At first glance in 1998, the choice of Ford Motor's Halewood plant may have seemed a strange one for Jaguar's first volume model, the "baby" X-400. The plant in northwest England briefly held the record for number of car factory strikes at the height of British industrial unrest in the late 70s and early 80s. In fact, Halewood had been renowned for fractious management-labour relations for decades. The decision by Ford, Jaguar's parent company, to invest heavily in the Halewood operations surprised no one more than the British unions involved.
However, most Halewood workers had been with Ford - Jaguar's parent company - for decades, and took pride in producing the Ford Escort. (By 1998, it was the sole Ford plant making the model.) But pride aside, Halewood had become notorious for exceptionally poor quality, productivity and competitiveness. Most managers, in accordance with Ford standard practice, were only on 18-month contracts - a rather short period to be held accountable for any major decisions.
Luk Van Wassenhove, the Henry Ford Chaired Professor of Manufacturing, explores the rationale behind Jaguar's decision to opt for an existing facility, rather than a greenfield site -- somewhat going against standard industry practice in the process. The case, winner of the European Foundation for Management Development case competition in 2001, reflects Jaguar's considerable leap of faith in Halewood. This reflected Jaguar senior management's conviction that, with the right strategy, it could engineer enough cultural change not only to make the English factory a model operation, but also to save it from likely imminent closure. With Ford's intention to stop production of the Escort, Halewood's very survival looked doubtful after 2000.
After considering various sites around Europe, Jaguar saw enough positives to give Halewood the green light. To ensure that all its high-standard conditions for the X-400 had the best possible chance of being achievable, it put together an on-site management team, drawn from all over the Ford/Jaguar world, in early 1998. The transitional team immediately conducted a cross-function study aimed at assessing Halewood's needs. Four main weaknesses were identified: quality, productivity, infrastructure, and culture.
Halewood's new management, led by David Hudson, a 20-year Jaguar veteran with experience in such turnarounds, immediately began an intensive dialogue with the unions. Their main concerns were in breaking with the plant's fractious past, and changing the mindset of Halewood's 3,000 employees, prior to making the sizeable infrastructural investments the X-400 would demand of the long-neglected factory.
The challenges were complex and plentiful. Ford's main emphasis had long been on productivity, cost and quality. Jaguar's were the same, but largely in reverse order. In conjunction with the British unions, Hudson's team developed the Gateway Agreement. Using Ford's new product development tool, the Gateway Process, as a model, the Agreement defined sets of milestones to be achieved within a set deadline. The overall programme only proceeded to the next "Gateway" stage once the deliverables and milestones of the previous phase were achieved.
Six months after the management team's arrival at Halewood, however, the most important indicators showed the plant was performing even more poorly. Workers were sceptical about management resolve, and were generally adverse to such dramatic changes. Meaningful communications between the different layers of the organisation were patchy, at best.
Van Wassenhove details Hudson's initiatives in bridging the communications chasm. For the first time in Halewood's history, management oversaw regular quarterly communication sessions with the entire workforce. These involved information sessions regarding important data, quality matrices, developments concerning competitors, etc.
These and other managerial initiatives -- including setting up centres of excellence, launching new training initiatives, and letting Halewood employees work alongside Jaguar colleagues elsewhere in the UK - paid off over time. Halewood went from being Ford's overall worst performing plant in Europe, to ranking third in the prestigious JD Power ratings in 2000.
For Hudson and his team, the turnaround demonstrated that positive psychological reinforcement and informing all professional levels of important developments could be critical in transforming a workplace culture. As far as Hudson was concerned, they had shown "those Ford guys that we can build cars".
[Please also see the companion INSEAD case study: "Supply Chain Design at Jaguar: Bringing 'Nirvana' to Halewood (02/2002-4941)]