U.S. Steel's "productivity gain" means layoffs for workers

July 30, 2003

Want to take the summer off, maybe do a little bass fishing? How about the rest of your career? That's the $40,000 question U.S. Steel asked 1,100 union employees of the former National Steel on July 1. U.S. purchased National in May, and negotiated a 20 percent "productivity gain" (layoff) with the United Steelworkers of America (USWA) as part of the purchase$40,000 is the maximum amount a worker will be given to leave before retirement.

"It's a stressful time for them, but on the other hand, the company has to do all it can to be globally competitive," said U.S. Steel spokesman Mike Dixon in the local paper.

According to USWA Local 1014 president Curtis Johnson, the job cuts mean, "Three people will be doing the jobs that five did."

While U.S. Steel's internal turmoil has a high profile here in the Chicago area, I bet you know all too well that most companies are facing the same productivity pressures.

Representatives of many of those companies (including one from U.S. Steel) attended the recent ARC Advisory Group Strategy Forum in Boston, which focused on improving productivity via real-time performance management (RPM).

The essence of RPM is shortening the time for information from operations to reach and influence the financial reporting and production planning functions. Not a new idea, but an important one whose time has come again.

Today, companies are working with fewer resources and more competition. We made infrastructure investments during the Y2K and ERP crazes, but have no money for new capital projects. We need to get more out of our existing assets, which boils down to making sure we're doing the best thing with each of them every minute of every day.

There's room for improvement. On page 39, Keith Mobley points out that at least 17 percent of asset reliability can be directly attributed to improper maintenance: generally, one-third to one-half of maintenance tasks provide no real benefit because they're inappropriate, improperly performed, performed at the wrong interval, or not performed at all.

For every RPM success story at the ARC Forum there was a question like, "What were the main problems you encountered during implementation?" Technology or costs were never mentioned as significant obstaclesthe fundamental problem was always getting people from diverse departments with different interests to work together on common goals.

Well, maybe that won't be a problem at U.S. Steelthere won't be enough people left to argue, and survival is a pretty common goal.

The company expects about 650 workers to take it up on the early retirement offer. Some have 30 years and are eligible for other benefits; others are not. I have a feeling that if they do the math, not many will be buying new bass boats.

Paul Studebaker can be reached at [email protected], 630-467-1300 x 433.

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