Oilwell Cable Company, Inc. (Author: Jack R. Meredith)
As Norm St. Laurent, operations manager for Oilwell Cable Company, pulled his Bronco 4x4 onto Kansas' Interstate 70, he heard on the CB about the traffic jam ahead of him due to icy road conditions. Although the traffic was moving some, Norm decided to get off at the eastern off-ramp for Lawrence, rather than the more direct western off-ramp, to save time. While waiting for the off-ramp to come up, Norm's mind drifted back to his discussion with Bill Russell, the general manager, on the previous day. Norm had been contemplating adding microprocessors to their rubber mixing equipment in order to save manual adjustments on ...view middle of the document...
Their product line consisted primarily of flat and round wire and cables for submersible pumps in oil wells.
The manager chosen to head up the new enterprise, Gino Strappoli, gave considerable thought to the organization of the firm. Gino envisioned a company where everyone took some responsibility for their own management and the success of the business. Gino preferred this approach not only for personal reasons but because cable manufacturing is a continuous process rather than a job shop-type of activity. The dedicated allegiance of the relatively few employees in a process firm is crucial to staying competitive. In such industries, direct labor commonly constitutes only 5 percent of the cost of the product, with
indirect labor being another 5 percent. By contrast, in a job shop the wages paid for labor are a major determinant to being cost-competitive, often running 30 percent of product cost, thus introducing a potential conflict between labor and management. Gino reasoned that if he could obtain the employees' commitment to improving productivity, reducing scrap, being innovative with new technologies, and staying competitive in general, he would have a very viable firm.
With the approval of the new owners, Gino initiated his plan. Of the original labor force, only a few moved to Kansas, including Gino and the firm's controller, Bill Safford. All new equipment was purchased for the firm and a local labor force was selectively recruited. As the firm was organized, the team management process was developed. Eleven teams were formed, six of which constituted the production area. The remainder included the management team, the resource team (support functions such as computing services, accounting, etc.), the technical team (including the lab employees, R&D, and so on), the Administrative team (office and clerical), and the maintenance team.
These teams basically set their own work schedules, vacation schedules, and job functions. They addressed common problems in their work area and interfaced with other teams when needed to solve problems or improve processes. With Gino's enthusiastic encouragement, the team approach grew and took on more responsibility such as handling grievances and reprimanding team members when needed.
In January 2008 the firm became profitable and later that year came fully on-stream. Gino soon thereafter left for another position and the operations manager, Bill Russell, was selected to succeed him. At this point, Norm was brought in to replace Bill as operations manager. Norm had years of experience in manufacturing and was a degreed mechanical engineer. (See Exhibit 1 for the organization structure.)
Exhibit 1: Organizational Chart: Oilwell Cable Division
As Norm recalled, from 2008 to 2010 the firm rapidly increased productivity, improving profits significantly in the process and increasing in size to 140 employees. In so doing, they became the low...