Treadway Tire Company Case Analysis

October 29, 2012

The Treadway Tire Company: Job Dissatisfaction and

High Turnover at the Lima Tire Plant Case Analysis

Step 1: Situation Audit The Treadway Tire Company, a renowned major supplier of tires to the original equipment manufacturer and replacement tire markets in North America, operates eight manufacturing plants with nearly 9,000 hourly and salaried employees. After a hefty $100 million investment in expansion and modernization in 2000, Treadway's Lima, Ohio, Tire Plant had garnered a companywide reputation for maintaining high productivity and manufacturing quality. Following the shutdown of Treadway's Greenville, South Carolina plant due to production inefficiency in 2006, the Lima plant has taken on a substantial production volume increase, forcing the plant to operate 24 hours a day, seven days a week.

Since shifting to continuous operations, Lima has realized an alarming turnover rate of 46% (23 out of 50 employees) within their salaried supervisory floor-level management staff, known as line foremen, in 2007. High line foreman turnover, along with increased raw materials costs and infectious dissatisfaction among line-production employees currently places Lima in a desperate position to make adjustments before the plant's productivity and employee morale levels are damaged beyond repair. With ten years of experience at Treadway and five weeks before the Lima plant reopens on January 2, 2008 following a week-long closing for retooling and annual maintenance between Christmas and New Year's, Ashley Wall, Lima's Director of Human Resources, has been appointed by Brandon Bellingham, Lima's plant manager, to determine what the root causes are for the plant's many problems. After thorough analysis of the issues' causes, Wall must develop a specific plan to address them in order to give Bellingham solid strategic recommendations. Conducting a situational analysis of Lima's internal strengths and weaknesses and external opportunities and threats will be constructive in determining the appropriate course of action for the Treadway Tire plant.

>Strengths:

With a recently expanded and technologically-modernized 1.5 million square foot facility, Lima has exceptional functional capacity to fulfill its 25,000 passenger and light truck tire daily production output, which has been a major contributor to the plant's success in productivity and quality ratings. The plant's continuous operation reduces direct production expenses by allowing Lima to amortize their heavy fixed costs, while the 12-hour shift system also generates cost savings as a result of a reduced average staff headcount. Lima's heavy focus on quality assurance serves as a constructive business practice that can minimize preventable expenses. By making the maintenance of technical issues the first priority of every 12-hour shift, Lima is being proactive to reduce rejected units owing to quality issues on a consistent basis. Lima also acts proactively by exercising strict health and safety standards pertaining to all production line employees to reduce the likelihood of workplace injuries and illness among staff members; workplace injuries are known to be costly to firms, as well as reduced productivity due to a weakened workforce.

Lima also has a number of competitive advantages. The plant pays their hourly employees an average wage of $30/hr, which is 16% above the industry average. Higher wages, the provision of overtime pay, and an internal employee referral system allow the Lima plant to attract and retain a greater amount of more-qualified workers. Monetary compensation and a sufficient work schedule (desired hours) are the basic incentives of most workers, "Very often, work is done solely for the sake of work and a salary" (Singh, 166). Lima's intricate First Line Test for its prospective foremen and rigorous employee candidate interview processes also help to ensure that their staff is comparatively adequate.

>Weaknesses:

Though Lima is armed with several desirable strengths, the plant is riddled with internal weaknesses. The Lima plant's foreman turnover rate is significantly higher than most other Treadway Tire plants, which is attributed to various factors. Mainly, Lima suffers from low employee morale levels and several communication issues involving line foremen, who are responsible for the lion's share of work at the production level.

Foremen supervise all phases of production and quality assurance work, while performing administrative, resource, and personnel duties. These duties include starting the tire production line each work day (often having to deal with unresolved equipment and quality issues from the previous shift), scheduling hourly workers, approving vacation requests, checking time sheets, solving payroll issues, maintaining health and safety standards, finding and assigning substitute workers for late or sick employees, and documenting employee disciplinary actions. In addition to all of the aforementioned responsibilities, line foreman are also under extreme pressure to meet major performance goals, such as completed unit output, performance and cost-efficient labor hour allocation and labor hours per unit. Each day, their performance is placed under the scrutiny of general supervisors, area managers, and the plant operating committee via comparative breakout reports. Line foremen feel as though they are rarely commended when they meet or exceed projections/expectations, yet they are constantly ridiculed when even the slightest of undesirable results are produced. A widely-perceived lack of appreciation, pressure to perform, an endless list of daily operations duties, and working through strenuous 12-hour shifts with minimal resting time make for high stress levels among line foremen. Shannon Taylor cites that these stress levels can be of great expense to firms, "The financial costs of workplace stress have been estimated to approach $300 billion annually; such costs reflect increases associated with employee turnover, absenteeism, lowered productivity, and health problems" (316). They also can contribute to poor communication and even mild hostility between foremen and the hourly employees they are in charge of supervising, which can negatively affect the entire plant, "Likert (1961) confirmed that departmental productivity was directly dependent on the degree of favorable attitude of the leader to the working personnel" (Singh, 173).

From complaints by hourly workers of unreasonably-harsh foremen, to foremen expressing