CHAPTER EIGHTEEN
End Work Rules and Job Descriptions
IN ALL THE HUNDREDS of books, articles, and speeches on American competitiveness—or the lack thereof—work rules and job restrictions are rarely mentioned. Such rules forbid a foreman to do any production work, whether taking the place of a worker who goes to the restroom, repairing a tool, or helping when the work falls behind. They forbid electricians to straighten a stud when installing a fuse box. They forbid workers’ moving from one job to another, thus restricting them to narrow, repetitive tasks, e.g., spray-painting the door panel of a car. And they narrowly restrict what a worker may be trained for. Yet all available evidence indicates that work rules and job restrictions are the main cause of the “productivity gap” of American (and European) manufacturing industry.
To be sure, productivity is not the sum of competitiveness. But when it comes to making things, productivity is the foundation. And it is precisely those American and European industries in which making things is most hedged in by work rules and job restrictions—steel, automobiles, consumer electronics, rubber, and so on—that have done the poorest against the competitors from East Asia.
“Double-Breasting”
The best evidence for the effect of work rules and job restrictions is found in America’s building industry. It alone of all major industries anywhere has—working side by side—union shops with tight job restrictions and nonunion shops without them. Both shops are often owned by the same company—it’s called “double-breasting” in the industry—with the same people running them. The time it takes to do an individual job, e.g., connecting a drainpipe, is exactly the same in both. Yet the crew working under work rules and job restrictions needs two-thirds more people to do the same job in the same time.
A “double-breasted” contractor recently ran a study on two nearly identical projects done by his company, one by a union crew, the other by a nonunion crew. The nonunion crew worked an average of 50 minutes out of every hour. The union crew worked 35; the rest of the time it was forced to wait—for someone to come back from the restroom or for a journeyman to become available to do work an apprentice could easily have done but was not allowed to touch. The unionized crew also had to work shorthanded for 40 minutes until a man qualified to drive a truck had come back from the shop with a replacement part. When that happened on the nonunion project, the foreman ran the errand and the work continued.
The result: the unionized crew required a crew of eight, the nonunion job was done by five workers. Interestingly, the large Japanese contractors who are considered models of efficiency work with roughly the same productivity, all observers agree, as American nonunion contractors.
Work rules and job restrictions also explain in large measure the higher productivity of the Japanese-owned plants in the U.S. and Europe. The best-documented example is an English one. In Nissan’s plant in the Midlands a worker turns out 24 cars a year. At English Ford in Dagenham outside London a worker turns out 6! Half of that difference may be Nissan’s buying many more parts on the outside than does Ford. This still leaves a productivity differential of 2 to 1. Yet the time it takes an individual worker to do any one operation—positioning the engine on the chassis, for instance—is pretty much the same in both plants. But Dagenham has 125 job classifications, each restricting the workers to one small task; Nissan has 5 classifications.
Similarly, the much-publicized higher productivity of the Japanese-owned auto plants in the U.S.—Honda in Marysville, Ohio, for instance, or Toyota in Fremont, California—is largely, perhaps entirely, the result of their having only three to five job classifications. GM, Ford, and Chrysler are each burdened with about 60. Again, the time it takes the individual worker to do any one operation is pretty much the same all around. And yet the Japanese-owned plants turn out 30 percent to 50 percent more per worker per day.
A recent book on the productivity gap, Tough Words for American Industry by Hajime Karatsu, one of Japan’s leading manufacturing engineers (Productivity Press, Cambridge, Massachusetts), predicts that the American market for manufactured goods eventually will be supplied by competition between Japanese-owned companies producing in U.S. plants and American-owned companies importing the same goods into the U.S. from “offshore” plants in Singapore or on the Mexican side of the border. In some industries, e.g., consumer electronics, this is already happening. The main—perhaps the only—reason is that the Japanese, being newcomers, are largely exempt in their American plants—even the unionized ones—from the work rules and job classifications that control the U.S. plants of their American competitors.
One of the leading multinationals recently studied its consumer electronics production in the U.S., Europe, Japan, Singapore, South Korea, and Hong Kong; it also studied the productivity of its main Japanese and Korean competitors in the same areas. The time it takes to do any given task was actually somewhat shorter in its U.S. plants than it was in the best plant of its principal Japanese competitor. But, overall, its American and European plants were outproduced by the plants—both its own and those of its competitors—in East Asia. The only explanation: in the U.S. and in Europe the company’s plants operate with more than 100 job classifications; the plants in East Asia—its own as well as those of its competitors—have at most 7.
The vehicle for work rules and job restrictions is, of course, the labor contract. But don’t just blame the unions. Managements are equally at fault. One major reason for proliferation of work rules and job restrictions is the narrow focus on dollars per hour with which Western managements conduct labor negotiations—and their tunnel vision is shared by economists, politicians, the press, and the public.
As a result, managements accepted, often eagerly, tighter work rules and more restrictive job classifications in exchange against a few pennies less wage per hour. Companies that all along paid attention to the total cost of work done rather than solely to immediate wage dollars per hour—IBM is one example—do not, it seems, suffer from a “productivity gap” either in their American or in their European plants.
But also Western managements typically—again IBM would be one major exception—rejected any other form of job security such as an annual wage, responsibility for retraining and “outplacing” redundant workers, and so on. This virtually forced the unions into pushing for work rules and job restrictions. In the end, of course, work rules and job restrictions have proven more costly, and in Western Europe and increasingly in the U.S., a good deal of expensive job security has been imposed by law on top of work rules and job restrictions, thus giving Western manufacturing companies the worst of both worlds.
But, then, conventional measurements available to both managements and unions also conceal the cost of work rules and job restrictions. It is captured neither by the industrial engineer’s time-and-motion study nor by cost accounting. It shows up only in “systems” figures such as the total number of cars produced per worker per year. And until recently such figures simply did not exist. The cost of rules and restrictions were thus dismissed as “intangible” by both managements and unions.
How do we get out of the work-rule hole we have dug for ourselves? Both American managements and American union leaders—though not, so far, very many of their counterparts in Europe—increasingly realize that they must get out, and fast. U.S. Steel has more than doubled productivity per worker in the past eight years, in large measure by cutting work rules and job classifications, and is now among the world’s most productive steelmakers—a few years ago it was near the bottom. And the United Steel Workers Union acquiesced in the rules and classifications cuts, even though it had to accept substantial cuts in jobs and members.
The Alternatives
At Ford, a joint union-management effort is under way to raise productivity by cutting job classifications in one of the company’s biggest plants. Still, it is not easy for the rank and file to accept both abandonment of what for 40 years it has been taught to consider “gains,” and sizable reductions in the number of jobs, especially in industries with low or no job growth to begin with.
In both a GM division in the U.S. and at Ford in England the membership rejected cuts in job classifications even though their own union leaders had strongly urged acceptance. But what are the alternatives? One is the disappearance of the unions. America’s building industry has moved pretty far down that road. Or are we going to end up with the weird paradox foreseen by Mr. Karatsu, the Japanese manufacturing engineer: newcomers from Japan and Korea produce in the U.S. and Europe while American and European manufactures are being forced by work rules and job restrictions to go “offshore” to supply their own home markets?
[1988]