his group; hence the organizationof the work done by his group is based in his own abilities, whereas
traditionally at Toyota it was based upon the abilities of the Kacho(section leader).
In this way more autonomy and more responsibility are devolved to
the working group; the group can hold a 5 minute meeting in order tosolve a problem or to make a Kaizen activity, by accelerating its work
pace and accumulating 3 to 5 car bodies at the end of its mini-line.
Moreover, the assembly line is more efficient than the traditional line,
since if one mini-line stops due to a problem, the others continue tofunction and the line affected can catch them up by accelerating its paceof work.
397

While Toyota Motor Kyushu has not abandoned the principles of ‘just-intime’, which are supposedly being respected, it has relaxed the constraints
imposed by T. Ohno in order to put in practice a more humane production
system. In simple terms, the principle of ‘just-in-time’ is not being applied
to people, while the idea of ‘autonomization’ is now being applied to people,
and especially to so-called ‘team work’.
As far as ‘team work’ is concerned, it is the group leader who organizes the task rotation in his group, taking into account the skill level of
his workers. Through the task rotation a worker now learns all tasks in his
group to become a professional worker in this segment. He can also moveto another work group after having learned all tasks in his original group,in so far as he wishes to obtain a wider skill, and if his leader permits it.
The groups in the assembly area include at least one woman, who receives
the same salary as men of the same age, at least to start with (salaries will
later vary, not by gender, but due to hierarchial position and Sateï). Thisis possible because the factory has become an acceptable place even foryoung women to work.
Moreover, Kaizen and suggestion activities too are undertaken by workers
and work groups. The suggestion system was introduced in August 1993.
Even though at Toyota the number of suggestions per person exceeds 20 per
year, most of them only constitute ‘simple ideas’. At Toyota Motor Kyushu,
by contrast, the worker has to spell out his idea in concrete form before
presenting it as a suggestion. The QC circle activities are being launched inJuly 1994. A work group constitutes a QC circle with the task of solving the
problems that occur in this group. To organize the activities for Kaizen, thework group holds a meeting, either after work in order to observe the tasks
performed by the other shift, or during work, after having stopped the line,
for 5 minutes in the case of an assembly area. The group leader is authorized
to stop his mini-line whenever he wants, as long as the tasks of the othersegments are not disrupted. This is possible since there is a buffer between
the mini-lines. For the QC circle activities, each group sets up its own Kaizen
goal proposed by its members, in general for a period of six months. Afterthe sub-section leader, on the basis of his experience,14 has approved or
modified the goal, it is approved by the section leader, who is authorized
to make such decisions in the factory. Six months later the section leaders
and the sub-section leaders jointly evaluate the degree to which the goals
have been achieved. These activities are treated as a task, and the result of
the activities will be reflected in the evaluation of the section’s activities,
and subsequently in the size of bonus (cf. PIT mentioned above). As things
stand currently, Kaizen activities appear also to constitute human relations
activities. Members of the group can reinforce their ties in discussing a
subject proposed by group members. This is all the more important since
Toyota Motor Kyushu does not intend to introduce the same full human398

Figure 4. The assembly line at Toyota Motor Kyushu where the Mark II
model is made399

relations activities as at Toyota.15 If it is to undertake human relations
activities, these are only to be within the factory and above all within thework group. Hence it is possible to avoid suffocating the entire life of theemployees. What matters is to create a work place that is more humane andattractive for all employees.

In conclusion
With the depth of the current recession, the crisis of work would appear tobe over. Surely Japanese companies are now talking in terms of overmanningand redundancies? Surely, sub-contractors which employ foreign workers
are sending all or most of them back to their own countries? Is unemployment not disciplining Japanese employees? Certainly it is possible to observe
signs of this. For this reason we do need to test Toyota’s seriousness. During
the period of crisis of work, only Toyota dared to question its pro-duction
system and its method of managing work, which were functioning so wellthat they were considered to be models for post-Fordism. It appears that
Toyota was able to take seriously the crisis of work because even in the old
Toyotaism, strongly marked by the personality of T. Ohno, Toyota considered the management of its human resources to be important, recognizingthat they constituted the motor within the Toyota machine. In any case,Toyota has interpreted the crisis of work as a tendential phenomenon andhas chosen a radical solution.
This questioning of the production system has finished by modifying
the idea of ‘just-in-time’ and the management of productive efficiency:‘just-in-time should not be applied to people’, and ‘we should not thinksolely about productive efficiency’. Hence a humanization of the production system and of work was launched. By investing massively to improve
working conditions, by developing a new conception of the production line,
by allowing segments of the line to keep buffer stocks, by making social
relations of work more equitable and rational, Toyota has changed the rulesof the game. For Toyota, ‘lean production’ appears to be the model of thepast, because it placed too much pressure on people. The new strategy at
Toyota is to give a more humane dimension to its production system but
without hindering productivity; even if progress remains slow, and is heldback by the old Toyotaism.
By contrast, Toyota Motor Kyushu seems to have detached itself fromToyotaism. In abandoning the management of productive efficiency created by T. Ohno, it gives more autonomy and more responsibility to workgroups thanks to the new assembly line. In organizing back-to-back shifts,
it renders both overtime and night work impossible. A new boost is given
to ‘team work’. Toyotaism thus appears to have entered a new era in which400

Table 3: Toyota Motor Kyushu
Subsidiary established:
Capital:Products:
Production capacity:
Construction Start:
Production Start:
Total Investment:

February 8th 1991
45 billion yen
Mark II (medium class)200,000 units annually
April 25th 1991
December 22nd 1992
150 billion yen

Note: The level of automation is lower than at the 4th Tahara factory
Work force in 1993
Plastic plant
Unit plant
Stamping plant
Body plant
Paint plant
Assembly plant
Head office
Others
Total

May, one shift
77
47
61
205
165
395
200
150
1300

November, two shifts
103
71
103
278
266
795
250
384
1970

Production per day

400

600

it is possible to speak of ‘autonomization’ in its true sense, in other words,
the ‘autonomization of people’. In the old Toyotaism, this word meant
providing the machine with an apparatus which would stop it if there wasan anomaly in its functioning, and the same idea was applied to production
workers, who were supposed to stop the line when they experienced a problem. People were thus treated like machines, even if this was necessary toguarantee quality at each stage. In the new Toyotaism, people should havemore ‘autonomy’ in their work at the same time as they should assume more
responsibility.
The experiments at Toyota Motor Kyushu appear to be having an impact on
Toyota itself. In February 1994, management and the union at Toyota began
negotiations on the introduction of back-to-back shifts with neither overtime
nor night work. This happened even though the union had categoricallydenied that it was possible when this author undertook interviews there in
December 1992. Of course it would be difficult to install the new assemblyline in the old factories, because they lack sufficient space. But the thirddivision of the production technology department will come up with a new
method of realizing the new concept.
401

In the current recession, the new factories are not profitable. The rateof capacity utilization at the fourth Tahara factory was only 50 percent in
October 1993, while that at Toyota Motor Kyushu was about 75 percent inNovember 1993. And yet these factories do not want to become ‘factories ofdespair’, but ‘pleasant factories’. The new Toyotaism may be far removed
from the Uddevalla model or the Kalmar model, and yet the attempts toescape from the fatalism of the assembly line and to give a more humane
dimension to assembly work appear to be the shared preoccupations of thesemodels even though different practical measures have been taken, not tomention the different sizes of the factories. But are there not differencesin the methods used to humanize work between the Kalmar and Uddevalla
factories? Despite the closure of the Volvo factories at Kalmar and Uddevalla
it appears that the principles of the new industrial model are to be foundin the humanization of work, and that the new Toyotaism may be seen as aleading model in the current situation (given the closure of the two Volvo
factories) in terms of simultaneously creating productive efficiency andhumanization of work; which is not, of course, to suppose that there is only
one model for the future.

Notes
1.

Translated from the French by Sybil H. Mair.

2.

On the overall state of the Japanese automobile industry at the start of the
1990s, see the well-known report of the JAW (1992), which characterized it asa ‘triple suffering’ in terms of exhaustion of employees, low profits, and trade
conflicts (especially with the United States).

3.

On the detailed functioning of this system, see Shimizu (1994), which explains
the relationship between the management of costs, the salary system (remuneration for production), and Kaizen activities.

4.

To simplify, productive efficiency can be considered as the relationship between
the standard time of production and the real time of production.

5.

On the creation of these workplace relationships see Shimizu and Nomura(1993:32–36).

6.

Toyota insists upon a special training for candidates for supervisory posts,
in which they receive off-the-job training and on-the-job training in Kaizen
methods, which are viewed as equivalent to the Toyota production system.

7.

According to the public affairs department, the turnover rate amongst new recruits reached 20 percent in 1990. For production workers only, the turnover rate
was reportedly higher still. According to the Toyota union, it was approximately
25 percent around 1990. With reforms to working and living conditions, but also
the introduction of a new first training scheme for these young em-ployees, therate was halved in 1991.

402

8.

The Kaizen objective was even imposed on office and engineering activities,
but here it has been replaced by supervision of overtime hours.

9.

According to the personnel management department, the situation of the indirect
section (maintenance) will vary according to factory, but the tendency will befor it to be integrated into the direct section. The goal is to broaden the skills of
the production workers towards those of the maintenance technicians. There iscurrently a wide difference in skills between the two, due largely to differencesin their training.

10. In 1990, Toyota decided to reduce annual working hours by 300 hours between
1991 and 1994. According to the personnel department, annual hours per person
were 2,284 in 1989, 2,273 in 1990, 2,173 in 1991, 2,029 in 1992, and 1,915
in 1993. According to the union, the rate of utilization of paid annual holidays
was 70 percent in 1990 and 90 percent in 1992, and would be 100 percent in
1993.
11. In the case of the assembly factory at Motomachi, the training is spread overnine months (in 1993, from April to December). While there is a general manual
concerning initial training, the factories are authorized to organize it as theysee fit. However, the Motomachi case is clearly exceptional.
12. The line for preparing seats no longer exists, since they are now prepared byexternal suppliers.
13. The fundamental concepts behind the fourth factory are: to manufacture topof-the-range and ecological automobiles but at a reasonable price, and with themost advanced technology; to attempt to motivate the employees by broadening
their skills, with an emphasis on working in teams.
14. The administrators, managements and supervisors at Toyota Motor Kyushu
have volunteered to leave Toyota to work in Kyushu, which is their region oforigin.
15. On the full range of human relations activities at Toyota, see Shimizu andNomura 1993:46–48.

References
JAW (1992) Japanese Automobile Industry in the Future: Toward Coexistencewith the World, Consumers and Employees, February.
Nomura, M. (1993) Toyotismu. Mineruva.
Shimizu, K., and Nomura, M. (1993) ‘Trajectoire de Toyota: rapport salarial etsystème de production’ in Un Nouveau Toyotisme? Actes du GERPISA Réseau International, No. 8.
Shimizu, K. (1994) ‘Kaizen et gestion du travail chez Toyota Motor Co. et Toyota
Motor Kyushu – un problème dans la trajectoire de Toyota’. Communication
pour la Deuxième Rencontre Internationale du GERPISA Réseau International, 16th–18th June 1994.

403

Recent developments at
Toyota Motor Corporation:
The emergence of a ‘Neo-Toyotism’?
Terje Grönning

Introduction
This chapter calls attention to some questions connected to the analysis ofconditions within the Japanese auto industry.1 The point of departure derives
from the observation that there are presently several developments within
this industry and that there is a probable mismatch between the developing
patterns and concepts developed within studies of the Japanese labour process.2 Several significant organizational developments have occured, suchas: the reorganization of the corporations, the reform of personnel management institutions, internationalization and diversification. In addition, there
is a discrepancy between the relatively medium-tech process depicted in
the theories and the fact that some of the experiments now being proposed
actually are relatively high-tech.
Indeed attention has been given to the question of possible trajectories
for future developments within the Japanese auto industry (Kaneda, 1991;
Nomura, 1992; Nomura, 1993; Fujita, 1994), or even within the auto industry
at large (Winter, 1994). Kaneda identifies the key functional areas of thecurrent ‘Toyota Production System’ as: quality, ability to deliver on time,and cost. This puts the mind set of industrial engineering and continuous
local process improvements in focus. In Kaneda’s thesis of the coming
agile production system, the key functions will in contrast be flexibility,
service and amenity, and more far-reaching systemic improvements will continuously become necessary. In addition, the new system will among otherthings, according to Kaneda, require a reorganization of supplier companies,
modularisation of production and networking (Kaneda, 1991: 252–253).
Nomura (1993) records some of the recent and observable changes occurring within the Toyota Motor Corporation. He lists eleven areas of suchchanges, and these range from a flatter organisational structure to declaration of new corporate policies (1993: 223). He analyses the developments405

as being corporate reactions towards the potentially problematic areas
within ‘toyotism’ that have surfaced during the current economic recession in Japan. But he questions whether there is evidence for the claimingthat the method of continous process improvements has been fully usurped(Nomura, 1993: 229). He is however, like this author, interested in observing the labour market driven changes, and he thinks the most interestingarea for further research is to question where the corporation in the future
will seek its basis for competitiveness in the case of a situation where factors for competitiveness related to the labour market become weakened(Nomura, 1993: 231).
Fujita (1994) is also taking his point of departure in recent observablechanges. He lists these as: various difficulties in maintaining the kind of ‘justin time’ system like the one that has been practiced thus far; difficulties inconnection with recruitment; and changes in the organization of work due
to higher levels of automation in final assembly (Fujita, 1994: 91–93). But
he admits that further research is needed in order to be able to analyse theinter-relationship between these and other changes (Fujita, 1994: 95).
There is thus, a considerable interest in investigating the question ofwhether ‘toyotism’ itself is in the process of developing into a fundamentallydifferent form of production organization. The time should soon be ripe forbroader empirically and theoretically based reviews of conditions in Japanand thereby, provide material for discussions on the possible emergence ofa ‘neo-toyotism’. Analysis of such developments is however, difficult, bothfrom a theoretical and an empirical perspective. One such problem, is the difficulty of discerning between limited, short term counter-conjunctural campaigns and more long ranging developments. Another, is the availability ofdata at the current stage. It should be pointed out that this paper is a tentative
work, one which utilizes a specific case study of the largest manufacturer,
Toyota Motor Corporation. The basic source is written materials for in-company use such as the company newspaper (Toyota Shinbun/Weekly Toyota)
and supervisor bulletins. Additional information has been collected frompublic sources, such as newspapers and industry journals. The case study
does moreover, concentrate on certain selected institutions and elements
instead of making an attempt at presenting an encompassing analysis. The
focus is also limited in the sense of being based mainly on announcementsof corporate policies, not on a follow-up of actual implementations.
Within the borders of these methodological and thematical limitations,the study focuses on the following issue. There have been a number ofpolicy announcements during recent years. Issues that have emerged as
central within the policy discussions, concern the problem of how to improve earning rates by implementing ‘a new production system’, implement
more competitive personnel management reforms as well the need to handle406

anticipated recruitment difficulties, changes in workforce composition, andchanged perceptions among the current workforce.3
One may thus, detect a preoccupation with ‘productive’ investments andnew forms for improving earning rates at the same time as labour market
driven ‘non-productive’ investments seem to be necessary. The resulting
strategy has turned out to be an increase of both ‘productive’ and ‘nonproductive’ investments accompanied by programmmes for stimulating
increased efficiency.

