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@Eronie: Not a rant, Jerome sent me an article where GE explicitly talks about being tasked with building an ultra cheap washer in an unreasonable amount of time with outsourced parts. Everything we suspected all these years about the post FF washer is indeed real and its has now been confirmed.
GE actually wanted to outsource their laundry division entirely, but appliance executives thought it better to just make a new style of washer that met Welch's ideals.
"GE brings a new washer to life
Author: Barbara Ettorre
Date: Sept. 1995
From: Management Review(Vol. 84, Issue 9)
Publisher: American Management Association
Document Type: Article
Length: 3,132 words
Abstract:
General Electric will introduce a new washing machine in Sep 1995 in the US. General Electric has begun to focus on teamwork
among all employees, faster production times and joint ventures. Appliances are 10% of General Electric's $60 billion in yearly sales.
The new washer was designed to have a larger capacity, less noise, better cleaning, no vibration and greater reliability for $399.
Full Text:
This month, for the first time in decades, General Electric will introduce an entirely new washing machine to American consumers.
The introduction is the culmination of several unprecedented departures for GE--how the company designed the machine and
outsourced many of its parts and how GE and its employees forged a dynamic relationship going forward. The company says the
process has been the most cost-effective and quality-focused effort in its washer-manufacturing history.
The process has been a good test of the way GE has positioned itself under its tenacious CEO, Jack Welch. GE is engrossed in
stretch and quality performance, reflected in its one-team mentality (marked by first names and an informal dress code at most
levels); its preoccupation with achieving better and faster processes and cycle times than any other company in the world; and its
partnerships with affiliates in and out of GE.
Bringing out a new washer is a critical move for GE that cuts to the heart of its business: According to company research, 78 percent
of the U.S. consumer image of General Electric is based on its appliances. Forget aircraft engines, medical systems, light bulbs and--
thanks to David Letterman --NBC.
Appliances are big money for GE, making up 10 percent of its $60 billion annual volume. The company sells a million units a month of
its core appliances--washers, dryers, refrigerators, ranges and dishwashers, which are called white goods and which comprise some
1,800 variations in GE models. GE and its main competitors, Maytag and Whirlpool, are virtuosos at making appliances. They have to
be. Appliance prices have remained the same for 40 years. Compare that with the price of a house or a car over the same period.
Half of all GE appliances made annually are manufactured at Appliance Park in Louisville, Ky., a venerable, 40-year-old complex of
five factories spread over 1,500 acres. It employs 9,000 workers, out of a total of 21,000 in GE's domestic appliance division. With 15
million square feet under its roofs, the park is GE's largest appliance-manufacturing facility.
But back in September 1992, Appliance Park was in danger of being phased out of existence. It had been averaging losses of $45
million a year. GE top management was ready to sign an agreement to outsource the company's domestically produced laundry line
to save costs. If washers and dryers went to other sources, it could be only a matter of time before the park's refrigerator, range and
microwave factories would be closed one by one.
The word had not yet filtered to the factory floor. Clearly, dramatic moves were called for.
Twenty-Day Wonder?
About that time, GE appliance executives were realizing that they could not devise a world-class washer by making changes to the
existing platform, which had been in place since 1960. The platform was a set of specifications and applications upgraded with each
new model introduction. Over the decades, about 150 variations had been done on it. "Our plan was flawed," says R. Mark Schreck,
vice president of technology.
The executives applied New Product Initiative (NPI), one of the alphabet-soup, companywide disciplines implemented under Welch
and intended to get away from vertical and functional mind-sets. NPI is a rigorous series of checks and balances incorporating
serious steps to bring a product to market.
The appliance executives had to define the product and figure out how it would be executed and commercialized. They determined
that, based on GE's consumer research (see box on page 36), a new washer should have bigger capacity and no vibration, have
some improvement in cleaning, be more attractive and less noisy, and be even more reliable--no leaks, no breakdowns. It also should
retail at $399. (Depending on size and features, washers run from $250 to $1,000 at retail. Most are sold at $399.)
