A Tale of Two Factories

1. Identify the differences in the processes of the 2 factories, addressing labor relations, safety, amount of automation, methods, costs, etc. Labor RelationsShanghai; Making changes and improvements is difficult since many workers are used to working for state-owned industries, and hence the employees are ferociously resistant to change. Relationships with supervisors and the employees are often bad-tempered, with neither side much interested in negotiations. Hiring and firing is difficult because employees have one- three year contracts, hence the employers have to wait until the contract is over or voluntary buyout. This reduces employee turnover. Litchfield, Mich, the atmosphere at the plant is business like; the workers are very professional, attentive, and careful, restrained and take active part in reducing bottlenecks. Employees are experienced they accept the changes made and adopt it. Employees are not bound by contract, hence hiring and firing takes place based on their performances. Process: Shanghai: The plant employs 275 people in two eight-hour shifts, work for 160 hours a month, the plant is sparsely automated and machinery is scarce. The plant uses low-tech techniques to build a medium-tech product. Welding machines help workers connect the tubes to the catalyst and the muffler, but they are simple rotating devices, numerically controlled machines. A few forklifts, no automated material handlers, no robots to perform repetitive tasks, no lasers to guard against slips and falls. The factory is dependent on its 51 suppliers. The employers prefer to use cheap human inspectors instead, this results in less quality products.

Litchfield, Mich: A total of 324 employees work on a three shift basis. The goal is to reduce the amount of labor in its mufflers and automate as much as possible. They practice Lean manufacturing, six sigma, kaizen (Continuous Improvement). Workers take an active interest in reducing bottlenecks. The day starts with a 30-minute production meeting. Various workers from all departments meet together to discuss about the work done the previous day, about deliveries, shipping, material requirements for production. Any mistake appear immediate solution is found and the work is carried on. Constant checking and inspection takes place. Safety: Shanghai: The Company is looking to provide protective glasses, steeltoed shoes, and earplugs, but they have been slow to implement it. The place is clean but scuffed around the edges. The workers wear jumpsuits which are very dirty. Litchfield, Mich: They have a smarter approach to manufacturing; since the plant is fully automated it reduces accidents and increases employee safety. Automation, methods and costs. Shanghai: the factory is scarcely automated, there is very few machinery in place. The method use is labor intensive approach to production. The labour costs are very cheap and in cost only 1% to the total costs. Litchfield, Mich: the factory is highly automated or semi automated. Employees are well experienced. Their main goal in automation and reduce labour force. The labour costs are high; it constitutes about 12% to the total costs.

2. Discuss the differences in life circumstances of the workers.

Shanghai: Workers in shanghai factory earn about $1.56 an hour, commute to work by bicycle, and live in a small one-bedroom rental apartment. Because of long working hour and lack of day care facility their children lack in parental care and proper education. People are satisfied with what they earn and they think they have a much better and brighter future ahead. Litchfield, Mich: workers in Mich; they commute to work in two cars, own a home, raised their own children, and recently returned from a vacation to Hawaii. They earn about $30 an hour (plus benefits), enough to provide a comfortable living in this farming community. Workers here are worried about their future though they earn a lot. 3. How do the workers view the future differently? Shanghai: The employees firmly believe that the company will bring in fortunes to them in the future and they would be better off; tomorrow will be brighter than today, and workers are hungry for their next raise and promotion. They are confident that their wages will increase and bring in more fortunes. Tenneco is expanding into china. They have already opened five plants and invested $21 million in China thus far; Tenneco expects to spend an additional $30 million over the next three years. Over the long term, Tenneco clearly sees China as the growth market; company executives believe that Shanghai can become as profitable as its U.S. operations. Litchfield, Mich: The workers in Litchfield are worried and tensed about their future. There know that there is a heavy competition in the market. They believe that the future in not very bright for them and it may lead to worse. Litchfield is surviving hard just to stay in place. Its Big Three customers in the U.S. are losing market share, and Japanese and Korean transplants are located too far away for Litchfield to supply them. The most likely scenario is that work at the plant will continue to bump up and down.

4. What has been happening with how much people have been paid over the last few years in each location?

Shanghai: The workers each earn about $1.56 an hour, employees $225 for every 50 hours or work. Blue-collar workers make $210 to $250 for 160 hours of work a month. White-collar workers like engineers start at $625 a month. Wages are going up 10% a year. Litchfield, Mich: Litchfield workers make about ten times as much as their Chinese counterparts. A technician, started at Tenneco 11 years ago when the average salary for her position was $8.50 an hour; it now averages $14.10. The blue collar employees are about $1,880 - $4,064 a month while the employees earn about $296 for every 28 hours of work. An hourly worker receives $900 for the plant's work plus another $480 for Tenneco's corporate achievements equivalent to about seven months' pay for their Chinese colleagues. 5. If you had a crystal ball, what do you think each site will look like in 10 years? That is, what changes will have occurred? Shanghai: After 10 years, the factory would have been semi-automated, they wages for the employees would have risen three or four times what is now. The factories infrastructure will be highly improved, more safety equipments will be provided, the workplace will be much more clean and hygienic. The employees standard of living would have risen. Litchfield, Mich: The factory will be highly automated, the labour force will be comparatively less, and the wages would have increased to a certain extent. There is also a possibility that the factory might have closed down or filed for bankruptcy due to heavy competition.