Monthly Archives: August 2013

They Call it “The Chasing-Out Room” in Japan

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AUGUST 22, 2013

Unwanted employees are made to feel forgotten

Shusaku Tani is employed at the Sony electronics plant in Tagajo, Japan, reports The New York Times(Aug. 17, 2013) front page story, but he doesn’t really work. For more than 2 years, he has come to a small room, taken a seat and then passed the time reading.  Sony consigned him to this room because it can’t get rid of him. His position at the Technology Center was eliminated, but Tani, 51, refused to take an early retirement offer in 2010 — his prerogative under Japanese labor law. So there he sits in what is called the “chasing-out room.” “I won’t leave. Companies aren’t supposed to act this way. It’s inhumane,” he states.

The standoff between Sony workers and management underscores an intensifying battle over hiring and firing practices in Japan, where lifetime employment has long been the norm and where large-scale layoffs remain a social taboo. Economists say bringing flexibility to the labor market in Japan would help struggling companies streamline bloated work forces to better compete in the global economy. Fewer restrictions on layoffs could make it easier for Sony to leave loss-ridden traditional businesses and concentrate resources on more innovative, promising ones.

Sony offered workers early retirement packages that are generous by US standards–severance payments equivalent to as much as 54 months of pay. But the real point of the rooms is to make employees feel so bored and shamed that they just quit. Labor practices in Japan contrast sharply with those in the US, where companies are quick to lay off workers when demand slows or a product becomes obsolete. It may be cruel to the worker, but it usually gives the overall economy agility.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

US Auto Makers Shift to Full Capacity

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AUGUST 20, 2013

Chrysler plant in Detroit

This Wall Street Journal (Aug. 17-18, 2013) article describing how more U.S. auto plants are cranking out cars around the clock discusses a variety of tactics for matching capacity to demand. After years of layoffs, plant closures and bankruptcies, U.S. auto makers are pushing factories to the limits. At GM, Ford, and Chrysler, more flexible union agreements now allow the companies to build cars for 120 hours a week or more while paying less in overtime pay.

Nearly 40% of car factories in North America now operate on work schedules that push production well past 80 hours a week, compared with 11% in 2008. “There has never been a time in the U.S. industry that we’ve had this high a level of capacity utilization,” says one industry expert. In 2005, the industry had 925,700 employees. In 2012, the workforce stood at 647,600.

Changes in union labor contracts have been critical to running auto factories harder. The Detroit Three now can schedule work at night and on weekends without paying as much in overtime as they would have in the past. Adding a third shift, as many plants have done, also reduces overtime. Overtime pay also starts after 40 hours a week, not after 8 hours a day as in the past. And a newly hired Detroit factory worker now earns about $15/hour versus $28/hour for veteran workers.

In Toledo, Chrysler is building all the hot-selling Jeep Wranglers it can. The plant has been running nearly round the clock, churning out about 800 Jeeps a day and using overtime to staff production lines 20 hours a day, 6 days a week for the past 2 years. Temporary workers fill in when regular employees aren’t available. Ford has gone a step further, adding a 4th crew of workers at some plants to keep those factories running 152 hours out of the 168 hours in a week.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

The Box That Built the Modern World

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AUGUST 11, 2013

shipping containersFor a fascinating story called “The Box That Built the Modern World,” enjoy this article in In Transit (Issue 3, 2013). The piece follows the Hong Kong Express, docked at Hamburg’s Container Terminal for 33 hours. “Already, the ship was half empty. Cargo from Asia was stacked in neat rows of shipping containers on the dock. The ship is nearly a quarter of a mile long; from side to side it’s 157 feet. It can carry 13,167 20-foot-long containers, the standard box used in commerce around the world.” In less than 2 months the Hong Kong Express will call at 11 ports and travel more than 12,500 miles. Circling the world 4-5 times a year, it can move 1.4 million tons of cargo annually.

More than any other single innovation, the shipping container epitomizes the enormity, sophistication, and importance of our modern transportation system.  Fundamental to how practically everything in our consumer-driven lives works, it is the Internet of things. Just as email is disassembled into bundles of data you send, then re-assembled in your recipient’s inbox, the boxes are designed to be interchangeable, their contents irrelevant.

Once they enter the stream of global shipping, the boxes are shifted and routed by sophisticated computer systems that determine their arrangement on board and plot the most efficient route to get them from point to point. The exact placement of each box is critical: ships make many stops, and a box scheduled to be unloaded late in the journey can’t be placed above one slated for offloading early.

The In Transit article traces a T-shirt sewn at a factory near Beijing. Tagged, folded, and boxed, the T-shirt is stuffed into a container with 33,999 identical shirts at the factory. The merchandise passes through 36 steps before arriving at a discount clothing retailer’s distribution center near Munich. There’s the trucker who moves the box to a waiting ship in Xinjiang, the feeder ship that moves it to Singapore to be loaded onto a bigger Europe-bound freighter, the crane operator in Hamburg, customs officials, train engineers, and more. The total time in transit for a typical box from a Chinese factory to a customer in Europe might be as little as 35 days. Cost per shirt? “Less than one U.S. cent,” says a shipping exec. “It doesn’t matter anymore where you produce something now, because transport costs aren’t important.”

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.