Dick Burke, then-head of manufacturing, engineering and purchasing at Appliance Park, selected 20 people from different areas at
the park and gave them 20 days to come up with a new washer design. It had to cost 30 percent less and lead in such critical areas
as capacity and aesthetics by a factor of two over GE's competitors. The team could allot only $50 million for development, plant
retooling and product introduction.
"They could buy any working machine from anywhere, tear it apart and look for ideas," Burke recalls. "I told them the factory will be
an assembly line only--anything else that goes in has to be value-added." If GE were to make a washer element, it would have to be
cheaper and better than a part from anywhere else. Burke and his colleagues had thrown down the gauntlet. The team would have to
create a new platform from scratch.
In October, Burke told senior executives at GE's Fairfield, Conn., headquarters about the design enterprise. Their pens essentially
poised in mid-air, the managers agreed to wait on the outsourcing contract. The design team reported excellent progress. It would not
meet the 20-day deadline. But, by January 1993, it would devise a plan that met all targets.
While this was going on, a critical meeting was held in Washington, D.C., on December 1, 1992. Attendees included Burke and other
senior Appliance Park executives, Frank Doyle, GE's senior vice president of human resources, and officials of the International
Union of Electronic, Electrical Salaried, Machine and Furniture Workers (IUE). Its Local 761 represented more than 8,000 workers at
Appliance Park. GE could not support any investment in Louisville without cooperation from the union.
Labor and management swung into action, forming a joint Save the Park team and, via weeks of meetings and worker input,
developing 43 cost-saving initiatives that collectively would produce savings of $60 million over three years. Using GE's well-known
Workout problem-solving technique, labor and management brainstormed. According to Jim Allen, manager of communications and
community affairs at Appliance Park, about 80 percent of the ideas brought to the table were approved on the spot. "Lots of trust was
built," says Allen.
Is the Park Saved?
"Management and labor have to figure out how to be partners," says Norm Mitchell, president of Local 761. "This is the only answer
for industry to stay alive."
The participants had spent long hours at the table during the Christmas holidays. The meetings had been, at times, emotional. For
Mitchell, the death of his mother during the negotiations had marked the process with personal loss.
Eventually, the initiatives included sweeping changes in floor management and worker decision making. A dollar amount was
ascribed to each cost-cutting idea. The plan eliminated piecework and called for work teams, as well as more effective scheduling
and revised work rules. It set up guidelines for equipment usage and remapped processes for increased productivity. The changes
were not cosmetic or short-term; they were intended to become the way of life for all of Appliance Park's facilities.
"It was an honest recounting of what our cost structure was-- what relates to the union, what relates to product design and
investment," says Steven Riedel, vice president of marketing and product management at GE appliances.
Throughout these weeks, Welch remained skeptical. At the GE operating managers meeting in Boca Raton, Fla., in early January
1993, Burke tried hard to convince Welch that Appliance Park could build a cost-effective washer, but Welch continued to say no.
"Some of it was heated," Burke says, crustily.
With support from Kentucky's governor and lieutenant governor, the Save the Park team took the plan to the workforce--in what has
become known at the Park as "The Warehouse Meetings." In shifts on January 15, 1993, GE bused the 2,000 Appliance Park
salaried workers and 7,500 hourly employees to an improvised auditorium inside a park warehouse. There, they heard Doyle, Burke,
union officials, and Dick Stonesifer, president and CEO of GE appliances.
"They said, 'This is not a bluff. This is real;" says Allen. "They showed the employees hard dollars and cents." Importantly, the
initiatives involved no reduction in wages or benefits.
The Chairman Says Yes
On February 1, Appliance Park executives were ready to persuade Welch. They were armed with the Save the Park initiatives and
the new washing machine design, including targeted outsourcing recommendations. They also had an optimistic report for a
substantially upgraded dryer with larger capacity already scheduled to go into production in mid-1993 at the Montreal plant operated
by Camco, GE's Canadian joint-venture partner. The new washer and matching dryer would be "a nice consumer package,"
according to Burke.
