Treadway Tire Company Lima Plant: SWOT analysis
SWOT Analysis for Treadway Tire Company Lima Plant
The Treadway Tire Company has almost 9,000 employees in North America. Treadway Tire is one of the major suppliers of tires to the original equipment manufacturers (OEM) and replacement tire markets. The company sells under the brands Treadway Primo, Treadway Performance, and also manufactures private brands. Treadway Tire Company has eight manufacturing plants in North America. The Lima plant in Ohio is one of them and has a serious problem of high turnover (almost 50%) of foremen. This SWOT analysis is mainly focused on the Lima plant in Ohio.
Leadership in the industry. Treadway Tire Company is one of the major tire suppliers of the original equipment manufacturer (OEM).Their major customers are car manufactures such as Ford, General Motors, and Chrysler. High productivity and quality. The Lima plant expanded and modernized its facilities to increase capacity and manufacturing technology. Due to this $100 million expansion, the Lima plant has become one of the Tradeway’s top plans for productivity and quality. Lowest cost producer. The Lima’s plant rotating shifts of 12 hours vs. 8-hours shifts has reduced significantly the cost and can be the lowest cost producer in North America. Competitive salaries and benefits. Foremen earn $30 per hour, overtime, compensation for years of service, and benefits. In exit surveys foremen were very satisfied with the salary and benefits provided by the company.
High turnover ratio. The foremen turnover ratio is extremely high at 46%. This means that in 2007, 23 out of the 50 foremen left the company. 10 did it voluntarily and 13 involuntarily. The issue of high turnover is affecting productivity and putting at stake the Lima’s plant positioning as the top productivity and quality rating plant of Treadway Tire Company. Low employee morale. According to the exit survey and current views of the foremen, they have low morale Foremen feel that they are not respected, they lack authority and support from the supervisors and managers. In addition, they have an adversarial relationship with hourly workers. When disciplining workers, foremen think they get away with it because workers are protected by the union.
Poor communication. Foremen are the direct link between the mid and upper management and the line or hourly workers. They have pressure from line workers, supervisors and managers. They feel isolated and supervisors and managers do not listen to their concerns. There are not open channels of communication with supervisors and line workers. Thus, these conditions cause the foremen frustration and adversarial relationships with supervisors and line workers. Thus, the main reasons why the leave or are forced to leave the job: lack of control of the workers, not meeting forecasts, and adversarial relations with supervisors and managers. Job dissatisfaction. The company does not provide support to the foremen to perform their duties. Foremen are overworked and under-recognized. This causes the departure of almost half of the foremen during the year. Besides, foremen feel isolated and they do not see ways to advance in the company. Unionized labor force.
All hourly workers are unionized with United Steelworkers (USW) and this causes constant conflicts with the union in terms of grievances, contract bargaining, salaries, overtime shifts, and benefits. Foremen consider that the union overprotects the hourly workers. Lack of formal training. There is not a formal training policy for the foremen. Foremen receive informal training only at the discretion of the supervisor or manager. Sink or swim approach or tried-and-true management styles are used by supervisors with the foremen. Foremen perform a variety of complex administrative, technical, and leadership duties that require extensive training. Rotational training and mentor training are on hold due to budget cuts. No advancement opportunities. The pool for foremen is heavily concentrated in internal candidates. There are very few new openings at the Lima plant for foremen to move up to supervisors, and also few openings to move up from supervisor to manager. When an opening is available, the company hires external candidates. Thus, the plant was not satisfactory developing new managers and supervisors.
Cost and productivity leadership. By resolving the issue of high foremen turnover, the Lima plant can consolidate its position as the top’s Treadway plant in productivity, quality, and lowest cost producer. Expansion to new markets. Treadway Tire as a major supplier of OEM in North America may use its positioning to enter new growing markets in Latin America, Asia, and Europe. Effective training program. If the Lima plan is able to develop an effective training program for foremen and thus reducing their turnover, this program can serve as a model and may be used by other Treadway plants. This training program will increase job satisfaction, boost employee morale, and productivity. New technology and development. New technology advancements can improve the tire manufacturing process and reduce the dependency of oil derivates raw materials.
Raising cost of raw materials. Raw materials used by the company are petroleum derivatives and highly dependent on oil prices. Variance of oil prices affects negatively the company because it increases the costs affecting profitability and competitiveness. Global competition. International competitors may displace the leadership position of Treadway Tire and lower its market share and profitability. Main competitors are located in Germany, Sweden, Finland, Italy, and Japan. New manufacturing tire companies are strongly emerging in India and China. Problems with the union. Unionized labor may cause problems with the company in terms of contracts, salaries, and benefits. A generalized strike may paralyze operations at Treadway plants. New Regulations. New environmental or government regulations may require new standards in the manufacturing of tires. This can be a factor of increasing costs.