1. Change in overall corporate strategy
This paper will mainly focus on certain labour market aspects of the way
Toyota Motor Corporation management currently views its situation. But
such selected aspects must be related to other attempts within the reorganization strategy. In this section, I will offer an overview of the most significantof the policy changes. The description covers changes in overall corporate
strategy, attempts at internationalization, measures for reorganizing thedomestic basis, and measures towards achieving diversification.
1.1 Policy statements
Throughout the 1980s, Toyota has launched several propositions concerning
what should be the corporation’s overall strategy in the future. After a peakin earnings in the fiscal period ending June 1985, huge decreases in earnings
followed mainly due to a strengthening of the yen that began in late 1985.
Toyota subsequently established a ‘Committee for Urgent Measures Against
the High Yen’ (October, 1986). After assistance by an abrupt increase indomestic demand, earnings improved. There were however, continued efforts for outlining a strategy that would secure high earning rates also in the
future, and by the late 1980s the Toyota strategy had been drawn up in theform of stressing the need for pursuing the following three pillars in order
to secure earnings in the future (cf. Miyazaki, 1994):
1.
2.
3.

Development of a strategic pattern of activities overseas in order toemerge as an ‘international corporation’.
Reorganization of domestic production in order to ‘strengthen the domestic basis’.
Strenghtening of new fields of activities in order to diversify.

These new priorities were further developed and conceptualized in thecompany’s new set of official policies declared in early 1992. The newpolicies replaced the ‘Toyota General Principles’ (Toyota Koryo) that had
been in existence since 1935. The main theme of the new corporate policy
was formulated as becoming ‘a corporate citizen that is being trusted by the407international community’. The three main areas for concentrating the efforts
were identified as: internationalization, the environment problem, and efficient use of management resources. These priority areas were then further
clarified in the form of seven paragraphs. Here are excerpts from them:
1.
2.
3.

4.
5.
6.
7.

Strive to be a corporate citizen trusted by the international community
by having open and fair corporate behaviour as the basis.
Strive for a more affluent society and a better world by making the
supply of ‘green’ and safe products our mission.
Strive to supply products that are full of attractive features and thereby,
respond to the demands from customers from all over the world throughmaking efforts at research and development within the most advanced
technology of various fields.
Contribute to the industrial economy by having our activities adapted
to each country and each region they are localized in.
Create a company spirit where the individual’s creativity and thestrength of teamwork is heightened to an optimal level.
Maintain a steady growth through efficient management on a global
scale.
Achieve long term steady growth, co-existence and co-prosperity byconducting transactions on an open basis (Toyota Motor Corporationmaterial dated 1992/Weekly Toyota, 1 January, 1993).

Apart from such policy statements at a rather abstract level, top management
has occasionally gone into somewhat more detailed explanations mentioning
specific target areas, such as, efforts for reconsidering the production system. One occasion where such questions surfaced was in the 1993 new year
announcement directed to the employees. Within the areas that were to begiven priority in 1993 and onwards, the president singled out the ‘effective
use of management resources’ as the most important field in the announcement. This field included subjects such as, a reconsideration of the productlineup, reduction of direct material expenses, optimalization of investmentsin equipment, and development of a flexible production organization thatconnects to improved earning rates (Weekly Toyota, 1 January, 1993:1).
Moreover, Shoichiro Toyoda, chairman of the corporation since 1992, hasin a recent article used the term ‘new production system’ when summing up
various issues that the corporation is facing:In the production shops … [we need to consider] the development of a‘new production system’ that is responsive to the reduction in the numberof skilled persons and other changes in the quality of the workforce andthat is responsive to a production formation that has taken on international proportions. [We also need] to consider production shops where
it is possible to feel attraction towards manufacturing and a sense of408

fullfillment in connection with manufacturing, and there is a need tosecure personnel within middle- and long range technologies (Toyoda,
1993, his italics).
In this particular article, Toyoda does not offer further details as to whatthe ‘new production system’ should consist of, the nature of ‘the reductionin the number of skilled persons’, nor details on what kind of technologies
constitute ‘middle- and long-range technologies’. But both these statements
by Toyoda concerning a new production system, as well as, the earlier
statements concerning an effective use of management resources may be
juxtaposed with the way the production system thus far has functioned. The
point of the production system has been to minimize manufacturing costsby eliminating wasteful elements within production (Ohno, 1988; Nomura,
1993: 24). By minimizing manufacturing costs, it follows that the gap between manufacturing costs and turnover is likely to increase. Thereby, thecorporation will see its earning rates steadily improved.
The policy statements and the Toyoda paper do however, reveal that thecorporation has started to doubt the continued success of this production
system. One factor behind such reflections is issues related to the productmarket. And the other factor is, as we will return to in further detail below,
related to the labour market by way of ‘changes in the quality of the workforce’ (Toyoda, 1993).
And when these are put together, the way of making an effective useof management resources will definitively have to take the form of a newkind of production system. The components of the new production systemremains to be seen. However, as tentatively outlined by a previous manager
in a Toyota Group company, the mechanisms for steadily maintaining asatisfactory gap between manufacturing costs and turnover will probably
have to be thoroughly altered (Kaneda, 1991).
1.2 Internationalization
Activities for achieving internationalization have, both before and after the
corporation went public with the strategy cited above, tended to be divided
into two distinct trajectories. One is the transfer of production to regionswith low cost levels in terms of labour wages etc., while the other trajectory
consists of transfers to regions with high cost levels.
The former strategy has been pursued for years with the establishment of‘knock down’-production in countries such as South Africa (1962), Malaysia(1968), Portugal (1968), and so on. What is new within this low cost trajectory is the transfer of larger chunks of parts production overseas and theconstruction of an integrated system for distributing the parts produced. Sucha distribution system has been created in the low cost countries of East Asia
and South-East Asia (Japan Auto Industry Survey, December 1992:3).
409

The latter strategy consists of establishing partly or fully integrated assembly plants in countries with high cost levels signifies a major innovation
regarding measures for achieving internationalization. In the United States,
the semi-integrated New United Motor Manufacturing Inc. (NUMMI), wasestablished as a joint venture with General Motors in 1984. NUMMI was asemi-integrated facility in the sense that engines were not produced on site,
but were shipped from Japan. The plant was followed by the completely
integrated Toyota Motor Manufacturing U.S.A. Inc. in 1988.
In Canada, Toyota established a smaller plant (Toyota Motor Manufacturing Canada, in 1988), and more recently a plant in Britain has started
production (1992).
1.3 Reorganization of the domestic basis
The activities for reorganizing the domestic basis include efforts concerning
the structure and geographical location of the corporation itself. Diversification constitutes another area for activities. A third area is the changes
in the production system and in organizational structures, i.e. the changes
described in further detail in the main bulk of the paper.
The restructuring process started with the merger of Toyota Motor Corporation and Toyota Motor Sales in 1982. With this merger, the contures of acorporation with strong integration between production and sales emerged.
On the production side, a parts plant was established in Hokkaido (withproduction start-up in 1992) along with a fully integrated assembly plant inKyushu (with production start-up in 1993).4 The corporation thus emergedwith a more dispersed production structure than previously.
The attempts at diversification may be summarized as follows. Diversification has occured mainly in the form of establishing separate divisions
devoted to the development of new corporate target areas. Between 1984
and 1991, a total of 19 companies with a total of approximately 4,530 employees were either invested in, acquired or newly established. Two of thesecompanies were within aerospace, five were within communications, and six
were within high-tech (Japan Auto Industry Survey, April 1993:4).

2. Changes in Toyota production organization since 1980
At first sight, the development of the production organization at Toyota
Motor Corporation in the past decade consists of an increase in the numberof models and the number of variants within each model produced. At thesame time, there has been a decrease in the general changeover time between
models. Product line has also been altered, with the addition of high valueadded luxury cars (Kojo Kanri, Plant Management, 1990:101). Moreover,these developments have come at a time when the company has moved from410

a rather conservative stance when it comes to the use of advanced production
technology to a strategy of increased automation levels.5
One should however, be cautious when analyzing these trends since there
have recently been some scale-backs. The recent low conjuctures (and thecompletion of several major construction projects), may have resulted in a
strategy of scaling back the levels of investments in high technology. The
low conjunctures have also led to Toyota decreasing the number of variants
offered, commonization of components, and increased lead time for new
product development (Miyazaki, 1994). Also, with regards to automationlevels within final assembly, another factor behind scale-backs may be theincreased cost (as relative to the usefuleness and flexibility) of certain typesof new technology, with the result that automation levels have remained
lower than the 20–25 percent that were initially projected. In other words,
automation activities within final assembly had to take into consideration
their applicability and cost in addition to their labour saving capacity, claims
that are not easy to fulfill within mixed model production (Automotive
News, 26 October, 1992:14i).
It is thus, very difficult to outline general trends in Toyota strategies andto assess how much the recent scale-backs are a result of circumstances ora result of conscious deviations from long range strategies. Nevertheless,this section attempts to present an outline of main developments within
production organization during the last decade or so.
2.1 Investments in facilities and equipment
Toyota investments in facilities and equipment during the second half ofthe 1980s, were fairly high when seen in comparison with the other auto
corporations (Kitamura, 1990). Towards the end of the 1980s, the spending by Toyota, Nissan and Mazda showed significant increases, although
Toyota’s spendings increased the most. These three companies incidentally
spent the most because of major construction projects, with Nissan building
a new plant in Kyushu and Mazda a new plant in Hofu. Toyota built a totalof five new plants and two additional lines at an existing plant. Two of the
new plants were in Toyota City. One of these was for the production of partsand equipment (Teiho plant, 1986), and the other was for the productionof electronic control devices, sensors, and so on (Hirose plant, 1989). In
addition, the plant in Tahara Town was enlarged with two additional lines(Tahara III, 1989, and Tahara IV, 1991), with the latter of these being theline within the corporation with the highest density of high technology(Automotive News, 25 January, 1993:23).
Toyota also initiated its plans for expanding production to other areas
than Toyota City and Aichi-ken (Aichi Prefecture) during the latter halfof the 1980s. A new plant in Hokkaido for producing various parts did, as411

mentioned above, open in 1992, and the new plant for the production of
upper-scale small-sized cars in Kyushu, started production in spring, 1993.
Domestic Toyota production capacity was at the time calculated to produce
approximately 4,800,000 vehicles by 1995, when final assembly by othercompanies within the Toyota Group was included in the figure.6
As for the most recent spending behaviour, Toyota and the other Toyota
Group companies have been in the process of ending the large projects
mentioned above. Also other companies like Nissan and Mazda have completed their projects, and figures for capital spending are showing huge
reductions.7
2.2 The Tahara IV and the Kyushu plants
The Tahara IV plant is one of Toyota’s pilot projects when it comes toexperimenting with the application of new types of machine technology
and organizational innovations, according to a study by the auto industry
survey firm Press & Data Service (PDS) International (1993:233). The maindifferences between the Toyota assembly plants with conventional production processes and Tahara IV is that the former system ‘balances the needfor mixed model production with the need to maintain high productivity
through continuous flow of production’, while the latter has got ‘quality
assurance’ and ‘improved working environment’ as priority areas, in addition to ‘maintaining high productivity’.
Some of the new machine technology and the new methods in use at Tahara
may thus, be interpreted as meant for alleviating the possible contradiction
between wanting improved quality and productivity levels simultaneouslywith an improved working environment. Such innovations include the useof automatically guided vehicles that have adjustable height and sideways
movements, automated engine and chassis installation, and the making ofparts of the assembly process ‘modular’. In the latter respect, the plant’s
assembly process is only slightly less advanced than Mazda’s Hofu II, theindustry leader in the field of modular assembly (Japan Auto Industry Survey, December 1992:12; PDS, 1993:234). The assembly process at Tahara
IV has in its present state however, been found to be more costly than thatof the conventional lines (PDS, 1993:234).
The scale of the Kyushu plant in southern Japan is 200,000 units a year.
The investments in machine technology are, according to reports (Asahi
Shinbun, 5 April, 1991; PDS, 1993:95; Nomura, 1992:9), concentrated on
worker environment rather than on automating the final assembly process.
The attitude towards automation has been described as resembling Toyota’s
overall step-by-step attitude (PDS, 1993:95), and the most remarkable innovations are on several organizational solutions.
First of all, the shift system and the workforce composition are different
412

from those at the other Toyota plants. While there are two shifts alternating
weekly between a day shift and a night shift at the other plants, the Kyushu
plant has got two shifts that run from about 06:00 AM to 03:15 PM and fromabout 04:15 PM to about 12:45 AM (PDS, 1993:94). In this way, the Kyushu
plant circumvents the Japanese prohibition against letting women workin manufacturing during nights, and has in fact recruited female workers.
Secondly, the organization of the production process is reported to containcertain production buffers within the production flow. This principle seems
to fly in the face of a crucial principle within the overall Toyota Production
System, in which stock-in-process constitutes an utmost evil in the form ofwaste (Ohno, 1988). Kyushu has however, allowed a certain amount of stock
between its teams consisting of approximately 10 workers each. And theseteams are then supposed to have a certain amount of autonomy concerning
how to perform the tasks within the team (Asahi Shinbun, 5 April 1991).
Other Kyushu innovations include the way the plant was financed, establishment as a separate, incorporated company, and a slight departure fromthe JIT system, consisting in collecting bulk supplies from Aichi Prefecture
suppliers for shipment to Kyushu.8
The experiments at the two plants of Tahara IV and Kyushu, exemplify
several strategies at a corporate level. On the one hand, the changes are
aimed at increased levels of productivity and efficiency. They do however, on
the other hand, seem to be aimed at adjusting production in some degree toworkforce needs and characteristics. For the Kyushu location, an additionalfeature supporting the second point includes the fact that a major part of
the workforce at the previous production sites, did in fact migrate from the
Kyushu region to central Japan (Oyama, 1985; Nohara and Fujita, 1989).
By locating the new plant in this region, the corporation obviously aimed
at reducing recruitment related problems.
2.3 On scale-backs
There have been some scale-backs when the present state of affairs is compared to the original plans. The corporation did recently decide that it should
deviate from the original five-year plan and reduce the size of investments
by 20 percent. One Toyota manager has commented on the high cost offlexible machinery in the following way:
It is pressing our corporate earnings down. A few years ago, it cost
20 million yen to replace one worker. Now it costs 35 million yen.
We had to bring it down to 20 million (Automotive News, 26 October,
1992:14i).9
In connection with the scale-backs, the corporation was thus, faced with the
problem of deciding upon which areas to target for reductions. The corpora413

tion has as mentioned in the intrduction, generally been dividing between
two types of investments, ‘productive’ and non-productive’. According to
one company official: ‘about half of the investments are of a type that do
not lead to increased production’ (Nihon Keizai Shinbun, Japan Financial
Times, 27 July, 1992).
The kind of investments included in this ‘non-productive’ category do
however, include both R&D as well as ‘welfare and benefit programs inorder to secure the recruitment of young workers’, and the corporation hasreportedly found it ‘difficult to reduce’ the level of such investments (Nihon
Keizai Shinbun, Japan Financial Times, 27 July, 1992).

