Milking the System

Somewhere in the world, at any given hour, on any given day, an auto plant supervisor is reaching for antacid.

For the start of every shift brings the gut-searing realization that millions of dollars worth of tooling could sit idle because work stations are vacant.

Most of the missing employees are on authorized leave. Some are on vacation, or attending funerals, or celebrating weddings. Others are simply tending to personal business.

Too many, however, are AWOL. They're asleep at home. Or maybe the weather forecast calls for sunny skies — a perfect day to rev up the personal watercraft.

No matter the reason, to the chagrin of unions, it's all considered absenteeism. And employers are on the hook for billions as they struggle to maintain production in a business climate where the slightest disadvantage can cripple.

Against this backdrop, a new study confirms the dark notion that there exists, in everyone, the capacity to exploit.

B&M Analysts SA (Pty) Ltd. has found that, excluding the impact of holidays, absenteeism rates are highest in those regions with elaborate social infrastructures and lowest in those areas where worker protection is lacking — or non-existent.

The global automotive consultancy found Asia/Pacific, represented mostly by suppliers in India and China, is missing 1.71% of its workers, on average. This is below even the 2% benchmark espoused by Justin Barnes, B&M's South Africa-based managing director.

Because there is virtually no social safety net in these countries, “the cost of losing a job is very substantial,” Barnes tells Ward's.

“India, for example, has a very low level of absenteeism because (absence) counts against your leave.”

Central Europe, which has seen major investments in places such as Slovakia and Hungary, scores worst with a 6.5% absenteeism rate, the study shows.

In stark contrast to their counterparts in India, workers in these countries almost break even when they miss time. The Czech Republic has seen its government-sponsored benefit plans give workers 88% of their pay when they call in sick.

Not surprisingly, abuse triggered a 20% absenteeism increase between 1999 and 2003, according to media reports.

The “developed economies” of North America and Western Europe recorded a 4.9% rating.

In 2004, slackerdom reached comic proportions in Sweden, where the government launched an aggressive push to inspire workers turned lazy by their nation's generous social system. The campaign was sparked by a survey that found 40% of Swedes believed tiredness was an acceptable reason for not going to work.

Such attitudes saw the country's annual sick-leave costs triple to nearly $7 billion between 1997 and 2002.

In the U.S., system abuse has changed the meaning of FMLA, acronym for the Family Medial Leave Act.

“We call it the Friday-Monday Leave Act,” says Fred Herring, vice president of United Auto Workers Local 43, which represents Lear Co. employees in Louisville, KY.

“It's a good thing,” Herring says of the federal legislation enacted in 1993 to protect workers from job loss linked to legitimate absence. “But it's abused. People use the FMLA for allergies, headaches.”

What is curious to Herring is that the FMLA affords no income protection.

“I can't take FMLA,” he says. “I've got to work. I need the money. I don't understand how they do it.”

Five hours north of Louisville, across the Canadian border in Windsor, Ont., the legislation is different. But the abuse pattern is the same — a core group of habitual offenders make the entire workforce look bad.

“In our situation, the worst 10% take 70% of the time off,” says Ken Lewenza, president of Canadian Auto Workers Local 444, which represents DaimlerChrysler Canada employees.

As in other plants, some of the chronic absentees suffer from addictions or other conditions that affect their attendance. The rest are slackers and layabouts.

What motivates these people to cheat a system designed to protect against crises?

“Disposable income — that's my theory,” Lewenza offers. “(Auto workers) make a pretty good paycheck. People today can live on four days' (pay) a week as well as five.”

Burnout becomes an issue when overtime is factored in, says Ron Harbour, publisher of the influential Harbour Report on manufacturing efficiency.

About 40% of all North American plants ran production on overtime during 2005, according to Ward's data. Overtime frequency ranged from a single weekend at Toyota Motor Mfg. North America Inc.'s plant in Georgetown, KY, to more than 40 weeks of daily overtime — plus a few weekends — at General Motors Corp.'s plant in Bowling Green, KY.

“If you run enough nine- and 10-hour days, sooner or later you're going to need some time off,” Harbour says. “If you're not going to get it, you're going to take it.”

Despite the prevalence of overtime at Bowling Green, site of Chevrolet Corvette and Cadillac XLR production, the Kentucky plant does not have a problem, GM says.

The average rate of total absenteeism, authorized and unauthorized, is estimated to be between 10% and 15% in North America.

“But there are plants that, in the past, have exceeded (15%) significantly,” Harbour says. “It would just blow your mind. (Today), there are few plants under 10%.”

Just to maintain a standby pool of absentee replacements can cost $16.5 million per plant, Harbour suggests.

Notably, the B&M study shows no correlation between absenteeism rates and union representation. However, Barnes says: “There is a correlation between team-based manufacturing and absenteeism.”

Plants whose workers are organized into teams, instead of functioning as individuals on an assembly line, have lower absenteeism rates because they are more engaged.

This is consistent with a study by U.S.-based consultant, Towers-Perrin Inc.

“People that are more engaged are at work more often,” says Janie Brill, senior consultant with Towers-Perrin in Detroit. “In the auto industry, where there's a lot of restructuring, engagement's going to be even more important.

“You can have people in your company who are doing just what they need to get by. But (they are) not necessarily going to help you get a competitive edge.”

Honda of America Mfg. has four team-oriented, non-union plants in Ohio — three assembly sites and an engine plant. Combined, their unauthorized absenteeism rate is below 1%. Add vacations and their rate is still under 6%.

“We try to make sure that associates understand how important it is to be at work,” says Hank Real, who is responsible for the Ohio plants as Honda's senior manager-associate relations. “When an associate is not at work, somebody else has to cover for them.”