Foremen employees are experiencing job dissatisfaction at the Treadway Lima plant. This is causing a serious turnover rate of 46% during the year. In other words, 23 out of the 50 foremen left the job during the year and had to be replaced. Exit surveys reveled that foremen had very low morale. They feel left alone and overwhelmed with plenty of responsibilities, but without the necessary training and tools to perform their duties. The lowest areas of dissatisfaction were training and development, working conditions, supervisors, and advancement opportunities.
In addition, during a meeting organized by Ms. Wall, the Human Resources Director, the foremen expressed their frustration about their lack of authority and the adversarial relations with the hourly workers. They said that the administration expects them to meet or exceed targets, but they do not receive the support to accomplish these objectives. They have issues with staffing the production, disciplining workers, and union’s grievances. Besides, one of the major issues is the lack of training. Foremen perform a variety of administrative and technical duties such as scheduling, payroll, staffing, and production sheets. Yet, they do not receive a formal training and the company does not have an ongoing formal training for foremen due to budget reasons. Another issue affecting the foremen is the lack of opportunities to advance in the company.
The consequences of foremen’s job dissatisfaction have become a major issue at the Lima plant. The immediate consequence is the high turnover ratio. Almost half of the foremen during the year left the company voluntarily or involuntarily. As a result, productivity is being affected because the production targets are not met. Besides, the relationships with the hourly workers and supervisors are also affected. The relationships with hourly workers are seen as adversarial because they do not respect the authority of the foremen and hourly workers complain that foremen are rude and they treat them like slackers. Supervisors just put pressure to achieve the targets, but they do not provide any support to foremen. There is a clear lack of communication with lack of communication with supervisors and managers.
Treadway Tire work system has many elements that contribute to the problems experienced by the foremen. The first aspect is the 12 hour shifts. This policy is saving money to the company, but it is placing an enormous pressure on workers due to long extended day. There are many people absent or arriving late to work. So this policy may be counterproductive and it is affecting not only the foremen, but also the hourly workers and the productivity as a whole.
The second aspect is the lack of formal training. Foremen perform a wide range of activities in their daily jobs that may be overwhelming and counterproductive. However, they do not receive a formal training to perform these functions. There is only informal training for new foremen at discretion of the supervisor or manager. Formal training has been place on hold due to budget cuts. This is causing frustration of the foremen because they feel powerless to fulfill their duties without proper training and support.
The third element is the lack of advancement. There are few opportunities for advancement at all levels. Foremen who made it to supervisors are not typically promoted to managers because they administration selects an outside candidate.
Finally, the lack of communication in the chain of command is affecting also the foremen. Supervisors tend to blame foremen for not meeting the targets, but they do not provide support to the foremen to achieve these objectives. Neither the managers are taking responsibility in supporting the foremen. In addition, the efforts to improve communication by the plant manager are inconstant and minimal. There is no a formal channel of communication and the foremen are left alone and nobody is taking responsibility for their high turnover ratio.
Plan of Action
There are many strategies Treadway may implement to solve the high turnover issue at the Lima plant and improve the job satisfaction of the foremen.
Implement a formal training program. A formal training and mentoring program needs to be fully funded and implemented. Foremen play a key role in the company and they need to be trained and supported on constant basis. They need to receive training in the areas of management, leadership, production planning, payroll, conflict resolution, and labor/union laws. Besides, the mentoring program is necessary with supervisors, so they take ownership of the foremen’s performance and provide the necessary support. This program will empower the foremen and will improve the relationships with hourly
workers and supervisors.
Modify the evaluation and targets for the foremen. Instead of having a yearly informal evaluation, the management should develop a monthly evaluation of the foremen so they have opportunity to make corrections and meet the targets. This new evaluation should consider both quantitative and qualitative data. In addition, this evaluation should also consider external factors that affect foremen productivity such as hourly workers absences or machinery breakdowns.
Create collaborative committees. Managers and supervisors must have open channels of communication with foremen and hourly workers to improve productivity and avoid adversarial relationships. One way to improve this communication is through the creation of collaborative committees. These committees will formed by hourly employees, foremen, supervisors and managers. They will discuss issues related to targets, production, productivity, and continuous improvement. These committees will keep informed the top management of the issues at the production line level.
Review the shift schedule. The 12-hour shift work schedule should be revised and compare with the 8 hours shift schedule in terms of savings and productivity. If the company is only considering the savings on the head counts, also the productivity and problems related with long shifts should be considered. The 12 hour shift may be saving money in personnel, but it may be losing money in productivity.
Modify advancement policies. Policies should be revised and clearly outline the requirements and steps to follow to advance at the company. More in-house opportunities should be given to foremen and supervisors to advance at Treadway Tire Company.