3. Reform of personnel management institutions
In this section some primary personnel management reforms, concerningreform of the status system, the personnel assessment system, and the wage
system will be presented in some detail. Thereafter, some other organizational changes and personnel management reforms will be treated somewhat
superficially.
3.1 Reform of status system
The Toyota status system distinguishes between ranks and statuses. The
latter corresponds to whether a person holds an administrative post or not,and to what level this post is situated. But, since there are ranks in addition
to the statuses, the system allows for considerable flexibility in personnel
management by accomodating rank promotions without actually promoting
a person to an administrative post or to a status of a higher level. The persons
belonging to a particular administrative level do not have to be of the samerank or grade. This is because the rank ladder and the status ladder are, inspite of being parallel, not strictly interconnected. Some in-company representations of the rank and status ladder do in fact indicate the possiblity of aperson in, for example, a group leader position being of either one of threedifferent ranks (cf. Grønning 1992:174; Nomura, 1992:22). The system doesin this way serve as a managerial tool for handling a workforce consisting ofindividuals with varying levels of skills and managerial potentiality underconditions where there are a restricted number of posts.
The present system is termed the ‘Job Ability Rank System’ (shokuno
shikaku seido). It emerged from the ‘Job Level System’ (shokuso seido)
which had been institutionalized in 1966. In 1987, however, the ‘Job Ability Rank System’ was instituted, and it was thorougly revised in 1989 andin 1991.
Although the new ‘Job Ability Rank System’ is no major break from the‘Job Level System’, the new system is considerably more sophisticated. In
414

addition, one of the innovations within several 1991 blue collar institutional
reforms, the implementation of a system of ‘Special Competence Posts’(senmon gino-shoku), signifies a development of the status system. Insteadof just being promoted to a higher rank, the new institution of ‘Special Competence Posts’ signifies that persons may actually be promoted to a higher
status, even when they are not promoted to a specific administrative post.
Such special competence persons will, according to an announcement in
the company paper, be allocated concrete, special tasks such as prototype
related work, assistance at plants abroad, education, practical work that
requires a wide range of experience, and so on. The system has also incorporated a flexible component in securing that persons in regular administrative posts may, ‘when the need arises’, be rotated with special competence
persons (Weekly Toyota, 1 February, 1991:2).
The implementation of such ‘Special Competence Posts’ may thus, turnout to be an interesting development. It is however, necessary to investigate in future research for what reasons and to what extent the institution
actually is being implemented. Subjects for such investigations include
for example the question of whether the new institution simply is a projectfor handling the problem of having promotable persons within the current
workforce without having available posts, or if it is an institution which
will have an indispensable place within a particular form of future production organization.10
3.2 Reform of the personnel assessment system
The personnel assessment system is the primary tool for placing workers in
the different ranks and statuses. The system is also used in order to connect
ranks and statuses with appropriate wages, as well as, in order to connect a
promotable person with prepromotion education (Tanaka, 1982).
The most important developments concerning the personnel assessment
system are as follows. Assessment, which was previously a holistic, ‘total’,assessment has been subdivided into two types: ability assessment and periodic assessment (see Table 1). While ability assessment is annual, periodic
assessment occurs semi annually.
Moreover, for the new periodic assessment, a person’s assessment results
may range between 80 points and 120 points as compared to the 85–115
range for the ability assessment and for the previous, holistic assessment
system. Both the previous system and the new form of assessment are
based on a zero-sum principle, i.e.; a system where 110 points awarded to
an individual within a certain section means that another person may beawarded only 90 points. The increase in range for the new periodic assessment means that differentiation between individuals may occur in a greater
degree than before.
415

Table 1. Personnel assessment system
Type, nameof assessment

1. Ability assessment

2. Periodically assessment
Ass. for job
Ass. for sum- Ass. for winterability wage
mer bonus
bonus

Philosophy• Assessment of abilities
of assessment
possessed• Assessment of abilities displayed during
period1

Reflection ofassessment• Ability
wage2• Raise in base wage
• Promotion• Summerbonus• Winter
bonus

Scope ofassessment

85–11580–120Assessment
elements

1. Knowledge, experience
2. Supervising ability
3. Ability for KAIZEN,
suggestion
4. Voicing opinion,
affirmativeness1. Result of work
2. Attitude towards task
3. Safety

Assessment
period• Feb. 1 of previous year–Jan. 31 ofpresent year

Assessmenttime• Nov. 1 prev. • May 1
year–Apr. 30 –Oct. 31
pres. year

• March• October

Assessment
group• In principle, separately for each rank

Assessment
rank• Total and relative assess- • Accumulative evaluation of 2 assessment
ment while referring toelements (5-ladder ass.)each assessment element • Department/assessment group with regula(5-ladder-ass.)tion finished within department• Regulation according toaverage of departement/
assessment group

Notes: This outline of the personnel assessment system applies for the
manufacturing related personnel. (System for technical and office personnel is slightly different.)
1.
2.

Does not take into consideration ability, experience, etc. acquired outside theperiod.
Does not influence promotion.

Source: Reproduced from Toyota Motor Corporation in-company material, March 1989, pp 7–8 (outline of system except ‘scope of assassment’),
and Toyota Motor Worker’s Union material, September 1989, p. 9 (‘scopeof assessment’)416

Finally, we may detect from the new elements for consideration withinassessment (Table 2), a focus on both the value of avoiding mistakes as wellas on the value of taking initiative.
3.3 Reform of the wage system
In connection with the institutional reforms within personnel management,
the wage system has also undergone major revisions:11
The reason for reforming the wage system is to clarify the element of‘getting rewarded if one makes an effort’.
1.
2.
3.

A system where the deciding elements are clear and one which theemployees will easily accept.
To wipe out attitudes giving priority to stability with the implementationof a system which can invite an attitude of continuously challenging
goals.
A system which definitively can reflect an individual’s ability (Toyota
Motor Corporation brochure dated March, 1990:1).

The concrete innovations do, when overtime pay is excepted from the description, mainly reduce the proportion of a person’s wages that is being
determined by the efficiency of the group that the person belongs to. Instead,priority is given to individual efficiency and work attitude.
The new system has got the following components:••••‘production allowance’, which reflects work group efficiency(40 percent)‘base wage’, as reflected by ability assessment results (40 percent)‘age wage’ (10 percent)‘job ability wage’, as reflected by periodic assessment results(10 percent)While the former system had the three components ‘base wage’, ‘production
allowance’and ‘rank allowance’, the latter component is in the new system
included in a component called ‘job ability wage’. It is noteworthy that
although a component called ‘age wage’ has been identified as a separate
entity that is entirely liberated from assessment results, this portion is amere 10 percent of the total amount.
Besides these changes, the way of calculating efficiency has according to
Nomura (1992:6–7) been altered or will be altered in the future. Efficiency
rates will hereafter apply not only to production department employees, butalso for maintenance and technical employees while measuring against acoefficient derived from a so called ‘standard time’. Females and older workers will however, be allowed longer ‘standard time’ than young males.12417

Table 2. Elements for consideration in personnel assessment
1. Assessment elements for ability assessment
Special knowledge,
techniques• Is able to handle work of great difficulty as well
as taking care of numerous tasks and respond tosudden situations. In other words, has sufficientknowledge/techniques while having a profoundunderstanding of the rules and regulations forsafety and employment conditions. Is also fervently involved in self education

Ability for contributing to continuous
improvement• Is always problem oriented and participates
whole-heartedly in activities for continuous improvement. Is also actively involved in offering
opinions in the relevant situations.

Ability to supervise • Shows the leadership necessary for his position. Is
also good at supervising while understanding theand instructfeelings of his people.
Sense of responsibility, cooperation• Has a strong sense of responsibility for his workand acts cooperatively while understanding thestate of the company and the workplace.
• Is also, based on mutual trust between management and labor, contributing to creating a pleasant
workplace.

2. Assessment elements for periodical assessment
Results of workand activities forcontinuous improvement• Performed the day-to -day tasks accurately, wasvigorously involved in solving difficult problems
as well as showing concrete results in connection
to activities for continuous improvement.
• Also showed concrete results in instructing/training his people in the planned way.

Attitude towards
work• Obeyed the various rules and regulations as wellas the instructions and orders of his superiors.
Was fully involved in his work and cherised teamwork. Did also show an effort in enabling communication between top and bottom.

Note: Applies for assessing sub-section leader and below. The various
elements or the relative weight of elements may vary according to therank of the assessee.
Source: Toyota Motor Corporation in-company material, March 1990, p 3418

3.4 Some other reforms
The question of altering the corporation’s shift system surfaced in 1989 andin 1993. Toyota plants have, as mentioned above, normally operated with
two-shift systems, with workers alternating weekly between day shift andnight shift. Legislation and prejudice against female workers working nights
meant that female hires were excluded under this system. With a system of
two daytime shifts, both female workers and others reluctant about night
shifts, could be attracted to work in the industry.
The 1989 labour and management committee discussed the goal of no
more than 1,900 hours in total working hours for any employee. The planthat was discussed at that time would however, necessitate an additional
6,000 workers, of which 3,000 should be new recruits while the labor output of 3,000 workers should be secured through automation (Nihon Keizai
Shimbun, Japan Financial Times, 29 July, 1992). The plan did in addition
contain several suggestions on reform of how working hours were structured(Nomura, 1992:4).13
In the discussions of the 1993 committee, a new system was planned to
be designed around the time slot between 6:00 A.M. and midnight, i.e. ca.
18 hours. With such a time frame, there would however be several obstacles
that would have to be resolved in order to make the system viable: the employees are used to the significant portion within their wages coming fromovertime;14 parking lots would have to be enlarged; the system would haveto be implemented simultaneously at all the plants since the new working
hours would have to be coordinated with the suppliers; and so on (Chunichi
Shinbun, 6 July, 1993).15 Moreover, such a system would mean that there isalmost no room for overtime between the two shifts.
Concerning reforms specific to blue collar workers, the most comprehensive reform was implemented in February, 1991. One of the innovations at
this occasion was the start-up of a System for Education in Special Skills.
This new education system implemented at this time is built upon the threeparts of ‘competence in practical matters’, ‘basic competence’, and ‘special
knowledge’. It is classified as a ‘challenge system’, meaning its objectiveis ‘that each and every employee may, through his work, improve his abilities or feel where he stands’. There are four levels, and any worker withthe certain amount of experience corresponding to one of the four levels
may request the appropriate education (Weekly Toyota, 1 February, 1991:2).
In addition, the 1991 blue collar reforms included the implementation ofSpecial Competence Posts as reviewed above.
The organizational structure for white collar workers first underwent somefundamental changes in 1989. The changes consisted in altering the way of
how to group the white collar workers. The previous pyramid-shaped organizational structure consisting of departments, sections and sub-sections419

was altered with the introduction of ‘groups’ within departments insteadof sections and sub-sections. The number of departments did remain about
the same, but the number of ‘groups’ was only 633 as compared to the 758
sections of previous times.16
In addition, another white collar reform was instituted in June, 1993. Thisconsisted in allocating 20 percent of the male workers (ca 800 persons) into
special teams. These teams should take care of ‘urgent issues’, while theremaining 80 percent performed the day-to-day tasks (Nikkan Kogyo Shinbun, Japan Industrial News, 11 June, 1993; Nihon Keizai Shinbun, Japan
Financial Times, 11 June, 1993, Japan Auto Industry Survey, September,
1993:3, 17).
The objective of this reform was thus to implement concrete measures that
could contribute to the on-going efforts at organizational development. Not
only are the persons assigned to the teams given the opportunity to devote
themselves to the issues at hand. Another target for the reform was the work
content for the portion of the workforce remaining with responsibility for the
day-to-day tasks. This part of the reform aims at using the situation with decreased manpower levels to visualize work that is really necessary and workthat is ‘not needed’ (Japan Auto Industry Survey, September, 1993:3).
Finally, a system for enhancing ‘re-recruiting’ to the new companies
within the Toyota group has emerged. With the additional companies resulting from the efforts at diversification, the Toyota Motor Corporation
has gone to concrete measures for increasing mobility within the corporategroup by recruiting people to the new companies from within the Toyota
Motor Corporation itself (Toyota Shinbun, 3 August, 1990).
The two reforms of creating special teams and enhancing ‘re-recruitment’ qualify for comments in the same vain as in connection with thepresentation of Special Competence Posts above. This is to say that it isdifficult to grasp the full meaning of these two reforms without conductingsome further research where certain additional aspects of the two reforms
are being investigated. For the special teams, it is possible to question
whether the real significance of their implementation lies in concentrating
particular workers in the special teams or in the effect on the workers withresponsibility for the day-to-day tasks. A crucial question in connection tothis is the question of what workers are being selected for the special teams.
The character of this institution depends on whether the workers selected
turn out to be the most outstanding workers, the workers that perform thepoorest or if it is a com-bination of these two. Similar comments may be
added in connection with the ‘re-recruitment’ process. It is in other words aquestion of what type of workers that Toyota Motor Corporation will ‘lose’to the new companies.