Welch gave his conditional approval, subject to acceptance of the Save the Park initiatives by rank-and-file union employees. On
February 7, the workers unanimously approved all initiatives at a Local 761 meeting. Now, the washer could be a hard reality. A
brand-new appliance platform at GE normally takes 30 months from conception to product launch. Typical GE products in the past
have taken about three to five years from conception to launch. The goal of NPl was to cut product development time in half. Already,
GE's Bloomington, Ind., plant had been able to bring out a new refrigerator in 18 months. Schreck's technology people at Appliance
Park didn't recommend that short a schedule for the new washer. They advised at least a year of field tests, in which 300 hand-built
prototype machines would be placed into consumer homes and put through rigorous use--off-balance loads running for 3,000 hours
continuously, for instance.
It eventually has taken GE some 26 months to bring the washer to market, and there has been internal debate on just how fast it
should have been done. "We took our time with this washer because we wanted to make sure it was right," says Schreck.
The new washer is the epitome of "lean engineering" at GE. It has 380 parts, down from about 800 in the past. Enamel, a mainstay in
older models, is messy and wasteful to produce. There is no enamel in the new machine, which is 60 pounds lighter. GE claims that
because of sophisticated bonding methods, the new machine is virtually rust-free.
GE outsourced the transmission--something it wouldn't have considered before, but the company found a supplier who could make it
better and cheaper. According to Tom Tiller, product general manager for laundry, five suppliers are constructing factories from the
ground up to build parts for the new design. "There are 62 suppliers, 20,000 people throughout the supply chain," Tiller says.
Components of the old washer model came from a 200-mile radius. Components for the new washer come from all over the globe,
including Japan, Korea, Germany, Italy and the United States.
The new washer is being built from a platform intended to have only a seven-year life span, including second and third product
generations. GE appliance engineers are already working on these. The new washer is the beneficiary of several company-driven
initiatives, intended to reinforce quality and market leadership. GE's Product Management Decision System (PMDS), for instance,
incorporates software in which team members can see where they are in every element of a current program. PMDS helps them stay
on schedule.
Quick Market Intelligence (QMI), an intelligence-gathering technique GE learned from Wal-Mart, has been used at GE for the past
three or four years. It consists of a staggered series of meetings with sales, marketing and service staffers in GE affiliates worldwide.
They begin every Friday at 7 a.m. with Asian counterparts and proceed to Europe and the Americas, finally to the U.S. team. The
meetings are conducted via one-way video and two-way audio. Currently they involve 40 to 60 people in Appliance Park.
All Join Hands
The design process itself was marked with unprecedented interdisciplinary cooperation. The design team learned about gear noise
from the GE turbine group, clutch spring breakage from the electrical switch gear group, lubrication from GE automotive (and Ford
Motor Co.), and metallurgy from the bearings experts at GE aircraft engine. "I've been here since 1973, and this is the most
interactive development I've ever seen at this company," says Schreck.
As one example, service technicians had never been drawn into a product design before this. "We also considered installers. We
asked them, 'What do you want?'" says Tiller, adding that sales personnel were also involved far earlier than before. GE held a
splashy weeklong introduction for 220 of its biggest laundry appliance retail customers and 500 company sales and service
representatives at Disney World in Orlando in June. (Disney was the winner in competitive bidding.) To train professionals to sell the
new washer, GE is using computers, interactive videos and self-teaching materials.
In Building One, the washing machine plant, the retooling for the new washer was taking place even as workers turned out record
numbers of the old models, which were to be phased out by the end of summer 1995. (Parts would be made through the fall.) The
retooling and training took place in stages. "I was running a factory making thousands of units a day, and in the process of building
another factory in the same space," observes Dan Langan, plant manager of the laundry manufacturing operation.
Old assembly lines were cleared away. First one, then two, newly tooled and configured assembly lines were dropped in. They were
up and running fully by June and August of this year, when, according to Langan, "My problem will be, 'How do I make enough of
these?'" (A third production line will open next February.) The washer-dryer retooling at both Appliance Park and Montreal has cost
$100 million over three years, from 1992 through mid-1995.
