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Standard Motor Products (SMP) makes aftermarket auto parts (for repairs and replacement) that are sold by warehouse distributors like Carquest and NAPA (National Automotive Parts Association) and auto parts retailers. Although the aftermarket auto parts market was estimated to reach $56 billion by 2008, it was incredibly competitive and companies that didn’t continue to improve quickly lost market share and profits.
Not surprisingly, productivity was also down and costs were up. Since SMP competes in an industry where the difference between a profit and a loss is three cents per hose, it couldn’t continue to incur rising costs. The company was already losing millions per year and had closed down money-losing production facilities. One factory in particular was a ‘perfect storm’ of problems, and was next in line for closure.
Problem number one was a top-down, authoritarian culture where managers prided themselves on being tough on workers; there was no love lost between managers and workers. Second, the workers dislike each other. Language barriers separated the English, Greek, Italian and Asian workers. In fact, negative feelings were so strong that when the company introduced English language classes, almost no one attended. With noise and nonstop pressure to keep costs low, quality high and production on schedule, manufacturing plants are already challenging places to work. Stir in an authoritarian culture, intense hostility between labour and management, basic communication/language problems between employees and you’ve got the recipe for poor results.
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What is wrong with the team culture at SMP?