420

Conclusions
Toyota management has during recent years been preoccupied with how tohandle an expected domestic worker shortage. Management has in addition
been preoccupied with strategies for the improvement of the corporation’s
earning structure. There is a possible contradiction between simultaneous
improvement of earning rates and increases in ‘non-productive’ investments
in order to respond to workforce needs and in order to attract new recruits.
The two themes may be interpreted as standing in a contradictory position
towards each other in the following sense. Adequate recruitment levels in
the future may in many respects necessitate increased levels of ‘non-productive’ investments. At the same time, a move towards strategies aimed atsecuring improved earning rates would perhaps favor as few non-productive
investments as possible.
Regarding the way the workforce is being handled, there are within thedevelopments reviewed here signs that management tries to retrieve with
one hand what it gives out with the other. In order to secure recruitment
or due to other reasons, management is considering concessions on certain
areas. The workforce has already experienced, or will probably experiencein the future, more responsive treatment in the form of e.g. more normalizedworking hours, a wage component reflecting age, and efficiency calculations
taking into account sex and age of the employee. But more strict conditions
are also evident, such as white collar worker rationalization, more frequentand more individualized personnel assessment, and company-wide calculations of efficiency rates. And it is especially noteworthy that indirect laborhas become the specific target for rationalization measures and that this portion of the workforce is undergoing changes towards structures resembling
the principles previously employed within the production department (e.g.
groupification of labor and provoking rationalization through the removal
of workers).
It should however be noted that certain aspects of the refoms warrant
further research in order to get a full picture of the recent events. Such aspects include the nature of the so called Special Competence Posts, special
teams for white collar workers, and the ‘re-recruitment’ process within theenlarged corporate group.
It should also be noted that the labor market related reforms contain anumber of other possible contradictions in addition to the basic contradiction
suggested in this paper. In relation to the Toyota reforms we may discern
possible contradictions such as the problem of how to create a new andambitious production system under the condition of possible workforce
shortage and a more heterogenous workforce than previously. And there is,
as has become evident from the review of the more individualized assess421

ment and wage systems, a possible contradiction between wanting both tostrenghten ‘the individual’s creativity’ as well as maintaining traditional,
Toyota-style teamwork.
In this paper, some of the most recent Toyota Motor Corporation activities have been presented and been tentatively compared to classical toyotist
activities. Some of the activities may be characterized as varying from theprevious institutions. Further research is however needed in order to become
able to formulate the true extent of the changes in question. And further
research is also needed if we want to follow the way of thinking about
different forms of production organization as consisting of configurations
ranging from supplier relations to in-company work organization. Regarding
this last point, this paper offers far too little evidence. But some clues inthis paper point to a possible future ‘neo-toyotist’ configuration consistingof at least the following characteristics: production and product development is dispersed both in a domestic and international sense, in contrast toconcentration to a single prefecture within Japan; products consist of a wide
range of products in addition to vehicles; workforce is heterogenous (young
and older males as well as even females) instead of homogenous (young
males); production organization combines mixed model production and hightechnology instead of adapting conventional technology to mixed model
production; production system is to some degree responsive to changes inworkforce composition, but wants simultaneously to be responsive to market
input; and the personnel management institutions are designed in order toenhance the creativity of individuals as well as being designed in order toenhance the ability to function within a context of groupified labor.

Notes
1.

A prelimenary version of this paper was first presented at The 17th Nordic Sociology Congress, August 13-15 1993, Gaevle, Sweden, with the title ‘Aspects
in Connection With the Introduction of New Technology in the Japanese Auto
Industry: The Case of Toyota’. I am in the addition to comments at this conference indebted to Åke Sandberg, Cecilia Runnström and Katsuji Tsuji, who all
took time to read through early versions of the manuscript.

2.

There is obviously a large number of such works, but cf. e.g. Cusumano, 1985;
Oyama, 1985; Nohara and Fujita, 1989; Tsuji, 1989; Wood, 1989; Womack et al,
1990; Elam, 1990; Totsuka and Hyodo, 1991; Helling, 1992; Grønning, 1992.

3.

Changes concerning the latter point, i.e. changes in the current workforce’s
perceptions and values, has already been documented (Jidosha Soren, 1990;
Tsuji, 1994:275).

4.

Toyota did also plan the establishment of a parts plant in the Tohoku region, butconstruction of this plant has, according to the auto industry survey institute
PDS International (1993), been postponed.

422

5. See Aichi Rodo Mondai Kenkyu-sho (1990:209) for figures on increases in
automation level.
6. Toyo Keizai, Far Eastern Economics, 29 December, 1991. The prognosis was
based on the figures for new plants and enlargement of existing plants (theKyushu plant and a total capacity for the Tahara plant of 500.000 in the case of
Toyota Motor Corporation itself as well as Kanto Auto Body’s Iwate plant to beconstructed within 1993, 200,000 vehicles, and Toyota Auto Body’s Mie plant
to be constructed within 1993, 80,000 vehicles) added to the 1989 production
figures (2.244.000 for Toyota Motor and 1,732,000 for other Toyota Group
companies).
7. The figures are, due to differences in when the respective fiscal years ended,
not directly comparable. But in the fiscal year ending 30 June, 1993, Toyota
registered a reduction of 20.5 percent (down to US$ 3.92 billion), Nissan a 15
percent reduction (down to 1.58 billion, forecast based on fiscal year ending
31 March, 1994), and Mazda a 37.2 percent decline (down to US$654 million,
forecast based on fiscal year ending 31 March, 1994). The only company thatwas expected to increase their spendings in this period was Honda (Automotive
News, 21 June, 1993:42).
8. See PDS (1993:95) and Nikkan Jidosha Shinbun, Japan Automotive News (16April, 1991) for details on these aspects.
9. Another source states that ‘Toyota long maintained a strict policy requiring theelimination of one job for every 10 million yen invested in automation. Morerecently, however, it has begun to relax this constraint, allowing investmentsof yen 15-20 million to meet changing requirements, such as the demand forshorter working hours’ (PDS, 1993:232).
10. For the latter point, it is interesting to refer to the trajectories of future production as proposed by Kaneda (1991). He suggests that in place of the small-scalesuggestions that have been the back-bone of production organization so far, the
new form of organization will require more system-oriented suggestions forincremental improvements, and hence a new type of workers who are able tosubmit such suggestions. Special Competence Posts may turn out to be one of
the elements within such a scenario.
11. It has been reported that wage system revisions were first implemented for theemployees not being members of the union, i.e. those of section chief rank andabove, in April, 1990, and that revisions for the remaining, unionized employees(ca. 63,000 employees) then followed in July, 1992 (Asahi Shinbun, 25 July,
1992).
12. Still another innovation is the introduction of different efficiency coefficientsin casting, machining, body/painting/stamping, and assembly (Nomura, 1992:67).
13. Note that Toyota and other companies are anonymized in the papers by Nomura(1992), his colleagues (Totsuka and Hyodo, 1991), as well as another work beingreferred to in this paper (Nohara and Fujita, 1989), but that these publications

423

are being used as sources after having identified the corporations that are being
described.
14. Toyota workers did during the 1980s on an average consistently work ca. 20
percent overtime (Aichi Rodo Mondai Kenkyu-sho, 1990:207).
15. Nomura (1992:9, 12) refers the details on the suggestions of the 1989 committee
and explains that an experimental shift system consisting of three shift groups
rotating two shifts commenced in January 1991 with a higher shift allowance(35 percent as compared to 25 percent previously) in order to compensate for
reduced overtime income.
16. Cf. Miyazaki (1994) and Nomura (1992:2) for further details.

References
Automotive News.
Aichi Rodo-mondai Kenkyu-sho (ed.) (1990), Toyota gurupu no shin-senryaku(The New Strategy of the Toyota Group). Shin Nihon Shuppan, Tokyo.
Chunichi Shinbun.
Cusumano, Michael (1985), The Japanese Automobile Industry: Technology &Management at Nissan & Toyota. Council on East Asian Studies, Harvard
University, Cambridge, Massachussetts.
Elam, Mark J. (1990)., ‘Puzzling Out the Post-Fordist Debate: Technology,
Markets and Institutions’, Economic and Industrial Democracy, vol. 11, pp.
9–37.
Fujita, Eishi (1994), ‘Toyota seisan hoshiki to rodo/rodo soshiki’(‘The Toyota
Production System and its Workers/Organization of Work’), Shokugyo
Seikatsu Kenkyukai (ed.) Kigyo shakai to ningen: Toyota no rodo, seikatsu,
chiiki (Corporate Society and People: Work, Living Conditions and Community at Toyota), Horitsu Bunka-sha, Kyoto.
Grønning, Terje (1992). Human value and ‘competitiveness’: On the socialorganization of production at Toyota Motor Corporation and New United
Motor Manufacturing, Inc. Ritsumeikan University, dissertation for the
Ph.D-degree, Kyoto.
Helling, Jan (1992). Varldsmestarna; Utgåva 2 (The World Champions, 2nd Edition). Sellin & partner, Stockholm.
Japan Auto Industry Survey.
Jidosha Soren (Japan Auto Workers’ Union) (1990), Genki no deru jidosha sangyo
ankeeto hokokusho (Report from the Enquete Survey on a Reinvigorated
Auto Industry), Jidosha Soren, 1990.
Kaneda, Hideharu (1991). Posuto-Toyota hoshiki (Post-Toyota Production System). Paru Shuppan, Tokyo.
Kitamura, R. (1990). ‘21-seki ni te wo nobasu jidosha kojo’ (‘The Auto Plants
Towards the 21th Century’), Ekonomisuto, August.
Kojo Kanri (1990). Vol. 36, no. 6.
Miyazaki, Shinji (1994), ‘“Jidosha fukyo” to Toyota no 90-nendai senryaku’(‘“The Automobile Crisis” and Toyota’s Strategies in the 1990s’), Shokugyo

424

Seikatsu Kenkyukai (ed.) Kigyo shakai to ningen: Toyota no rodo, seikatsu,
chiiki (Corporate Society and People: Work, Living Conditions and Community at Toyota), Horitsu Bunka-sha, Kyoto.
Oyama, Yoichi (ed.) (1985), Kyodai kigyo taisei to rodosha: Toyota no jirei(The Giant Corporation and its Workers: The Case of Toyota). Ochanomizu,
Tokyo.
Nikkan Jidosha Shinbun.
Nihon Keizai Shinbun.
Nikkan Kogyo Shinbun.
Nohara, Hikari and Eishi Fujita (eds.) (1989), Jidosha sangyo to rodosha (The
Automobile Industry and its Workers). Horitsu Bunka-sha, Kyoto.
Nomura, Masami (1992). ‘Farewell to “Toyotism”? Recent Trend of a Japanese
Automobile Company’, Mimeo No. 1992-1, Okayama University, Department of Economics.
Nomura, Masami (1993). Toyoteizumu (Toyotism), Minerva Shobo, Kyoto.
Ohno, Taichi (1988). Toyota Production System: Beyond Large-Scale Production.
Productivity Press, Cambridge, MA.
Press & Data Service (PDS) (1993), JAIS Annual Corporate Profile: Toyota Motor Corporation, 1993/94 Edition. PDS International Co., Ltd., Tokyo.
Tanaka, Hirohide (1982), ‘Nihon-teki koyo kanko wo kizuita hitotachi II’ (‘ThePeople Who Made the Japanese-style Employment Practices II’), Nihon Rodo
Kyokai Zasshi, nos. 280–282.
Toyo Keizai.
Totsuka, Hideo and Tsutomu Hyodo (eds.) (1991), Roshi kankei no tenkan to sentaku (Changing Industrial Relations and Possible Choices), Nihon Hyoronsha, Tokyo.
Toyoda, Shoichiro (1993), ‘Seikatsu kachi wo tsuikyu suru monozukuri no furonteia’ (‘The Frontier of a Manfacturing Pursuing Life Values’), Weekly Toyota,
February 5, 1993, p. 2.
Toyota Motor Corporation, various documents.
Toyota Shinbun, company newspaper now named Weekly Toyota.
Tsuji, Katsuji (1989), ‘Jidosha kojo ni okeru “shudan-teki jukuren” no kino-keisei
to sono keisei-kiko, 1–3’ (‘The Formation and Mechanism of “Group Skill”
Within the Automobile Plant, 1–3’), in Ritsumeikan Sangyo Shakai Ronshu,
vol. 24, no. 4 (March), vol. 25, no.2 (September), vol.25, no. 3 (December).
— (1994), ‘Toyota kigyo rengo no keisei katei to genjo’ (‘The Formation Process
and Present Situation for the Toyota Corporate Conglomerate’), Shokugyo
Seikatsu Kenkyukai (ed.) Kigyo shakai to ningen: Toyota no rodo, seikatsu,
chiiki (Corporate Society and People: Work, Living Conditions and Community at Toyota), Horitsu Bunka-sha, Kyoto.
Weekly Toyota, company newspaper (previously named Toyota Shinbun).
Winter, Drew (1994), ‘Agile Manufacturing: Can it Really Make Big Corporations Nimble?’, Ward’s Auto World, April.
Wood, S. (1989). ‘The Japanese Management Model’, Work and Occupations, vol.
16, no. 4 (November), pp. 446–460.
Womack, James P. et al (1990). The Machine that Changed the World. Harper
Collins, New York.

425

Social preconditions for lean management
and its further development
Paul Lillrank

The problem
Lean management was originally developed as an operational response topressing strategic challenges. In the early 1960s the driving force behind ofJapanese manufacturers’ management innovations was the threat from US
mass manufacturers who were perceived to possess superior technology andunbeatable produced volumes. The challenge was to combine efficiency withflexibility, to compete not only in terms of cost but also in terms of quality, rapid model cycles and variety. For a few decades, Japanese managers
focused on operationally oriented strategies, the build-up of organizational
capabilities, such as Just-In-Time (JIT) logistics, Total Quality Management(TQM), and Lean Production, to achieve these goals.
Lean production requires a set of soft enablers, that is, social and organizational conditions to match the inherent fragility of the just-in-time-system. Working under lean management is difficult in two ways: it requires
fast-paced work closely following standard operating procedures (SOP)and a continuous vigilance to improve the SOPs. Until recently, a ‘hardship
mentality’ has prevailed in Japanese society. Memories of post-war poverty
were vivid, social and family values encouraged hard and dedicated work. In
such a society, hard work was more easily accepted than in a society where
decades of wealth accumulation had softened attitudes towards work.
When pondering the future of lean management in the Japanese auto industry the key question is whether there have been any significant changes
in the drivers and the social enablers of lean management.
External challenges can affect the lean system in two ways:•

changes in competition and market conditions can affect the economic
drivers of the system; for example, if customers are no longer willing to
pay for variety, some of the advantages of lean management are lost.
427

•changes in society can affect the hegemony of hardship, as a new generation of affluent workers may refuse to put up with the demands oflean production.

