The situation with Titeflex is concerning, but with the proper turnaround plan, Titeflex as an enterprise has the variables that are needed for a sustainable path going forward. The financial position of the company and the brand recognition for high quality are two variables that Titeflex can build on with an equal focus being put on the internal operations as well to be successful. Did TI make a good decision in picking Jon Simpson to head Titeflex? Jon has strengths in the area of operations, which is important when considering the immediate changes will be within that discipline.
However, Jon’s approach with dealing with labor unions is not an effective approach and complicating the situation is the new management team that Jon is now reporting to. In both instances, Jon has yet to build a rapport or relationship with either group, which is essential to Jon managing effectively. When weighing the pros and cons of Mr. Simpson, I believe that it was not a good decision to hire him for general manager. What, if anything, can he do to turn around Titeflex? How should Simpson deal with various internal groups, including workers, the union, Ralph Galarneau, and middle management?
First and foremost, Jon needs to create a turnaround plan, which should begin with immediate action within the operations and focus on process improvements to achieve operational excellence. Jon should begin with a production review and start by tackling the low hanging fruit. Simple steps such as general housekeeping and production flow are a good start followed by production metrics that can be measured and shared with the workforce. The implementation of processes such as TQM, JIT, and lean manufacturing should also be next step objectives to reduce lead times, reduce costs, and retain market share.
Constant communication on the goals and objectives should also be a top priority and make the workforce part of the solution as opposed to the problem. Jon also needs to review the product offering and begin to cull out the unprofitable products. He should also assign his engineering and purchasing teams to review current products and look for standardization as well as less expensive components (without sacrificing quality). Once these internal steps have been taken, Jon should then begin to analyze the results and determine if further cost reductions are necessary.
These cost cutting measures would be in areas such as headcount, benefits, and asset sale. If it is determined that further cost cuts are necessary, Jon should then meet with the union leadership and present not only the steps taken to date to reduce costs, but emphasize that management looked at all options before coming to employees and asking them to share in the pain. At this point, Jon should have some credibility because of the actions taken and the success he hopefully has had with these prior cost cutting measures.
Jon should also provide a Pro Forma P&L that outlines the results of any concessions taken. This may be in the form of profitability, increased revenues due to reduction in operational expenses, or another option would be to show the results if no action is taken. This may result in the enterprise reaching a crisis stage or worse and how that will impact the membership (loss of job, insurance, pension etc. ) How tough should Simpson get with the union? Should he insist on any immediate changes to the contract, which is not due for renegotiation until 1990? Should he consider or threaten to relocate the plant?
In an ideal world, once the action items discussed have taken place one would expect that Jon would receive cooperation and get the concessions needed. However, this is not an ideal world and Jon may still receive resistance. If that is the case, then Jon has some options. First Jon could try to negotiate further and see if there is a compromise that can be reached by opening the contract and negotiating. If the union is unwilling and unreasonable and the situation is that dire, I would violate the contract and make the necessary changes that are needed to keep the enterprise alive.
I would take my chances with the NLRB and an arbitrator because if the situation is that bad, the union will not win and the action taken would stand. Will the organization feel that changes are as urgently needed as Simpson might think they are? The key to this question is how transparent Jon is through the process. If Jon is effectively communicating with the employees and reporting the results of the action items discussed, then Jon will be trusted and the organization as a whole will recognize the urgency.
If Jon is not communicative and only talks with the employees when cuts are needed, then he will not receive cooperation nor will anyone understand the sense of urgency. Would you have taken the job if it had been offered to you (assuming you had the requisite background in the industry)? Why or why not? I absolutely would have taken this position because there is a tremendous opportunity to “right the ship” and maximize shareholder value with the Titflex enterprise.
I personally enjoy a challenge and it is evident that there is inefficiencies within the operation that will positively impact the business if fixed Furthermore, I have a great deal of experience in the manufacturing/operational side of the business, I have a very good track record in terms of negotiating and communicating working with union membership and I work very well under pressure. Lastly, I am very good at communicating and providing a level of transparency that allows me to build trust which is critical in a situation such as this, so I am confident that I would be successful in that roll.