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Layoffs at a Lean Company

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News – StatesmanJournal.com

From Oregon: “Neilsen Manufacturing Inc. said Monday that it will slash its work force from 175 to 50 because of competition from Southeast Asia. The 48-year-old company is a model of lean manufacturing, a group of practices that maximize the use of factory space, time and employees.”

We could quibble about the definition of lean being more than what's listed above. The company paints the picture of their situation as a labor cost and scale battle, a battle they lose against China labor and against the scale of larger companies. Shouldn't lean teach us to challenge those assumptions? Can't you use lean to be cost efficient and responsive even as a smaller scale company? If the “economies of scale” competitor uses batch thinking, you'd like to think you could compete by thinking lean.

“Tom Neilsen, Neilsen Manufacturing's chairman, said the company is moving to a smaller, undetermined niche facing less global competition.

“We're in a difficult size range,” Neilsen said. “We're too big to be little, and we're too little to act like large contract manufacturers with operations in Asia and eastern Europe.””

A different local company, Zephyr Engineering, competes based on a different dimension than cost — their products are large and heavy, therefore being tough to ship from overseas. Another company, Royal T “survives by doing very small orders that aren't feasible to send overseas”.

I hope Neilsen isn't going into the classic “death spiral” of layoffs killing morale, hurting improvement (and lean) efforts and then leading to more layoffs. I hope things turn around for them. Is it inevitable that certain product lines are “doomed” to China competition or can we use lean to be competitive with all types of products?

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Mark Graban is an internationally-recognized consultant, author, and speaker who has worked in healthcare, manufacturing, and startups. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent book is an anthology titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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