Hard challenges to lean production
The current auto industry crisis has been well documented in the Japanesepress. In short, the Japanese suffer from low and falling profits with theweakest players deeply in the red, overseas market shares are static or declining, domestic demand is weak, overseas manufacturing operations are
slow to break even and a number of product strategies have failed.
The low profitability can be explained by the following factors:
•
•

•
•

the strong yen hurts export prices as well as volumes
the variety wars are taking their toll: during the 1980s Japanese auto
manufacturers competed with increasingly broad product lines and awide variety of versions and options. While the lean factories could
handle most of the proliferation, the white-collar sector mushroomed
causing heavy non-manufacturing overhead burdens
a number of models were over-engineered resulting in high prices relative to performance
many foreign competitors have quickly learned to adopt lean production.

In 1993, after four consecutive years of falling profits, the Japanese manufacturers look less like the management giants they were when The MachineThat Changed The World was researched and written. The Japanese are facing problems and the Japanese style of management is not likely to survive
the recession intact.
However, there is no reason to believe that the lean management systemitself, as it operates in the factory, is the source of problems or the firstcandidate for radical reform.
A major part of the problem is that Toyota, as well as most other Japanesemanufacturers, suffer from excessive bureaucracy at the head office which
reduces profits. The strength lies in the factories, which work reasonably
well as does the marketing. New product development and engineering,
though renowned for their short development cycles, are not as effective as
is commonly believed.
Another major challenge is that with the exchange rate approaching 100
yen to the dollar, many parts manufacturers lose their competitiveness.
The famed keiretsu supplier system is undergoing a structural change. The
first-line system suppliers will strengthen their positions while the second
and third-tier suppliers will either be forced to close down or move to428

cheaper locations. The vertical ties keeping the supplier families together
will loosen.
It appears that these problems can be solved with new strategies and amodification of the lean management system. Toyota and others are taking
action: variety is cut, model cycles are becoming longer, inventory levels
are optimized rather than minimized, new less engineered products, suchas the new Mark II, are released, middle-management layers are eliminatedand white-collar overtime forcefully cut. To put it simply, the solution is to
apply lean production principles also to office work.

Soft challenges to lean production
Another challenge comes from changes in the Japanese society. The ultimate
driver is increasing wealth that permits higher average education levels, allows more leisure, fuels higher expectations, and creates jobs and careers inthe service sector. In comparison to opportunities elsewhere, even well-paid
manufacturing jobs become less attractive than before. During the economic
boom (1987–1990) young graduates started to avoid the 3K -jobs (Kitanai,
Kiken, Kitsui = Dirty, Dangerous, Demanding). There has been a lot oftalk about the new generation of Japanese, the Shinjinrui (the new humanrace), that is said to lack all the virtues of their hard-working parents andconstitutes a radical challenge to the old ideology.
Ironically, there is a hard component of this challenge: bowing to pressure from their overseas trading partners, Japanese auto manufacturers havepromised to cut their average annual working hours from 2 200 to 1 900 by
the end of 1993. To the Japanese this is a major challenge, yet in comparison,
VW’s Wolfsburg plant is set to go down to 1 500 hours.
In comparison with Europe, it should be noticed that the social welfare
system is not changing, neither is there any significant official departurefrom the established ideology even though some of the rhetoric has softened.
Consequently, whatever dissatisfaction is felt on the shopfloor, it will notshow as increasing absenteeism or lack of cooperation, but rather as difficulty in recruiting and high labour turnover. Until approximately mid-1992,
Toyota suffered from a shortage of labour and high turnover. Thereafter therecession has halted new hires of temporary shift workers for the first time in
14 years, and reduced the intake of university graduates by 10%. With mostmajor companies reducing the intake of new graduates and letting middlemanagers go, the cozy assurance of life-time employment is disappearing
and even the shinjinrui cannot be as picky as they used to be.
The recession is reinforcing the established order, much in the same way
as the oil crisis twenty years ago abruptly closed the debate about whether
Toyota should import immigrant labour to man its assembly lines. The hard429

times are cooling down the labor market and deflating expectations, thereby
slowing down the drivers of change.

The response
Toyota has been relatively quick to respond to challenges. In the following,
the main lines of action are described.
From maximizing to optimizing: robust manufacturing systems
After the death of Taiichi Ohno, the crusade against work-in-progress (WIP)
inventories has cooled down, and quite reasonably so. The waste reduction
drive has reached its logical limits: the trade-off between inventory on
one hand and fragility and stress on the other has been recognized. Now
inventories are slightly increased to optimize the benefits and costs of leanmanagement.
It is worth noticing that in this context stress is openly recognized as amajor problem calling for more robust arrangements. However, Toyota officials – very much in line with the ideology – interpret stress not as arisingfrom hard repetitive labor, but from the mental stress stemming from thenotion that a small disturbance may cause the whole factory to come to astop. This would obviously lead to production loss, a small erosion of thewealth base, and a loss of face and feelings of shame to those responsible.
Toyota systematically uses shame as a stick to motivate middle managers.
At the Tahara plant which produces the Lexus an extra final inspection
called The Customer Satisfaction Line has been implemented to assure
perfect quality. Whenever a defect is found, the origin of it is located andthe inspector goes to the intercom and announces for everyone to hear that‘would Mr. Suzuki of XYZ section immediately come over, we have founda defect of yours …’!
Simultaneously, JIT deliveries have become problematic because trucks
shuttling back and forth between assembly lines and parts manufacturers
several times a day clog the notoriously weak road system in Japan. With
increased use of foreign parts–purchased to relieve trade friction – andrelocation of plants outside the Aichi prefecture, WIP inventories had togrow slightly, adding a bit of buffers to relieve mental stress. This has beenprematurely interpreted as the end of JIT; more correct is to describe it as
an adjustment, that comes at a time when the waste-minimization drive hasreached its natural limits. A number of arrangements have been devised tocope with the problem: cooperative load sharing system, a parts distribution
center with one to two days of inventory, and daily sea transports from Aichi
to the new plant in Kyushu (Watanabe 1993).

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Coming out from the Aichi Prefecture
In 1990 Toyota announced it will break ‘the Monroe Doctrine of Aichi
Prefecture’ and establish three new manufacturing locations in Japan: theMiyata plant in Kyushu for final assembly, and plants in Hokkaido andTohoku for some key components. The reasons given for this radical breakwith tradition were the need to overcome labour shortage and to build betterworking environments, and to experiment with new concepts at greenfieldsites (Watanabe 1993, 80).
The Miyata Plant, which came on stream in early 1993, is the prime experimental plant in work organization, production, and parts supply systems.
It has an assembly capacity of 100,000 vehicles per annum with one shift. It
is currently producing only one model, the Mark II, and expected to make,at most, only three similar passenger models in the near future. The production of Mark II moved to Miyata from Motomachi, the first and oldest
assembly plant that incorporated decades of continuous improvement. This
move signifies a need for changes more radical than can be achieved withthe traditional kaizen, continuous small-step improvement approach.
For obvious reasons the experimentation going on in Miyata is not well
documented. Watanabe (1993) gives the following outline of measures labeled the ‘hito ni yasashii’ -line, meaning being nice to the people.
•
•
•
•
•

Even at full capacity, only two shifts will be used (first shift 0600–1450;
second shift 1550–2350).
An increasing number of females will be hired, up to five percent of
the workforce, but they may leave their shift 2200 to comply with thelaw restricting female night work.
Use ‘easy’ lines for elderly workers and low-stress sub-assembly lines
for part-time workers.
Job sharing: two persons may share one job.
Better welfare amenities such as locker rooms, showers, canteens;
Toyota as a whole plans to invest 100 billion yen in amenities during
the five-year period starting 1991.

It is recognized, however, that the ‘Hito ni Yasashii’-line will not solve theproblems. In the long run, automation of simple manual labor is the key
solution. In the short term, the key is how to plan and implement appropriate
levels of automation so that it fits with other objectives.
The Miyata plant is less automated than Tahara. Very much in line withthe established ideology, the managing director of Toyota, Mr. Yanogawa,made the following statement during the planning stage of the Miyata
plant: ‘Planned full automation is expensive and resented by workers. We
want to introduce simple, friendly automation. Then, after a while, workers
will rack their brains and have fun figuring out new ways of automation.
431

Kyushu will be a plant that is built on a continuous stream of ideas fromthe workers.’ (Nikkei Business 1992) In other words, Toyota has spent thepast three decades involving workers in planning and implementation of JIT-manufacturing; now the challenge is to do the same with automation.
The lean office
The most serious challenge facing Toyota, and other Japanese manufacturers, is to apply the lean principles in offices to streamline excessive administrative procedures.
The bad and worsening profitability of Japanese auto manufacturers canbe partly explained by variety-based product strategies, resulting in shortmodel cycles and a proliferation of parts, models and options. While thefactories were able to handle the increased complexity, the offices werenot: during the decade from 1982 to 1991, Toyota increased its blue-collar
labor count by 18 percent to cope with a 20 percent increase in unit volume
and a doubling of revenues, while the number of white collars increased
45 percent. For every factory worker hired, 2.5 office workers were added.
While production is continuously rationalized, staff functions and R&D
are very wasteful. ‘If white collars can’t become lean, Toyota won’t bestrong’, says Mr. Katsumi Ohnishi, Vice President at Toyota (Nikkei Business 1.4.1993, p.13).
The famed lean product development is apparently not as efficient as believed. It has demonstrated its ability to get products out the door fast, but
not cheaply. The new product development team leaders, the Shusha ‘supercraftsmen’ began increasing the number of custom designed parts without
consideration of synergy across models. In October 1992 engineering and
R&D were radically revamped for the first time. Three major product development clusters were created: FF (front engine, front drive), FR (front
engine, rear drive) and CV (commercial vehicles). The aim is to increase
the number of commonly used parts and designs within each cluster.
In production plants working hours have been reduced by 100 hours per
year since 1991. In offices, despite calls for voluntary action, no results wereachieved until in November and December 1992 white collar overtime wasdrastically reduced to zero despite massive protests from the employees.
Already in 1989 Toyota announced it will eliminate a layer of middle
managers, the kacho (section chief) rank. Instead, flatter administrative
hierarchies with only one level beneath the department manager (bucho),called Staff Leader, were created. The old multilayered hierarchy lives on
as a competence scale, removed from the administrative hierarchy. Parallelhierarchies as such are nothing new. For example, blue collar workers in
the Japanese steel industry have traditionally been ranked on an elaborated
competence hierarchy with up to a dozen different levels. Reaching a cer432

tain level formally qualifies for a position in the administrative hierarchy,
such as a foreman, but does not guarantee it. Indeed, the system is similar
to that found at most universities. A competence hierarchy consisting ofundergraduates, graduates, Ph.D. candidates and post-doctoral students iswell established but the administrative hierarchy with professors, heads ofdepartments and deans is separate.
The new Toyota system has apparently been slow to get rooted, as old
habits die hard. However, the real significance of Toyota’s flatter hierarchyis that for the first time, white collar work is beginning to be subject to organizational reforms implemented in the blue collar sector already decadesago. The real challenge to both lean management and Japan’s future as aleading industrial nation is whether this will work.

Conclusions
In the early 1990s, during the closing years of the economic boom, it looked
like Toyota would be facing the same problems that Volvo encountered sometwenty years earlier. The question was whether Toyota would be forced to
implement Kalmar/Uddevalla -types of solutions. At the time of writing, fallof 1993, the answer must be an emphatic no; at least not for the rest of thedecade. External and internal forces will move Toyota to take a number of actions, but none of them lies in the direction the Swedish plants have taken.
The challenges facing Toyota are different: there is no welfare stateeroding the willingness to work among those who remain on the payroll.
Turnover among line workers can be handled as it always has been; therecession and increasing unemployment serve as a strong reminder to the
Shinjinrui that wealth must constantly be recreated. Shorter working hours
can be managed within the system – they may also be a blessing in disguise
forcing the ideology to move a bit from glorifying hard work to valuing
smart work. Labour shortage will ease as some production moves out fromthe Aichi prefecture – it is not a permanent solution, but should be satisfactory for the rest of the decade. By the turn of the century, automation will
have eroded a part of the problem.
The Toyota production system offers workable solutions to the problems
of monotony and stress starting from its own premises. The challenge of
automation will provide ample opportunities to creative problem solving
involving line workers. While the Japanese have taken a page from theSwedish book in recognizing the need to ‘be nice to people’, it is only one,and a minor, solution to the problems. In a world where jiriki (self-reliance)and jishusei (internal motivation) are still accepted as hegemonistic values,
management can throw the ball back to workers: ‘well, if you think this work
is boring, then let’s figure out a way to automate it away’.
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The Japanese solution to the boredom and stress of mass assembly is todownplay the Taylorian distinction between thinking and doing without
radically changing the formal organization and management prerogatives.
On the factory floor, workers are requested to diligently follow standard
operating procedures (SOP) while at the same time encouraged to actively
participate in rethinking and improving the very same procedures. Organizational arrangements, such as Quality Control Circles, suggestion systems,
study groups, and quality audits are created to support this effort. While theworkers are free to tinker with alternative solutions, the final decision tochange a SOP is taken by the appropriate manager.
Formal organization is less important in Japan than in Sweden: continuous
improvement can live side by side with a strict formal hierarchy. Mixing
conformance to standard operating procedures with team-based improvement activities of those same procedures, the Japanese can play with a wide
range of possible solutions without radically changing the basic logic ofproduction. Swedes are limited to playing with the formal organization ofwork because there is no tradition of informal mixing of improvement withfollowing of rules.
Are the Japanese learning something from Sweden and Uddevalla? The
Volvo experiments are certainly recognized, but in various ways. Morinobe(1989) uses Volvo as a warning example where you end up when pampering people.
Watanabe (1993) admits that Volvo has made significant progress inmaking work more humane. The Kalmar model could be an ideal factory
system for producing high-margin, small volume cars. Honda is already doing that very thing at its Tochigi Plant, where some 300 people are building
25 NSX sports cars per month, each worker performing the tasks of 20 to
30 traditional assembly line operators. It would be nice if all auto industry
work could be organized like this, writes Watanabe, but unfortunately it is
not feasible in the Japanese competitive context, and certainly not in thenear future, when the overriding concern is to restore the profitability of
the Japanese auto industry.

