Engstrom Auto Mirror plant is a private manufacturing company in Richmond, Indiana. Engstrom produces mirrors for the Automobile industry since 1948. Engstrom was a very profitable company until they started struggling in the late 1990s due to reduced productivity. In addition to their unprofitability the installations of new technology created significant production delays. The plant manager at the time unable to find quick solutions to the delays on the production lines, jeopardized their relationships with customers and the United Autoworkers Union (UAW).
The plant manager exhausted and frustrated with fighting with both the union and the new technology resigned his position. This led to the hiring of Ron Bent as plant manager. He was tasked with turning around the plant by increasing productivity and profitability.
As Plant Manage Ron Bent was hired back in 1998 to reinvigorate the company and increase profitability. Ron chose the Scanlon plan because through his research of other motivation plans Scanlon would be the most accurate way to judge actual productive of production workers without individuals effecting the productivity measure negatively.
Ron rallied the employees and got an overwhelming 81% acceptance of the Scanlon plan which immediately turned the plant in a positive direction. All employees receive significant bonuses and employee participation was high. The Scanlon plan seem to have created team work and cooperation under a unified goal of cost saving and high productivity. The turnaround from the Scanlon plan lead the plant to receive preferred vendor status with customers such as Sam Martinez with the Toyota Plant.
Also allowed everyone to receive bonuses on time very month until the industry down turn in 2005.
Between 2005 and mid 2006 Engstrom hit an industry wide down turn, which cause 46 people to be laid off due to low productivity. The individuals still employed with Engstrom had not received a bonus in seven months. Productivity issues, and production quality lacking Ron and the rest of the management team had to wonder what solutions can be found to increase the productivity of the plant during economic down turns. Ron knew that the Scanlon plan would not be sustainable without periodic changes to maintain its success but with the industry wide down turn Ron is not sure what he can do. Ron can either modify Scanlon plan to help be more sustainable in the long term, or Ron can choose to scrap the Scanlon plan all together and look for alternative options to increase employee morale and productivity.