Of the line in general, Langan says, "We are an excellent and flexible assembly team." Layoffs at Building One and at Building Five,
which makes refrigerators, are expected to total about 500--minimal in light of the changes at Appliance Park. Those hired since
spring 1993 have been told to expect to be laid off as new processes are put in place. "No long-term employees have been affected,"
Langan says.
The newly streamlined operations are cleaner, quieter and less capital-intensive. Cumbersome and toxic stamping processes have
largely been eliminated. Finding himself in a coaching and counseling role, Langan supervises some 110 work teams, plus nine
business teams in the new work areas. Some areas include ergonomics, environmental health and safety, and communications.
A visit to Building One earlier this year, when the old assembly line was still up and running, showed how different the old and new
lines look. The old line--which began in 1953, when 10 units a day were produced--was noisy and dirty. Huge rolls of coiled steel
were being stamped into components.
Over in the new line, Bill Mattingly, a tool and die maker and 22-year union member, works on giant plastics machines that make the
new washer tubs. He says the plant changes have been drastic: "The most important thing that came out of Save the Park was that it
took the company a lot of years to see there was a tremendous amount of knowledge not being tapped."
New-line member Patti Calvert, a 26-year union veteran, says the new mind-set is more aware of safety. "The new equipment is
better for us--no repetitive injuries," she says. In fact, an ergonomics team tested all line functions.
Jerry Barnes, senior advanced manufacturing engineer, points out the new computer-controlled metal-bending system from a New
Zealand company that eliminates overhead conveyor storage. The horizontal apparatus, Manufactured by Scott Technology,
stretches serenely along the line and resembles a windowed laboratory.
Via a series of computers and an automated drawbridge unloading system, the plant is able to keep components as needed on hand.
The line is stocked during a slower shift, with enough material to run for 16 hours. There is no forklift traffic. Provisions are made for
such additional considerations as recycling. If something doesn't work, employees can shut the line down--and they get help quickly.
An End of the Line Audit (EOLA) is a computer-driven spot check that selects a finished washer at random and puts it through a
complete operational check based on audit criteria. To keep the production line continuously aware of how it is doing, the computer
feeds the information back to production workers, says Tony Sipes, a specialist in training and development in Building One.
Bill Hamilton, a 30-year union man in quality inspection, sums it up thusly: "The employees and management used to be pulling in
opposite directions. People are proud to work back here now. They listened to us."
Local 761's Mitchell now finds himself unable to handle all the requests he gets from other unions that want him to tell them how GE
did it. "They tell me, 'I wish I could get my union president to open up,'" Mitchell says.
Says Langan: "You can never imagine the enormity of what we're doing. It's great that Jack [Welch]'s supporting it, but I got the
janitor asking about it."
THE COMPANY:
GENERAL ELECTRIC CO.
THE CHALLENGE: To create a new washing machine from the ground up in record time and to determine whether GE's appliance
manufacturing complex--slated to be phased out--is the best place in which to build it.
THE SOLUTION:
A blitzkrieg program at Appliance Park in Louisville, Ky., including a multiteam design effort, innovative outsourcing and radical "Save
the Park" cost-saving and quality initiatives from labor and management.
COMING CLEAN
Does GE make the best washer today?
According to Brian Kelley, general manager of GE appliance brands, if asked to consider all appliance makers, most consumers
would rate GE slightly lower in washers, but slightly higher in refrigerators. "It varies by product line," he says, adding that GE is
perceived by consumers as No. 1 in brand commitment, particularly in service and continuity.
Kelley is closely involved in consumer perceptions of the GE brand name. The company surveys 12,000 consumers per quarter.
They often cite, in order of importance, "trust? "innovation" and "quality" when referring to the GE name. GE is stressing these
attributes in the introduction of the new washer--in effect, asking the consumer a question to which the company believes it already
knows the answer: "Who would you expect to come out with this washer?"
In the minds of many younger consumers who usually aren't in the market for them, appliances can be considered unexciting. "If
there were anything we'd want to improve, [it would be] to get the same perception among young people as there is among their
middle-aged counterparts," says Kelley. But then he adds, "The nice thing is, middle-aged people buy the majority of appliances:'
--B.E."