434

References
Clark, Kim B. and Takahiro Fujimoto (1991), Product Development Performance.
Strategy, Organization, and Management in the World Auto Industry. Harvard
Business School Press, Boston, Massachusetts.
Lillrank, Paul and Noriaki Kano (1989), Continuous Improvement – Quality Control Circles in Japanese Industry, Michigan University Center for JapaneseStudies Publications, Ann Arbor.
Monden, Yasuhiro (1993), Toyota Management System, Linking the Seven Key
Functional Areas, Productivity Press, Cambridge, Mass.
Morinobe, Eijiro (1989), Toyota no Jinzai Senryaku (Toyota’s Personnel Strategy), Daiamondo-sha, Tokyo 1989
Nikkei Business (July 19. 1993), ‘Katsuryoku o hikidasu soshikikakushin– Rienginiaringu Gannen’ (The organizational revolution for vitality – The
Year Zero of Reengineering), Nikkei Business, pp. 10–24— (January 4. 1993), ‘Toyota no Sentaku’ (Toyota’s Choice), Nikkei Businesspp.10–23
Ohno, Taiichi (1988), Toyota Production System: Beyond Large-Scale Production., Productivity Press, Cambridge, M.A.
Omichi, Yasunori (1993), ‘Adjustments in Car Industry Required.’, Journal ofJapanese Trade and Industry, No 4, pp.12–15.
Shimokawa, Koichi (1993), ‘The Auto Industry Enters an Era of Restructuring
and Globalization.’, Journal of Japanese Trade and Industry, No 4, pp.8–18.
Toyo Keizai (May 1.1993), ‘Nihonteki Keiei no Shi to Saisei’ (The Death andRebirth of Japanese management), Shukan Toyo Keizai, Tokushu pp.8–21.
— (April 24. 1993), ‘Shushin Koyo no Genso’ (The illusion of life time employment), Shukan Toyo Keizai, pp.8–24.
Watanabe, Yoshihiro (1992), Toyota ga Nihon o Kaeruka (Will Toyota Change
Japan?), Nikkan Shobo, Tokyo.
Womack, James P., Daniel T. Jones & Daniel Roos (1990), The Machine that
Changed the World, Rawson Associates, New York.
Yasuda, Yuzo (1990), Toyota no Soikufu Teiankatsudo (Toyota’s Suggestion System for Creative Improvement), Nihon Noritsukyokai, Tokyo.

435

Lean production
The Micro-Macro dimension,
employment and the welfare statePeter Auer

1. Introduction
Volvo’s Uddevalla Factory is unique in that its production system is
not based on the assembly line principle … A majority of the Group’s
production units are working with programs in the work-life area. The
most far reaching approaches are applied in Volvo’s new plants … As awhole, these programs will increase the satisfaction employees derivefrom their jobs thereby resulting in more efficient operations (Volvo,
1989, p. 12, p. 61).
The comprehensive rationalization programme that was initiated in1990 continued throughout 1992. The objective is to achieve cost-effective production with shorter lead times, higher quality and improveddelivery reliabilty … the assembly plants in Uddevalla and Kalmar are
being closed down … Since mid-1990 the number of employees has
been reduced by approximately 6,500. Decisions regarding further reductions in the number of employees were made in November of 1992.
The substantial reductions in personnel have placed Volvo companies
in situations that they have not dealt with earlier (Volvo, 1992, p. 12,
p. 61).
Only three years interval separate these two statements. But, more thanmerely indicating the difference between announcements of a company inboom times and in bust times, the difference between these two statements
indicates that a fundamental change has taken place in the organisationof production of a major car company, known for its human centred workorganisation. A new model has emerged which shakes the foundations ofindustrial (and also service) production: lean forms of organisation replace
traditional forms of organisation. Volvo, all in all a small player in theworld automobile industry, does not stand alone in this change. All major
437

companies in Europe are presently engaged in large scale rationalisation
to streamline their organisation and reduce their costs to arrive at ‘lean
employment’.
Does this development also indicate that the humanized work organisation along the lines of an European, socio-technical model is incompatible
with the rough world of ever increasing competitive pressure? Has the ideaof the ‘fathers’ of the socio technical model (Trist and Bamforth, 1951;
Thorsrud and Emery, 1964) that job satisfaction through new forms ofwork organisation is indeed a necessary condition for efficient production
to be dismissed because of the new requirements of production in the faceof Japanese competition? Although the authors of the now basic referencefor ‘lean production’ Womack, Jones and Roos (1990) (hereafter WJR)
contend that the lean world is ‘the best of all possible worlds’ and unites
rationalisation and humanisation, the former seems – after a struggle ofabout 20 years – clearly have taken the lead over the latter and might evenhave won by knock-out, resulting in employment cuts of unknown dimensions especially in countries like Sweden and Germany, known as the mostadvanced models of ‘welfare’ production, with high wage, employment andsocial security levels.
It has to be asked if there is an alternative to the lean approach and if
there is still room for some ‘fat’ in production, despite all the pressures in
the opposite direction. We think indeed that there is an economic (and not
only social) rationale to retain some fat, which appears if one is to consider
the impact of micro (company) decisions on the economy as a whole.
The following article is written not only from the perspective of organisational change itself, but also considers the linkages between organisationalchange and employment: a topic so far widely neglected in the literature onindustrial sociology or industrial relations. However, in the understanding of
the author, the consequences for employment of the present rationalisation
strategies – which are not exclusive to the automotive industry – have to bequestioned and solutions have to be found, which permit competitivenesswithout endangering the whole network of social protection of the advanced
industrial countries.
This paper will provide a rough overview of present organisational change
and discusses the links between internal and external adjustment of theworkforce and the extent of (estimated) overmanning and manpower cuts.
Differing workforce adjustment patterns in four European countries in the
recent past as well as the institutional embeddedness of these adjustments
will also be discussed. Finally, some ideas on how to combine reasonablelean organisation with reasonable employment levels are proposed.

438

2. Towards a new work organisation modelFew would deny that there is widespread change in the European automotive
industry and that since the late 80s this change is, in one way or the other,influenced by Japanese practices. The book ‘The machine that changed
the world’ by WJR is today a basic reference: It has had a large impact onmanagement circles within the European automobile industry and illustrates
the lead of the best practice Japanese firms opposed to the inferior positionof leading European manufacturers in assembly productivity. Cooke (1993),
shows the impact on Germany, where most major car companies bought‘thousand of copies’ for reference as ‘a bible for top management’.
However, changes are far from being introduced in an even manner. Take
Volvo, where the work group has become an institution: There the situation varies from plant to plant: Uddevalla has dropped the assembly line
principle, Kalmar has dropped the assembly line, but kept the principle ofcentrally paced sequential flow (before closure decision for capacity reasons
were taken for both plants) and Torslanda and Ghent have kept assemblylines. Some producers have in some factories ‘doubled’ the assembly linewith group working stations to assemble special vehicles (Mercedes Benz,
Volkswagen and others). Three German manufacturers have established newfactories (Opel and Volkswagen in the ex-GDR, Mercedes Benz in Rastatt),
which have all introduced group work, JIT (just in time), and Kaizen (continuous improvements), in various forms. Mercedes has established one of
the most modern final assembly plants in Rastatt which is also based on the
now defunct Swedish experiences and where production organisation is a
mixture of Uddevalla, Kalmar and local German technical approach withsome Japanese ingredients.
The level of automation also varies with each manufacturer. With few exceptions manufacturers have automated their body shops so that body welding is nowadays an almost completely automatic process and differences
between firms amount to a few percentage points in the degree of automation.
More differences can be found in paint shops and especially in final assembly, where still many barriers for automation do exist. Some manufacturers
implemented automation of the final assembly for large series, such as Fiatfor the Tipo and Volkswagen for the Golf. At the other end of the spectrum,
Mercedes has, on the whole, stuck to manual assembly lines and is proudthat it runs only one industrial robot at Rastatt. One finds today ‘automation
islands’ in all final assembly plants, where tasks like body/motor marriage,
seat, wheel and windshield fixing are carried out automatically. However,after attempts to maximise automation, today, a more careful approach is
the rule, even in the newest Japanese Assembly plants.
Concerning operator autonomy, the number of layers of hierarchy, the439

level of equipment flexibility and the amount of time equipment is used,a general rule is that production units become more responsible for costs
and quality of their products, hierarchies are becoming flatter (even in
the formerly very hierarchical french firms) equipment more flexible (asto allow simultaneous operations on different models or variants of cars)
and shift systems are introduced everywhere to allow for intensive use of
equipment. Also as far as the relationship between manufacturers and suppliers is concerned, there are similarities in developments like the increasein outsourcing and globalisation of supply while reducing the number of‘first tier’ suppliers which will in future deliver whole ‘modulized’ systems(and arrange their own network of second and third tier suppliers). But inall these dimensions differences remain: sometimes hierarchies have only
three layers, sometimes more. Sometimes far reaching cost accountancy is
introduced at low levels of the organisation, sometimes it is not, in some
European factories continuous shift work or night shifts are introduced, inothers not. Some of the manufacturers will rely in the future on only a few
main suppliers, some – while reducing their overall number – will cope withmore (for example, Volkswagen will go from 950 to 100 while Mercedes
will go from 1,100 to 550 and Ford from 900 to 600). Despite common
trends and a fair degree of similarity in goals large differences have andwill remain. Some of this differences have to do with production volume(e.g., the difference between high and low volume producers) some withthe age of a factory (old sites vs. green field sites). Others have to do withthe firm specific business cycle, the labour market situation (tight or loose)and industrial relations (changes depending for example on the bargaining
power of the unions). In the final analysis, despite common trends and theintroduction of such policies as ‘Just-in-time’, ‘Kaizen’, ‘Total Quality’,‘Group work’, ‘Profit (or Cost) centers’, ‘Outsourcing’, etc., there is stilla fairly wide spectrum of different practices in work and production organisation across countries, companies and individual plants (Turner and
Auer, 1992).
It might be one of the paradoxes of organisational change that unions
turned work organisation changes into an important policy issue just whenthe ‘lean production’ concept made its successful entry in management. But
it is clear that while unions do not oppose efficiency, their goals are different
from that of management. For management, efficient production in a competitive world remains the main goal, whereas unions have to fight also forthe maintenance of the acquired rights of their constituencies. Because theirconstituencies are being endangered by the lean, cost reduction approach it
might well be that the coalition between reformist management and unions
in regard to work organisation which prevailed up to the early 90s (see Kernand Schumann, 1984; Auer and Riegler, 1990) will not survive in the era of440

lean production if no solutions to the employment problem are found. The
only chance for conflicts not arising overtly is the present vagueness of theconcept of lean production under which, with some efforts, even former
human centred work organisation concepts can be subsumed. The diversityof actual situations on the shop floors contribute to this vagueness and thefact that employment cuts caused by organisational change cannot be easily
divided by those stemming from overcapacity, has also its impact.
However, despite all the differences, there is something in common to all
European manufacturers and this is troublesome for workers and trade unions,as well as for those managers brought up in the cooperative and ‘humanisationof work’ spirit of change of the 80s. It is also disturbing for all those concernedwith the problems of employment and unemployment: all manufacturers try
to get leaner and try to reduce their costs. This places a tremendous amountof pressure on their major suppliers which will in turn direct this pressure
towards their lower tier suppliers. This will lead to reductions in manpower
levels everywhere, even if future demand will increase.

3. Internal and external adjustment: friends or foes?
The situation of the European automobile industry compared to the Japanese
automobile industry seems to be that in Europe both internal adjustment
through lean forms of organisation and external adjustments to reduce
the labour force are required, whereas in Japan lean form of organisation
match with lean levels of employment. In this context, it becomes more
and more important that companies engage in what could be called ‘managed redundancy’ policy. These policies comprise an array of measuresof internal (internal transfers, internal training, short time work, etc.) andexternal adjustments (attrition, external transfers helped by company based
placement units and training programmes, redundancy payments, early
retirement schemes, etc.). They permit to lower workforce levels without
disrupting totally ‘corporate cultures’ – important for having a motivatedworkforce, willing to be flexibly allocated to different tasks – and are
already an important issue of bargaining which will gain in importance inthe future. As workforce adjustment is not a new issue, the following chapter looks at the ways in which it was managed in the past. Four countries
with different patterns (Sweden, Germany, France and the UK), have been
selected. Before a short presentation of the experiences of these countries,
the issue of why employment security seems to be important for efficient
production, is discussed.
3.1 Employment security and internal change
The cooperative attitude of Japanese employees and their labour unions
441

and their very strong identification with the destiny of their firm, are notconceded without certain things in return. The most important one is undoubtedly the employment security large firms in the automobile sector offer
their employees, and the management of their internal labour markets, wheresalary (and promotion) is based on seniority and continuous training. The
three pillars of Japanese management (employment for life, salary based onseniority – which goes together with training and evaluation – and enterpriselabour unions, see Inagami, 1988) although now shaken by a prolonged
recession, seem still to hold.
It is interesting to see how this trade-off between acceptance of internal
adjustments, industrial peace, identification with corporate strategies andemployment security, has spread to other national contexts through Japanesetransplants or joint ventures.
The principle of trading greater internal flexibility for less external flexibility, through greater employment security is one of the cornerstones of theJapanese ‘model’. However, as has been related by many authors, in Japan,
external flexibility is ensured through less employment stability amongsmaller subcontractors, through inter-company transfers (shukko) mainlyfor older employees which often are a ‘functional equivalent’ to European
type of early retirement provision. It is this ‘extended internal labor market’,including suppliers and helped by subsidised short-time work and training during economic downturns, which explains much of the employment
system in Japanese plants (Inagami, 1988; Auer 1994). In Japan, clearly,
internal adjustment is preferred to external adjustment.
If we look at employment development over a long period, we can see
that, compared to other geographic regions, employment in the Japanese
automobile industry including those subcontractors classified as belonging
to the motor vehicle sector fluctuates much less than in the American automobile industry. Also employment increased until 1990, which contrasts
with the experience in the two other regions (figure 1).
3.1.1 Internal management in a context of unstable employment?
Europe is, as we have already said, disadvantaged in relation to Japan:
on the one hand, it will have to push through internal adjustment throughchanges in work organisation and the development of human resources, toface technological changes and catch up with the Japanese, and on the other
hand, its workforce will have to ‘lose weight’ to achieve ‘leaner’ production.
Yet in a lean organisation, technical and human faults are felt ‘on line’, andproduction becomes more fragile. Therefore, skilled labour is required, who
are able to act quickly in case of failures and work without making errors.
But if a major investment in personnel is made (and this is presently thecase as further training is becoming increasingly important), while lean442

Figure 1

production leads to dismissals, a dilemma is reached: The commitment toand motivation for sustained qualitative internal adjustment seems to beeasier, as the Japanese example shows, if there is a certain degree of employment security. Womack, Jones and Roos (1990) noted in their book that thehesitation to express your know-how and commit yourself ‘… would leaddirectly to catastrophe in the Ohno plant’ and that ‘the high work moralein the Takaoka plant was probably due to the fact that all workers had life
employment in exchange for their commitment’ (1990, p. 58, 84).
If there is no development of the market to counterbalance the effects ofrationalisation and such markets are yet not in sight, the European automobile industry will steer somewhere between Charybdis (massive layoffs– and have difficulties making internal changes and get trained labour), andScylla (have too high labour costs and be disadvantaged in competition). In
any case, it won’t be easy going. A substantial segment of industrial employment is concerned: aside from the automobile industry (manufacturers andequipment makers), which in 1992 represents more than 8 percent of all jobs
in EEC manufacturing, there are other dependant sectors (repairs, insurance,
shipping, etc.). It is estimated that 10 percent of total employment in theeconomies of the major car producing countries, is directly or indirectly
associated with the automotive sector (CCFA, 1992; JAMA, 1993).

