Edges Fray on Volvo's Brave New Humanistic World
By STEVEN PROKESCH
Published: July 7, 1991
GOTHENBURG, Sweden— Since August 1988, when A.B. Volvo opened its car-assembly factory in the southwestern Swedish city of Uddevalla, it has been hailed around the world as one of the boldest gambles in what is known as humanistic manufacturing. But this noble experiment is increasingly looking like a noble failure, its productivity nowhere near the exacting standard of world competition.
At Uddevalla, about 45 miles north of Volvo's headquarters here, Volvo became the first large-scale carmaker to turn its back on a system that has prevailed in the industry since the days of Henry Ford: the assembly line. Pehr G. Gyllenhammar, Volvo's visionary chairman, wanted to prove at Uddevalla that the craftsman approach of having a small team of highly skilled workers build an entire car, when combined with advanced materials handling, could compete after all.
The approach, which entailed slashing layers of management and eliminating all foremen, aimed to reduce the tedium of the assembly line, encourage workers to increase their range of skills and give them more control over their jobs. In the process, Volvo hoped to curb a special Swedish problem: absenteeism and turnover that are among the highest in the developed world.
But the word in the tightly knit Swedish business community is that Volvo is going to abandon the Uddevalla concept. Volvo, whose car division last year suffered its first loss in a decade and which is struggling to cut costs, has moved up its review of the concept to the end of this year. Originally, it had been set for the spring of 1992.
In an interview, Christer Zetterberg, Volvo's president, insisted that it is "a bit premature" to pronounce the Uddevalla approach a failure. But "we can never run factories long term which are not competitive," he added, saying that if Uddevalla "doesn't come out as a viable concept from a productivity point of view, we will, of course, rebuild the factory."
The company's goal was for productivity and quality levels at Uddevalla to at least equal those of Volvo's two other Swedish assembly plants but with absenteeism and turnover lower than the 20 to 30 percent norm in Sweden. While Volvo executives report that quality has improved and the plant's nearly 900 workers seem happier, they cannot boast about productivity.
Mr. Zetterberg noted that one difficulty for Uddevalla is that "they're shooting at a moving target." Volvo's Gothenburg and Kalmar plants, after all, have both responded to orders to improve their competitiveness. In addition, executives at Volvo now recognize that measuring up by Swedish standards is not enough. What really matters is how a factory stacks up against the competition around the world. By that measure, the Uddevalla plant is found wanting.
It takes 50 hours of labor to assemble a car at Uddevalla, including the time for materials handling and quality control but excluding welding and painting. In contrast, Volvo's 17-year-old plant at Kalmar in southern Sweden requires 37 hours, although its assembly line is anything but traditional.
Unlike an old-fashioned assembly line, where a worker does the same simple task over and over again, spending perhaps 30 seconds to 3 minutes on each car that goes by, each car at Kalmar travels on an individual carrier upon which an individual team might spend 20 to 25 minutes before the car goes on to another team. At Uddevalla, a team of workers typically spends 2 to 3 hours building an entire car.
Volvo's big Torslanda factory here requires 40 hours to assemble a car. To improve worker satisfaction, its relatively traditional assembly operation is incorporating the Kalmar approach in certain areas: work cycles range from 2.5 minutes for simple tasks to 90 minutes for assembling the car doors. And teams work on the car both at stations off the assembly line and on moving platforms on the line.
Volvo's factory in Ghent, Belgium, which has a conventional assembly line, needs only 25 hours to build a car. And even Ghent looks mediocre when compared with the 20 hours or so that Japanese carmakers require not just to assemble a luxury car comparable to a Volvo but also to weld and paint it.
If it shutters Uddevalla, Volvo would not be the first company to give up on the team concept. Earlier this year, Saab Automobile A.B., which is jointly owned by Saab-Scania A.B. and the General Motors Corporation, decided to close a new assembly plant at Malmo, Sweden. Opened in the fall of 1989, the plant divided the assembly process among work teams that each spent about 20 minutes on a car.
Saab and G.M. executives say the plant is being shut mainly because of the depressed European car market and because Saab can satisfy any increase in demand from its main assembly plant at Trollhattan, Sweden, near Uddevalla.
But the partners concede that they have little faith in the plant's ability to achieve world-class productivity levels. "Given the competitive pressures, I wouldn't start another plant like that," said Robert J. Eaton, president of General Motors Europe and chairman of Saab Automobile's board.