OM in the News: Subaru–America’s Leanest and Greenest Auto Plant

Our OM in Action box in Ch.6 (Managing Quality) highlights the  Lafayette, Indiana Subaru plant’s environmental leadership as it relates to ISO 14001. A good article about the same plant to reference when lecturing about lean (Ch.16) and green appears in the latest Businessweek (June 6-12, 2011). Here are a few facts about Subaru, which is perhaps the leanest car plant in the US: (1) in its 22 year history, Subaru-Indiana has rolled out 3 million cars and has never resorted to layoffs (this during a period that spanned 3 recessions  and the loss of 46,000 auto jobs in that state); (2) it has given workers a wage increase every year of operation; (3) it provides premium-free health care, lots of overtime (averaging $15,000 last year), financial counseling, and the ability to earn a Purdue U. degree on-site.

But whereas Toyota made kaizen famous, Subaru has created green kaizen. Going back almost a decade, Subaru decided to become the nation’s 1st zero-landfill car factory. It recycles  98% of the plant’s waste and incinerates the other 2% in an operation that sells power back to the grid. The plant abounds with well-reused parts containers. In 2010, Subaru saved $5.3 million by obsessively reducing, recycling, composting , and incinerating–and saved multiples of that using employee-sponsored ideas to reduce injuries and fatigue. The workers can get bonuses (up to a new car) for pointing out excess packaging and processes that can be cut from the assembly line.

To score a cherished “associate” position  at the factory, would-be employees are expected to put in long hours mastering Subaru’s low-impact manufacturing. They learn to scrutinize every byproduct for savings and to look for ways to slice seconds off the assembly process. The jobs pay $14 (starting) up to $25 (peak)/ hour, yielding a salary of $50-60,000 including mandatory overtime.

Discussion questions:

1. What happens when the plant needs to slow down (say from parts shortages)?

2. How does Subaru get such worker commitment that the UAW has failed 3 times to unionize the plant?