443

3.2 The level of over-employment
The figures given are not reassuring and there is hardly a day without announcement of planned lay-offs by one of the automotive companies in
Europe. Without additional outlets, and with a productivity similar to thatof its Japanese counterpart, the European automobile industry can only continue to employ half its workforce (WJR, 1990). Mc Kinsey estimated thatas many as 700,000 jobs could disappear in Europe in the coming years. The
declarations made by European automobile executives for future employment levels are not optimistic either. There are, of course, many uncertainties concerning the development of the market, and such uncertainties will
increase with the opening of new markets in Eastern Europe, which havealready (temporarily) spurred the German and French automobile industry.
One should also remember that during the first oil crisis in 1973–74, massive
layoffs were predicted, as well as the disappearance of many manufacturers
in the then near future. But aside from the UK where more than 55 percent
of all auto jobs (and more than 30 percent of production since 1974), werelost in 1991, the automobile industry weathered the storm quite well.
In fact, no one knows in which countries most of the layoffs will takeplace. Different sources come to different results: according to Morgan
Stanley among European manufacturers, France and Italy – whose market
share is said to be shrinking by roughly 3 percent, from now to 1995, to thebenefit of the Japanese (+5 percent) – are more directly concerned, whereas
Germany (VW, AUDI, Opel) should increase its market share for new carsby +1 percent by 1995. It is probable that the European countries whose
automobile markets are the most protected against Japanese imports, i.e.,
Italy and France, will be the ones to suffer the most when the market opens
after the year 2000. But all is dependant up on how ‘managed’ this trade
will remain. A European Commission study (EEC, 1990) which measured
the effects of European integration within 40 ‘sensitive’ economic sectors(taking foreign trade into account), showed that the automobile industriesof Germany and Spain, and also to a lesser degree France, are in very goodcompetitive positions, and that the United Kingdom, Italy, and the Netherlands are in bad positions (especially with relation to countries outside the
EEC such as Japan). To this it must be added that manufacturers such as
Volvo and Saab, which sell a large part of their output on the highly competitive American market, suffered greatly from the Japanese competitionin the top-of-the-line range there.
However, it seems that those countries which have had up to now very
high employment levels, such as the German manufacturers are increasingly
concerned by cuts in their workforce: All in all about 11 percent of all autojobs disappeared in Germany in 1993. Observers judge this numbers to be
insufficient and estimate that in Germany alone, suppliers and manufactur444

ers together could loose as many as 200,000 to 300,000 jobs by 1995 (Die
Zeit, No. 12, March 1993).
Where will jobs be cut: among manufacturers, among equipment makers, or both? Table 1 shows job distribution between equipment makers andmanufacturers in 1987 and 1991.
Table 1
Employment Distribution among Manufacturers and Suppliers(in percent of total)*
USA

Europe1)
with manufacturers
with suppliers

Japan

1987

1991

1987

1991

1987

1991

67.5
32.5

66.7
33.3

45.0
55.0

44.2
55.8

27.4
72.6

25.8
74.2

* total = NACE 351 (construction and assembly of motor vehicles
and engines and NACE 353 (production of motor vehicle parts andaccessories) (US = Sic 3711 and 3714; Japan = SicJ 3111 and 3113)
1) Germany, France, Italy, UK
Sources: VDA; US Department of Labor; Statistisches Bundesamt, Fachserie 4; own calculations.
The three regions of the triad show very different types of distribution
between manufacturers and suppliers. In Japan (and to a lesser degree inthe US) the majority of the workforce is working for suppliers, whereas inEurope most employees work with manufacturers. This distribution patterns
are consistent with the degree of subcontracting which is much higher in a
typical Japanese plant than in an European plant.
In all regions (Japan included), the trend is clear. As a share of total automative employment, employment of manufacturers is decreasing, whereas
employment of suppliers is increasing. Especially in Europe, one can expect
most job cuts by manufacturers, as the potential of subcontracting seems
far from being exhausted. This does not mean that the jobs lost by manufacturers are simply transferred to suppliers, as the suppliers themselves arebeing pushed into hard rationalisation programmes to produce at low costsby their costumers. The distribution balance on the whole will be skewed
towards supplier employment but still fewer jobs than before, at the endof the day.
3.3 Employment trends in Europe since 1974
Between 1978 and 1985 (the same number of years as those remaining445

between now and the year 2000) 350,000 auto jobs were lost in countries
which registered job losses during this period. This was higher than that of
the European steel industry, which cut 265,000 jobs over the same period.
This means that a fairly massive readjustment of the workforce is not a
new phenomenon for the automobile industry or for European industry ingeneral. But there are great contrasts between the different countries: theUK alone accounts for 57 percent of all job cuts in the automobile industry.
Furthermore, aside from the quantitative aspect, over-employment was managed differently in different European countries, which is explained by theirdifferent socio-economic models. The subsequent analysis of the different
countries patterns of workforce adjustment, concerns primarly the period
after the first ‘oil shock’ to just before the end of the recovery (1989).
3.4 Four different ways to adjust employment
We have plotted the different performances of four countries in chart 2. Two
countries succeeded in creating jobs during the period, and two others suffered job cuts. It seems clear that the need to adjust employment is primarely
determined by economic development and the strength of the automobile
branch in the world market. There is a relationship between production andemployment (see figure 3), though this relationship is much looser in France
and the UK, than in West Germany and Sweden.1 This shows that, while in
the final analysis, management of the workforce is a function of production
and the market, it also depends on employer, labour union and government
strategies, i.e., the power balance in the system of industrial relations. Employment is a political as well as, an economic issue. Since the balance ofpower is governed by institutions such as the Labour Law (the regulationof employment protection: see Auer et al., 1992; Büchtemann and Meager,
1991; Mosley, 1993), employment and training policies, etc., a filter exists
between adjustment requirements determined by market changes and theactual adjustments. For economists of the pure neoclassical tradition, thisis a distortion of market forces as employment should not be affected bysocial or political factors. For supporters of the ‘institutionalist’ approach,the intervention of the industrial relations system can provide a buffer
against the abnormal functioning of the market and regulate employment
levels more efficient as the market. For some authors, the existence of strong
institutions makes it possible to implement post-Taylor or post-Fordist production models, and is a prerequisite for economic growth, since strategies
for mass-producing low-quality goods, requiring cheap unskilled labour
are no longer adapted to the current expectations of consumers. Therefore,
strong institutions support a ‘diversified quality production’ in a high skill,high wage economy (Streeck, 1991).

446

Figure 2
3.4.1 ‘Neo-corporatist’ countries maintained a high level of employment
Up to very recently, there seems to be reason to believe Streecks arguments:
chart 2 shows that employment has fared, up to the 90s, better in countries
with ‘neo-corporatist’ type social relations and strong labour unions than incountries with more conflictual industrial relations and weak or weakened
labour unions. Furthermore, the former increased their output fairly quickly
after the two oil crises and took advantage of the subsequent recoveries byconcentrating on the top-of-the-line range. This also holds true for industry in general, and particularly for the steel industry, where they cut fewer
jobs over a longer period than the two other countries, and production was
redirected towards special steels (Semlinger, 1991; Riegler, 1992).
Germany and Sweden have strong labour unions and employers’ associations and a tradition of communicating between social partners at different
levels, as a result of deals which include industrial peace clauses. Therefore,
strikes are rare but can be serious and widespread, as during the struggle
for a 35-hour work week in Germany. In both countries, the trend towards
decentralisation in bargaining, although affecting the labour unions, has not
weakened them to the same degree as in the UK or France, thanks to strong
institutions at enterprise level. Employment is certainly not ‘guaranteed’,
but it is protected by legislation against lay offs and agreements to counterthe effects of rationalisation (Rationalisierungsschutzabkommen in West
Germany). It must be said that large companies in the automobile industry
have developed ‘internal labour markets’ with their own recruitment, careerand redundancy rules, which come close to employment security for workers
with unlimited employment contracts. Compared to France, they make less447

Figure 3
use of fixed term contracts and temporary workers (Auer and Büchtemann,
1990). But they do not ensure this ‘employment security’ alone: they are
assisted, when needed, by measures financed in part by the government. In
West Germany, short-time work was heavily used during drops in demand: in
1974, 14.5 percent of workers in the automobile industry were on short-time
work, and during the second oil crisis, the figure was 7 percent on average.
Short-time work is used in Sweden along with subsidies for training on thesite of employment during slow growth periods.
The Freezing of hiring and use of attrition make it possible to avoid lay
offs. In the automobile industries of both countries, but more in Sweden
than in Germany (where departing employees often receive severance pay:
Aufhebungsverträge), adjustments were made easier thanks to a fairly highturnover (and therefore voluntary departures), even though there are fewer
departures during economic slumps. The fairly high level of mobility andthe return of activity enabled the renewal of personnel, but at the same time,
underlined the tightness of local labour markets.
In both countries, though much more in West Germany than in Sweden,
the early retirement solution (partially paid for by public funds) was used.
In West Germany, where immigrant labour is laid off more than German
labour, ‘expatriation grants’ together with facilities to recover pension funds,
were proposed temporarily to immigrant workers who accepted to return totheir home countries. For both countries, the decrease in work time has also
supported employment: in Germany, the working week was significantly
shortened through collective bargaining (37 hours by now and probably 35448hours in 1995). In Sweden, where the working week remains the same, forexample, it is still 41 hours at Volvo, the numerous possibilities for legal
absence (parental leave, training leave, etc.), have decreased the effective
time worked to one of the lowest in Europe. Different shift systems have also
been introduced in both countries which allow a longer use of equipment.
While there are many differences between the two countries, internal
adjustments were favored over external adjustments, and there was job
stability for a large ‘core’ of employees with substantial seniority, which isstill encouraged by a solid ‘institutional environment’. This employment
stability (relative because of turnover), was put to the test during the two oil
crises but was not seriously threatened, and with the recovery up to the 90s,
the lack of qualified labour sometimes became even more of a problem thanensuring employment stability. This has changed with the present recession
together with changes towards the ‘lean’ company.
3.4.2 Market vs. State: employment adjustment in the UK and FranceThis ‘institutional environment’ is different in the UK and France whohave more conflictual industrial relations, even if changes can currently
be noted. True, there are major differences between the way the UK andFrance approach layoffs: France, with the help of the government, is a caseof ‘managed exits’ with accompanying measures largely paid for by the
public, while the UK is a case of neo-liberal market led adjustment.
Adjustment by the market. In the UK, after 1979, the very liberal policy of
adjustments by the market became a key issue in the battle against what
was considered an ineffective ‘over-manned’ industry and was also part ofa strategy against labour unions and against certain institutional rules laid
down earlier to protect jobs (such as the ‘guaranteed week’ agreements,
a sort of short-time working scheme, which guaranteed employees in theautomobile industry a certain number of paid hours of work per week irrespective of hours actually worked). Massive job cuts were, however, atthe heart of the ‘liberal’ adjustment. Nevertheless, even in the UK lay offs
are not without any compensation thanks to the legal protection in case oflayoffs (Employment Protection Act), backed up by the law on severancepay (Redundancy Payment Act). Adjustments in the various automobile
firms were therefore generally negotiated with the labour unions. The mostwidely used system is redundancy payments which were often increased by
the firms. Almost all layoffs were ‘voluntary redundancies’, i.e., with theconsent of the departing worker, and with higher severance pay than thestatutory minimum payes in case of involuntary redundancies. But it has
been observed that redundancy payments are the least protective measures,
and a large part of workers who received these payments continue on to fill449

the ranks of the long term unemployed (White, 1983; Rees and Thomas,
1988). Early retirements were also used; they concerned approximately 20
percent of all departures and are to a very large extent paid for by company
pension funds (Campbell, 1992).
Some companies (British Leyland, Vauxhall, Ford) attempted retraining
programs, which have led some authors to draw parallels between the British automobile industry employment market and the German concept of‘internal markets’ (Marsden et al., 1985).
However, the adjustment was carried out more rapidly (e.g., 130,000 job
cuts in 1980/81 alone) and with less protection than in Germany, Sweden
or France. This is obviously linked to the very different need to make adjustments due to very low productivity; during the 70’s, the labour unions
practiced ‘labour hoarding’: their splintered organisation and attitude of
opposition to change sometimes impeded the internal adjustments required.
This has changed since, and there is a current renewal of industrial relations (e.g., single union deal, single status) coming from the transplants,
which offer a certain degree of employment security for their employees.
This renewal became widespread and is taken up by other companies (suchas Rover) as well.
The government as an adjustment agency? In France, employment fared
better during the 70s but job cuts increased after the second oil crisis. The
management of job cuts has become a major issue. Despite the fact that thelabour union membership rate is now the lowest of all European countries,
labour unions are not powerless. The government, which plays a more
important role in industrial relations and industrial modernisation than in
the other countries, has made a fairly wide range of adjustment measuresavailable to companies and individuals (such as short-time work, special
in-plant placement, training and especially early retirement). It is true that
the French automobile industry uses fixed term contracts and temporary
employment more than other countries, to counterbalance swings in production and the external adjustment policy is also based on the departureof immigrant workers. But more than in other countries it is reliant on ‘age
measures’ (e.g., it has been estimated that the costs to the French state forearly retirement at Peugeot SA alone, amounted to more than 2 billion francs
over a ten-year period – Gerpisa, 1994). But this exit management, throughthe early retirement of older workers, was gradually slowed due to its costto the government; the loss of experienced workers for the companies; andby efforts to introduce a system of preventive employment management
and exit management based on training. In fact, the ‘retraining’ policy has
become one of the key aspects of employment policy in the 80s (Villeval,
1991; Ardenti and Vrain, 1988), which demonstrates the government’s wish
450

