"Unavoidable" Plant Closing?


Tecumseh To Close Wisconsin Plant; 320 Employees To Lose Jobs

This is a disappointing article after we normally read such good lean news from the state of Wisconsin . Lean isn't mentioned one way or another in the case of Tecumseh Products Co.

Tecumseh Products Co. announced Sunday that the company will be closing their manufacturing facility in New Holstein, Wis.

Approximately 320 workers will be affected by the plant closing, which produces component parts for gas engines.

Unfortunately, it sounds like “non-lean” business as usual:

“While maintaining several of its U.S. operations, Tecumseh over the past several years has increasingly outsourced the manufacturing of components and certain small engines to low-cost countries, including India, Brazil and China. Making these strategic moves enhances Tecumseh's ability to compete in the highly competitive global business environment,” James J. Bonsall, President and CEO of Tecumseh, said. “The impact of the decision announced today on Tecumseh's remaining workers in New Holstein is deeply regrettable, but unavoidable.”

So the choice to outsource their production to low-labor-cost countries is “unavoidable?” It's a shame, for the sake of the employees, that they couldn't have found a way to use Lean as a competitive method. I guess they dabbled with off-shoring and eventually decided to go all the way. What a shame.

From this article, we learn more about the long, slow “death spiral” that the factory has been in for a while now.

The Tecumseh plant, 1604 Michigan Ave., has operated in New Holstein since 1956. It employed 550 people in mid-2006 and 1,500 in 2000. Since October 1997, the company has filed nine mass layoff notices ranging in size from 60 to 450, though employees were not laid off in every case.

Tecumseh officials told New Holstein-area officials in March 2004 — while reassuring them the plant “is an integral part of our current formula” — that the company had moved production of “low-end” engines to a Brazilian plant it purchased in 2002.

Another case of cutting and shrinking your way to greatness, eh? We obviously can't sit and judge from the outside looking in, but was this a case of short-sighted management chasing cheap labor around the world?

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.



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