The business challenge
The Schaeffler Group is a privately owned engineering group with headquarters in Germany and factories across the world. It has had operations in the UK for over 50 years, currently there are some 1400 UK based employees working in manufacturing, research and development and distribution across 6 major locations. One of these sites belongs to Schaeffler (UK) Ltd., formerly INA Bearing Company in Bynea, near Llanelli in West Wales. This plant produces precision automotive products, mainly engine components, and there are currently 279 staff employed.
Schaeffler (UK) Ltd has faced a particularly challenging time. The 1990s was a period of rapid growth. Towards the turn of the century, however, the company faced increasing competition from low labour cost countries as group production capacity was placed in Eastern Europe (Slovakia and Romania) where wages are a fraction of those in the UK.
The company has responded by seeking to compete through developing the capability to deliver higher value added products. There has been a planned and sustained focus on continuous improvement, cost reduction and, as an integral component of the process, a sustained attempt to up-skill the workforce. As the Human Resource Director for Schaeffler UK, Adrian Roberts says:
“Previously the investment has been in machinery, now the investment is in people.
You never know what the next product will be, so you need to update the skills so that people have new techniques to cope with whatever comes their way.”
The change process began with a management offsite strategy day held in March 2001. The culture change programme developed there identified ‘production location of choice’ as the vision for the Llanelli Plant. ‘Integrity, Innovation, Respect, Commitment and Passion’ were identified as values for the whole company. A series of initiatives were put in place on a planned timetable.
The culture change programme involved continuous improvement, training and flexibility; significantly they were linked and supported by the philosophy “the rate of learning must be greater than the rate of change” (L>C).
A learning culture
The Company felt it important to communicate, as early as possible, the vision and strategy for the future to its employees and so embarked upon a communication exercise whereby a member of the senior management team on an individual basis interviewed each employee.
Guidance for this communication exercise was prepared in the form of a briefing document, to ensure consistency of the message. The guidance note states that:
To achieve this vision a “learning culture” must be at the core of our activities, so that we are practising a culture of continuous improvement and consequently whatever “change” is necessary in the future we have the requisite skills, knowledge and experience to adapt and achieve our targets.
This will mean the training and development of all people in the organisation to improve our skills knowledge. We will be assessing and appraising everyone within the organisation to ensure that we have a suitably trained and experienced team.
A major obstacle to overcome was to encourage employees to learn. Schaeffler is located close to a ward in Wales with some of the lowest levels of adult literacy. Many employees had few or no qualifications, and generally were disenchanted with education and learning. To embrace these “reluctant learners” in the culture change programme, the Company initially “sold” the concept in individual interviews with employees:
The employees had nothing to lose, if the investment in learning and development paid off, there was a more secure future. If despite these efforts the fortunes of the Company did not improve, then at least each individual would have a nationally recognised qualification to improve their chances of re-employment.
Mechanisms for change
The initial challenge could be characterised as a battle for hearts and minds. Once this had been won a series of initiatives were put in place to reinforce the importance of the acquisition of relevant skills.
First an e-Learning Centre was established in conjunction with AMICUS, the local college, Coleg Sir Gar and Learndirect and a wide range of courses were offered to employees, including “Computers for the Terrified” for those unfamiliar with IT. Other initiatives were developed also, such as “lunch and learn” sessions to engage with employees and get them on the learning ladder. The Company now has four Union Learning Representatives who are playing an active role in promoting learning in the workplace.
From 2001 onwards all staff were encouraged to acquire National Vocational Qualifications (NVQs). Again this process was supported by Coleg Sir Gar who helped staff provide relevant evidence of competence. For the plant operators the relevant NVQ was identified as Performing Manufacturing Operations which does not extend beyond the lower-level of NVQ2. As the desire for NVQs grows, the company will be encouraging staff to acquire the more demanding NVQ level 3 or 4 in Performing Engineering Operations. Team leaders and supervisors have been directed towards level 3 NVQ in Management and Business Improvement Techniques. By the end of 2005 virtually all the employees who were eligible had completed and obtained an NVQ - for many of them it was the first qualification that they had gained since leaving school.
The next major initiative to reinforce learning was the introduction of a development review for all staff. This takes the form of an annual interview with the supervisor, recorded on a simple form which is submitted to the Human Resources Department. All appraisers received training delivered by Coleg Sir Gar and the Schaeffler HR team. This system is now fully in place and all forms completed. There is recognition of the need to improve the quality of the appraisal process, and some supervisors are more comfortable and confident than others in delivering and recording a review. However, the development review has, for example, allowed production staff the opportunity to indicate a desire to move onto the higher level NVQs and gives supervisors a chance to emphasise the individual’s responsibility to take action to secure continuous improvement in operations.
Current position and the future challenge
The investment in people has paid off in business terms. New higher value products have been added and profitability increased. Industrial relations have improved dramatically.
Schaeffler (UK) Ltd ( as INA Bearing Company Limited up to 2006 ) was named Welsh People Development Company of the Year in 2003, won a CIPD special commendation in 2004 and in 2006 won the CBI Human Capital Award for Education, Skills and Leadership. It has also won a National Training Award and numerous awards for business in Sir Gar (Carmarthenshire). Roger Evans the Plant Director, was named Welsh Business Leader of the Year, large companies, in 2006.
Most importantly the Schaeffler Group has named Schaeffler (UK) Ltd as lead plant for mechanical tappets, a key automotive project. This will involve responsibility for controlling and supporting production and quality on a world-wide basis, with plants in the US, South Korea and China. This news was communicated to the entire Llanelli workforce at a company conference held in July 2007 and marks the culmination of a long haul to secure the future. However, in the spirit of continuous improvement, Roger Evans argues
“Now we have secured a future, we must plan to make the future successful. The more we do the more we want to do.”
Schaeffler (UK) Ltd has recognised an issue as its next development challenge. This concerns knowledge transfer. During the change process, which began in 2001, recruitment has been very limited and, except for the necessary voluntary redundancy programmes, few staff have left the company. This has resulted in the creation of pockets in some production areas where forthcoming simultaneous retirements will cause a skills shortage problem if nothing is done. Unless it is captured and transferred, vital knowledge will be lost.
Schaeffler is at the early stages of a project with the Engineering Department at Coleg Sir Gar. The first stage can be described as “role and knowledge mapping”: What expertise is required and where is it located at present? Who holds it? Once this stage is complete the aim will be to put mechanisms in place to transfer and share that knowledge to colleagues who have longer to work. This may involve a series of training interventions or mentoring, but the detailed arrangements will only be determined once the first stage is complete.