to support companies in their adjustment programmes without footing theentire bill. The relative weakness of labour unions, a gradual change of theirpolicy towards more cooperative models, and a corporate strategy to improve‘out-placement’ using external labour market management tools financed
in part by the government, have led to a relative consensus on the need to
cut jobs to increase productivity in the face of competition.
3.5 Employment security, cooperation and internal change
Our initial hypothesis was that employment security, one of the aspects of
the Japanese model, would make adapting to internal structural changes
easier. It seems that in Sweden and Germany, during the 80s, the state of
the market, the strength of labour unions and the institutional support ofinternal markets protected jobs, but did not stop external adjustments (because of a fairly high degree of labour mobility) when needed. They also
made internal change easier, such as the introduction of new technologies,group work, work time flexibility and even ‘just in time’. However, the typeof changes introduced were usually more ‘human centred’ as with the lean
production concept. Even when systematic comparative data for ‘qualitative’ internal adjustments are not available, many authors have shown how
extensive the changes are in these two countries, sometimes introduced indifferent ways (Berggren, 1991; Turner and Auer, 1992; Auer and Riegler,1990). The familiar changes in work organisation at Volvo, as well as theintroduction of group work and flexible hours to increase the operating timeof equipment in German plants (Muster, 1988; Lehndorff, 1991), illustrate
this fact. In comparison, difficulties are greater in other countries, such as
those demonstrated by Pontusson (1991), in his comparison between Sweden and the UK. Other studies (Bouche et al., 1992) show the difficulties
of modernisation in France as well.

4. Will yesterday’s strengths be tomorrow’s weaknesses?
The emergence of the Japanese production method and the recession has
suddenly cast doubts, not only on the viability of the kind of European styleorganisational change (the Volvo approach but also the German style group
work supported by the unions provides an illustration of European style approach) but also in general of the socio-economic model dominant mainlyin ‘neo-corporatist’ European countries.
It is true that such European models of work organisation change, as at
Uddevalla and Kalmar – considered as non viable by Womack, Jones andRoos – have been discontinued and production has been recentred at thebigger but traditionally organized plants in Torslanda and Gent. It is also
true that managers at the Mercedes plant in Rastatt are worried, and might451

ask themselves if they have engaged in the right solutions for the ‘mostmodern’ car plant in Europe. Put under pressure of delocalisation, unions
have also accepted wage restraint there to attract production of the Mercedes city car.
Furthermore, the high employment levels reached during the last upswing
in the German and Swedish automobile industry have been questioned andhave already been substantially lowered.
However, beyond what can be seen as normal adjustment in economic
troughs, it seems that it is the whole socio-economic model with its labour
law regulations, high wage levels and substantial social benefits (and assorted wage and non-wage costs), which was only possible to develop
because of strong and participative unions and compromise oriented management, is now blamed to be part of the problem rather than being part ofthe solution, thus putting a question mark on Streeck’s thesis of institutional
superiority of these systems.
Put under pressure in an era of supply side economics, deregulation anddecentralization, globalized markets, renewed power of employers, thetraditional ‘neo-coporatist’ countries seem to be disadvantaged in relation
to more market-oriented economies because of their assumed rigidities. On
the other hand, these models have already changed to a substantial degree
without scrapping all the socio-economic foundations on which they arebased. And, as the recent bargaining agreement at Volkswagen has shown,
there seems to be a potential for innovative solutions even in such large‘neo-corporatist’ firms known for the power of their unions. And also the‘employment oriented’ collective bargaining arrangements in the German
metal and chemical industries (providing for working time cuts in orderto maintain jobs) show this potential for (bargained) change. Institutional
resilience in the face of change is certainly a feature of the German model(see Turner, 1993; Thelen 1993; Auer 1994) and institutional stability mightalso be seen as an advantage in a time of many changes as it makes behaviourof the actors more predictable and ‘path dependent’. And the institutional
weaknesses (e.g., the training systems, industrial relations, etc.) of the twoother countries have given way to a large body of literature which one should
not neglect. In any case, it is certainly too early yet to judge which of the‘models’ will be the most viable in the long run: those which have comenear to (im)perfect markets or those with an institutional ‘filter’ providing
for bargained and cushioned change.
Even if countries react differently to the present organisational change(e.g., different way of socialising the risk of becoming unemployed) a threat
is posed to all the economies of the developed world. All have to cope withshrinking employment levels not only in industry but also in certain partsof the service sector (such as banking and insurance) and most notably also452

in the public service sector where up to now employment was created. At
least two scenarios are possible (neither of which most become reality): theworst case market driven and the less worse socio-economic scenario.
4.1 The worst case scenario
The defenders of lean production believe that lean organisation will leadto low costs, low prices, will spur demand and increase market shares andwill eventually become the weapon to defend European markets against
the Japanese. They contend that in any case, if one does not engage in cost
efficient lean ways of organisation, one will simply disappear from themarket altogether. Employment and production will also be lost totally. In
that view, lean production is necessary in order to survive. It is difficult toargue against this.
Yet, if we were to add all our factors cited above together, the developed
economies engaging in lean organisation on a large scale (not only in theautomobile industry) could face important problems which are difficult toovercome. It will be increasingly hard to find regular replacement jobs for
those displaced by structural (also organisational) change. But lean employment levels pose also the problem of financing the welfare state: at a certain
point, low employment levels might not any more provide a sufficient basefor taxation.
Seen from an employment point of view and in a micro-macro link perspective, the present changes towards ‘lean’ production and organisation inlarge sectors of the economy might produce the end of the ‘fat years’ in theeconomy. ‘Lean’ organisational change might be a remedy for individual
firms, but on the macro level, it could also be a cause for the deteriorationof the economic and social climate in general. More than just a bitter pillto swallow with promising health, the remedy could be poisonous or evenkill the patient. Lean production in Europe means cost reduction (Cooke,1993), and cost reduction means basically ‘lean employment’
But the lean approach promotes also a fundamental change in how big
corporations are run. Until recently, many corporations were in fact socioeconomic entities which integrated economic and social responsibilities.
But these responsibilities were embedded in a system that benefited all: theemployed benefited because of industrial peace and employment security
and high wage levels, while the employers benefited because of the maintenance or expansion of demand. Public budgets financed from tax revenue
based on (high) wages served to provide the unemployed with benefits andactive labour market policy measures, as well as replacement incomes in
the form of retirement benefits or social assistance.
In the European ‘lean’ world of cost (and employment) reduction, there
is not many space left for social responsability. This could mean that either453

the employment and poverty problem is individualised or the state has totake over (e.g., through unemployment benefits and labour market policies)
while the tax base is shrinking.
Even on a micro-economic level, a catch-22 situation could develop: organisational change needs the motivation of workers and their acceptanceof flexible allocation across functions. In exchange some trade offs have to
be offered in order to have not only short-term commitment which mightalso be reached by the fear of job loss, but also sustained commitment anda cooperative attitude of workers. One could argue that the simple threat ofjob loss is enough to get all the commitment that one needs and that the stick‘employment uncertainty’ is a much better instrument of discipline than the
carrot ‘employment security’. But as has been shown, even firms not boundto give employment security by a strong labour legislation (e.g., in the US)
tend to assure it (Mosley, 1993). It was also demonstrated that tenure andtraining correlate positively and that a trained workforce is an undisputed
asset for firms. From a more theoretical perspective, Williamson (1985)
arguments imply that transaction costs (screening, hiring, training, etc.) tend
to be higher in labour markets with a high degree of external flexibility.
This leads to the conclusion that employment security beside being sociallydesirable has also economic benefits. And as far as flexibility for adjustment
is concerned, labour markets characterised by employment stability haveinstitutional ‘puffers’ which authorise them to make the necessary adjustment (e.g., employment maintenance measures such as short-time work or
adjustment measures such as early retirement).
Today, many European manufacturers have to battle on two fronts: they
have to recieve consent from their workers for far reaching internal changes
but cannot offer employment security anymore. They must consequently
find either new ways of employment maintenance (like work sharing) orways to ‘socially cushion’ exits from the labour markets.
Of course, it is always tempting in times of recession to engage in worstcase-scenarios much like the ‘technology as a job killer argument’, or more
directly linked to the automobile industry, the pessimistic predictions of thefirst International Motor Vehicle Programme of the MIT (the one preceding the ‘Machine that changed the world’). The programme forecasted thedisappearance of many major automobile producers (Altshuler, 1984).
Far from behaving as ‘lean organisation Luddites’, we think it is importantto point out the fact that it is today the combination of different elements(lean organisation, high mass unemployment, depleted public funds, slow
employment growth in the service sector, etc.) which give alarmist arguments some legitimacy.

454

4.2 What can be done: a socio-economic scenario
It seems unrealistic to assume that the employment levels reached in theautomotive industry in countries like Sweden or Germany can be maintained.
Jobs will be lost, as is the usual case during phases of structural change. Inthat respect, instability is the only stability we can really be sure of.
However, the automotive industry, as well as other industries, should notpush for a total cost reduction approach and the leanest of all worlds. Insteadof a maximum in leanness, which might lead internally to fragile organisations and externally to a downward spiral in the economies, an optimumin leanness is required. Acceptance of some ‘slack’ in the production flow
as well as in the labour force might be functional for organisational andeconomic ‘safety’ alike. Just as a second break fluid circuit in cars (or areserve computer system in airplanes) is functional for traffic safety while
being ‘redundant’. In general, one has to ask if some ‘redundancies’ in the
production systems (such as puffers, reserve equipment and reserve labour
and/or skills) which from a cost perspective are considered wasteful and nota necessity maintain in fact production flows (see Grabher, 1994).
It might even be better to pay for products a little bit more (add if you
wish a ‘fat production premium’), but be aware that the organisation andthe entire economy benefits from it. A biproduct of such a ‘welfare’ priceapproach is a high level of employment, high wages, a high standard ofsocial protection (all supporting demand for goods and services) and sound‘humane’ work organisation, which enhances the quality of life.
This does not mean that one should strive for inefficiency, but for gradualadjustment to a reasonable level of efficiency, one which leaves room forsome ‘waste’. Again, this is not argued solely on social grounds, but insocio-economic terms.
In a totally competitive world, such a gradual adjustment seems impossible, as some players might get lean and displace those who are less lean.
Therefore, a corollary for a reasonably efficient economy is not to engage ina totally competitive world. This of course cannot be done on a national levelalone but requires cooperation between countries and a sort of bargained or‘managed trade’. This managed trade could simply consist in the regulationof at least minimum standards of social protection, working life or environmental standards which must be fulfilled by all producer countries. This
would also help to prevent one country from ‘hoovering’ over production
and jobs from another country by social or environmental dumping.
In view of the Japanese advances this socio-economic approach might
be interpreted as leading to the death of all other producers. And yet, even
Japan will have to change in the coming years under pressure from new
generations, which are not the ‘worker bees’ their fathers were. Japanesemanufacturers adapt their leanest systems to new social demands (Nomura,455

1993). Some social adjustments will be needed in this system, which willbring it closer to the European and American automobile industries. In
Japan (e.g., Toyotas newest plant), some elements of the European model
are integrated, where instead of targeting at a maximum in leanness, they
are reintroducing such ‘wastes’ as puffers between work stations, thereby
reducing negative consequences for production flows and worker’s health.
These developments show that there is indeed a possibility for change which
integrates the economic as well as the social dimension.
It is clear, however, that the maintenance (in the European case) or the
reintroduction (in the Japanese case) of some ‘fat’ in production and theeconomy in general is firmly opposed by those who want to introduce lean
production. Therefore some additional remarks have to be made. Our argument is that if lean forms of organisation are adopted to any significant
extent, their macro-economic consequences will threaten – by complex effects in the economic process – the foundations of the economy itself. Thishas to do with micro-macro link questions and also with supply and demand
factors. To give a very simple example: in an isolated supply side microeconomic view, high wages are a cost factor which affect competitivenessand destroy jobs. In a demand side macro-economic view, high wages area benefit to the economy. This is because they spur demand and production
and contribute, all other things remaining equal, to the creation of jobs. The
dilemma cannot be solved by relying on isolated policies for either side, but
by a combined supply/demand and micro/macro policy. The fear is that lean
production is just such an isolated supply side micro-economic mechanism,
which does not take into account demand aspects (more jobs equal morepurchasing power, less public deficits, etc.).
However, in a time of rising unemployment, one has also to question
the notion of full employment, as it seems that full employment (full-timejobs with long working hours), can not longer be provided by the advanced
industrial countries, and a new more flexible definition for full employment
has to be found. Some authors argue that the message of lean ways to organize production is a positive one: more wealth can be produced with lesshuman labour. Despite all the alarmist scenarios of future labour markets,
productivity advances make the ‘cake’ of wealth constantly bigger. It is thecake of work which is shrinking. Yet if one is to engage in work sharing ona large scale, one could distribute smaller slices of the work cake to more
people while maintaining or often increasing the wealth cake. This scenario
of large scale job sharing to overcome the employment crisis is today believed by a growing number of authors (e.g., Aznar, 1993; Gorz, 1986). It
is also applied (not as a clear cut strategy, however) through extending theshare of part-time jobs, work time reductions and leave (training, sabbaticals) schemes. Even if work sharing is only one of the possible solutions456

for the present employment crisis, it is worth trying it. And one should notforget that new social demands have always been important driving forces
for economic development.

Note
1.

Regression coefficients show that over the whole period around 75 percent of
the variation in production is ‘explained’ by employment variation in Germany
and 60 percent in Sweden, but only 10 percent in France and 20 percent in
the UK. In other words: production and employment is much closer linked inGermany and Sweden than in the UK and France. Productivity (production perhead) has strongly increased in the UK and also in France, and has been rather
stable in Germany, while it has decreased in Sweden till 1991. It is on the risein all countries since 1991.

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