Team-oriented assembly has only begun to resonate with the UAW and CAW because it flies in the face of the time-honored practice of rewarding high-seniority workers with less strenuous jobs. Team assembly requires that workers rotate through various work stations.

“Sometimes we, as politicians, don't want to upset our members,” admits a senior UAW official, requesting anonymity. “Because some guy's worked to get to a certain plateau and all of a sudden you say, ‘Well, you've got to start rotating.’ Then he says, ‘Why did I bust my butt all these years?’”

Stubborn support of the traditional manufacturing model has often poisoned labor relations and entrenched system abuse by protecting laggards, says an industry insider who also requests anonymity.

“This can't go unspoken,” he says. “(Union officials) will say, ‘Bring Joe back, bring Bob back and we'll excuse these 1,000 grievances.’ This is reality.

“(That) they let the 5% (of chronic absentees) destroy it for everybody else is absolutely shameful.”

Some suggest North American workers have bought into a “culture of entitlement.” But Mark Hogan, president of Magna International Inc., disagrees.

“I don't get that feeling,” says Hogan, who spent more than 30 years at GM before joining Magna in 2004. In addition to being the world's third-largest automotive supplier, Magna performs contract vehicle assembly at a plant in Graz, Austria.

“It's very difficult to paint (absenteeism) with a broad brush. I found that the assembly plants I was associated with when I was at General Motors, you would tend to get into individual situations — and they're mostly personal, family issues.

“You just have to be, from a team leader and a group leader standpoint, very aware of your people.”

A persistent problem for generations of auto workers, absenteeism has become the industry's dirty little secret. Hence, employers are loath to quantify it.

“I can't give you the percentage, but I can tell you right now, it's too big,” says Joe Laymon, Ford Motor Co. group vice president-corporate human relations and labor affairs.

But he defends the way Ford and other auto makers combine authorized and unauthorized absences to come up with a single number.

“Here's where I put them all together: Absence is when you're not at work and I've got to find a way to cover for you,” Laymon says. “Whether it's on vacation, or a holiday and we're working, when you have a family emergency … when you're not at work, I still have to find a way to put a talented, trained person in there. It's going to cost me something.”

And the cost may not be limited to dollars and cents. Product quality can suffer when there is a skill gap between a replacement worker and the regular operator, Laymon notes.

With manufacturing trending toward more widespread use of flexible tooling, skilled replacements are a primary concern for auto makers seeking consistent quality.

“Every time you have somebody missing, you're missing a skill,” says Robert Chiaravalli, a labor consultant with Michigan-based Strategic Labor and Human Resources LLC.

Automation associated with flexible manufacturing demands that today's workers have broader skills, he adds.

“Not as in the skilled trades. But they require a person that has adequate reading skills, adequate mathematical skills. Because that's just the way we are today.”

Regardless, unions claim, combining authorized and unauthorized absences skews the problem.

“Whether (an absence) is planned for or whether it's not, it's considered bad,” says Glenn Woemmel, president of UAW Local 110, which represents workers at Chrysler Group's St. Louis minivan plant. “That shows that we can't control the whole game.”

Adds Buzz Hargrove, CAW national president: “Our absenteeism in Canada, the way the companies define absenteeism, would be higher than the U.S. because we have more paid time off in our collective agreement than the U.S.”

In total, CAW members enjoy 80 additional paid hours off the job annually, compared with their UAW counterparts. But there are none of the quality problems associated with absentee replacements, Hargove claims.

Instead of individual days off, known as Personal Paid Holidays under the UAW agreement, CAW members have time off in week-long blocks, known as Special Paid Absence.

“It used to be, I'd cover you for a day and then move on to another job for a day,” Hargrove says. “The argument was you'd never develop expertise on any of the jobs. The quality was down. We've solved that. We've had no complaints from any of the companies about it being a problem with quality.”

Canadian plants — Asian-owned and domestic — are consistently among the top performers in Harbour Report and J.D. Power's annual plant ratings.

There are as many absenteeism remedies as there are excuses for absenteeism. Honda pays a monthly attendance bonus of $1.25 per hour if designated benchmarks are met.

Currently, DaimlerChrysler Canada has formed a taskforce to investigate absenteeism at its Windsor minivan plant, while also targeting repeat offenders with written warnings known on the shop floor as “This-Is-Your-Life Letters.”

“It basically says, ‘We don't care how many more doctor's notes you bring in; we don't care how many more times you ask for personal days off; we don't care how many more bereavements you have in your family; the fact of the matter is we consider you unfit to live up to your employment commitment to us, which is working fulltime,’” Lewenza says.

While opposing such a tactic, the CAW has grudgingly accepted it.

“We'd rather have a process of counseling,” Lewenza says. “But our program, the last three or four years, of educating our members and trying to do it with limited discipline isn't working.”

Nevertheless, Harbour expects absenteeism rates will improve as increasing global competition forces auto makers and suppliers to contemplate plant closures to resolve the nagging problem of overcapacity.

“If I was a betting person, I would think that (the trend) would be somewhat downward because of the fear many people have over their jobs right now,” he says. “Although, when I say that, I'm still surprised to go to some plants and hear some pretty high (absenteeism) numbers.”

The rancor over absenteeism leaves labor consultant Chiaravalli amused. There are no simple solutions when workers' lives hang in the balance, he says.

“People have unpredictable schedules. (Employers) think a whole plant can be perfectly balanced with no statistical fluctuation. And it's an uphill battle every day. Every single work station.”

A look at the most recent data from the U.S. Bureau of Labor Statistics affords a broader view of absenteeism.

Statistics show 3.4% of workers in transportation equipment manufacturing, which includes auto workers, recorded an absence during 2003. But this total compares favorably with other sectors.

Ironically, social assistance workers ranked last, with 5.4% of them booking at least one day off the job.