Set amid tawny popcorn and soybean fields, weathered barns, and rusty silos, the Subaru of Indiana Automotive plant cuts a swath. A 3.4-million-square-foot monolith abutted by railroad tracks, SIA has a mountain of compost and the occasional coyote skittering through the surrounding 832 acres of woodland. Step inside, though, and you'll discover why this might be the most exemplary car factory in America.
In its 22-year history?a period that has spanned three recessions, a global
financial crisis, massive U.S. auto bankruptcies, and the departure of Isuzu, a
founding partner, from the operation?SIA has rolled out more than 3 million
vehicles and has never resorted to layoffs. Instead, it's given workers a wage
increase every year of its operation. Staffers also enjoy premium-free health
care, abundant overtime ($15,000 each, on average, in 2010), paid volunteer
time, financial counseling, and the ability to earn a Purdue University degree
on-site?all in a state that has lost 46,000 auto jobs and suffered multiple
plant foreclosures in the past decade. And the truly astonishing thing is how
it achieved all this: through a relentless focus on eliminating waste.
"This is not about recycling, or a nice marketing to-do," says Dean Schroeder,
a management professor at Valparaiso University who has studied the plant.
"This is a strict dollars-and-cents, moneymaking-and-savings calculation
that also drives better safety and quality."
Toyota made kaizen?the Japanese principle of constant "change for the
better," with a special focus on efficiency, aka "pushing lean"?famous.
SIA, you could say, has instilled green kaizen, or pushing green. Starting in
2002, SIA set a five-year target for becoming the nation's first zero-landfill
car factory. That meant recycling or composting 98 percent of the plant's
waste?with an on-site broker taking bids for paper, plastic, glass, and
metals?and incinerating the remaining 2 percent that isn't recoverable at a
nearby waste-to-fuel operation to sell power back to the grid. Within two years,
the results spoke for themselves.
"Everyone quickly saw the green dividend of not wasting anything,"
says Tom Easterday, the plant's executive vice-president, passing a stack of
yellowed Styrofoam cases that have survived four round trips around the globe.
"You reduce packaging, negotiate a better deal from suppliers, and
everyone then shares in the savings."
To score a cherished "associate" position at the factory?there's a 10-1
ratio of applicants to openings?would-be employees are expected to put in long
hours learning and practicing SIA's low-impact manufacturing. That means
scrutinizing every byproduct, from welding slag to plastic wrap, for savings.
And obsessively slicing seconds off assembly procedures. And a willingness to
work whole months of six-day shifts, and likely years on the graveyard shift,
while resisting the siren call of unionization. (The United Auto Workers has
failed three times to organize the plant's workers.) There's always a catch,
and at SIA it's this: All that ultra-efficiency?when applied to employees?can
lead to unforgiving schedules. SIA workers, who start at just over $14 an hour
and peak at about $25 an hour, put in 47-hour work weeks that include two
Saturdays a month at time and a half?good for $50,000 to $60,000 a year in
per-employee salary. (That means roughly 100 employee salaries were protected
by the aforementioned $5.3 million zero-landfill rebate.) The upside? When the
Japan earthquake interrupted the supply of parts in March, slowing down the
plant's breakneck output, SIA was able to keep paying its workers in full to
volunteer in town. The downside: "Everyone's burned out here," says
Kay Tavana, a 48-year-old who installs airbags and headlights. Not that she
isn't grateful for the work and the SIA perks. Working while on chemotherapy
for a blood disease, Tavana avails herself of SIA's free gym to rev up for her
shift from 4:30 p.m. to 3:30 a.m.
The cost savings and social programs at SIA wouldn't amount
to much if Subaru's cars weren't in demand. From 2008 to 2010, unit sales
jumped 41 percent, while last year the company's 22 percent rise in vehicle
sales was double the broader car market's increase. "You get worker
commitment to productivity by offering job security," says Kristin
Dziczek, who studies labor issues at the Center for Automotive Research in Ann
Arbor, Mich. "But the best job security is still a product people will
buy."
With SIA operating at maximum capacity and with an expansion plan under way, Vice-President Easterday says this "experiment" in the middle of Indiana corn country could someday export its American-made Japanese cars to the rest of the world. His SIA case study left Schroeder convinced that "Dumpster diving can be great for business."