Capitalist Commune

DuPont operates one of the leanest manufacturing facilities of its globe-straddling empire in Richmond, Va. The secret: a high-performance work system that obliterates management-worker distinctions and treats everyone as equals.

by James A. Bacon

The workers may not own the means of production at the Zytel facility, which spews out nylon pellets used for everything from auto parts to chainsaw casings, but they sure do run it.

The Richmond Zytel plant has the flattest conceivable hierarchy--if it were any flatter, it wouldn’t even be a hierarchy. There’s Plant Manager Thomas P. Takacs, and then there’s everybody else. And the way Takacs sees it, his job isn’t to give orders. “I represent the corporation. My job is to make sure everyone stays in the budgetary and policy boundaries.”

If truth be told, Takacs does help workers solve operational problems and fine tune the High Performance Work System, the blueprint for handing off decision-making authority to self-directed work teams. He sets profit goals, gets involved with major capital expenditures and delivers periodic business updates to employees. Otherwise, it’s hands off. Says he: “I let the work teams make the decisions.”

The Zytel plant currently operates with fewer than 100 employees. That includes Takacs, the plant manager; 10 percent engineering and administrative support staff; and the “polymer specialists” responsible for operations on the factory floor. The Richmond plant requires less manpower than comparable manufacturing plants. Productivity, says Takacs, is 25 percent to 30 percent higher than at peer facilities, and quality meets DuPont’s highest standards.

Richmond’s Zytel operations may well represent the future of American manufacturing: The best way to compete with low-cost labor in China and other developing countries is with high-productivity labor here at home. That means stripping out middle-management – obliterating the distinction between factory worker and supervisor – and cross-training employees so they can make intelligent business decisions.

Lean manufacturing is all the rage among major U.S. manufacturers these days, and many aspects of the Zytel work system are being implemented elsewhere. What’s special about the Richmond operation is not that it has pioneered entirely original management strategies but that it has followed them, without compromise, to their logical conclusion. The most productive form of industrial production in the knowledge economy, it turns out, is an egalitarian system that trains and empowers all employees to use their brains. Ironically, it took the capitalists of DuPont to figure that out.

While praising DuPont for its innovative spirit, Gene Winter, senior vice president of the Greater Richmond Partnership, also suggests that it’s no accident that the High Performance Manufacturing System took root in the Richmond area. Manufacturing productivity per worker in the metropolitan area is one of the highest in the country. High productivity reflects not only the capital-intensive nature of Greater Richmond manufacturing but the adaptability and educational attainment of the workforce.

In Virginia, the northern-most Right to Work state, only 7.7 percent of all employees belong to unions. That’s crucial because high-performance manufacturing methods require the flexibility typically associated with non-union work environments, Winter explains. At the same time, average educational attainment in Greater Richmond is higher than in most other right-to-work metro areas. That’s vital because high-performance systems place greater intellectual demands upon their employees.

In a competitive analysis comparing Richmond to Charlotte, N.C., Jacksonville, Fla., and Nashville, Tenn., Market Street Services found that Richmond enjoyed an 11 percent productivity advantage over its peers. As the Partnership-funded study concludes: “Richmond area workers are more productive than the closest competitor and have been increasing their lead over time.”

Between the right-to-work environment, the high average level of education, and the presence of world-class multinationals like DuPont, Philip Morris, Honeywell and others, says Winter, “Richmond hits the sweet spot for high-performance manufacturing.”

The Zytel experiment began in 1997 as the idea of a small steering team of DuPont corporate managers. DuPont wanted to expand production of Zytel, a nylon-based plastic valued for its strength and durability. The company had a vacant building in its sprawling Spruance plant in south Richmond where Kevlar, Nomex and other high-performance fibers are made. Once the decision was made to put the Zytel operation there, Steve Catrow, now the ZYTEL Global Business Operations Leader, led a team to design and implement the “High Performance Work System”, known in the argot of Zytel employees as HPWS.

In the start-up phase, Catrow hired a crew of “polymer specialists”–none of whom had any experience running a polymer plant. The hiring process took a couple of months. Applicants were subjected to a battery of interviews, personality tests and group exercises that winnowed them, Apprentice style, down to a select few exhibiting the personality traits required for self-directed work teams. Catrow was looking for self starters who were capable of working on their own yet who also communicated well and showed they could resolve their differences with others.

Alan Gulash was one of those who made it through the highly selective screening process. A refugee from a small Pennsylvania coal town, he had moved to Richmond to work in a paper bag plant, and was astonished to find himself one of the one-in-100 survivors of the screening process. He didn’t have a background in chemical manufacturing, but he did have the right attitude.

Eight years later, Gulash is a believer. “I’d worked in a lot of union environments where it wasn’t the best guy who was promoted, but the guy who’d put in the most time,” he says. Zytel’s polymer specialists don’t get promoted in the traditional sense, but they do move steadily up the pay scale as they master skill sets in six process areas: chemical preparation, continuous polymerization, heat transfer, finishing, lab and packaging. Every employee is expected to work their way up the scale with the ultimate goal of developing the same competencies. The cross training is crucial, he explains, for it allows employees to address problems as soon as they see them, and not wait for the guy with the right job description to show up.

A friendly bear of a man, Gulash sports a Pittsburgh Steelers cap and a Harley Davidson t-shirt. He’d never had the chance to go to college, he says, but he’s made up for his lack of formal education over the past eight years. “DuPont is investing in me,” he grins. “I’m getting all that training for free. Actually, I’m getting paid to get it!”

Gulash is learning skills that, as a plumber back in Pennsylvania, he never imagined himself needing. He has recently mastered computer applications such as Excel and PowerPoint, and he also has earned his Six Sigma green belt. Getting a handle on Six Sigma was difficult, he admits. “There was a lot of algebra and x factors.” But his co-workers helped him work through the program – more than half the organization is trained to the Six Sigma green belt level or higher.

Nick Medellin had served in the U.S. Marines and landed an accounting job at Chippenham Medical Center when he saw a newspaper ad last year for a polymer specialist. “I didn’t know what a polymer specialist was,” he recalls, but he liked what he heard about the job. More than 2,000 people applied -- he was one of the lucky few who made the cut.

He feels blessed, Medellin says. At Zytel, there’s no getting stuck in a rut. After their six months up-front training, Zytel employees systematically move through most of the jobs in the plant, including those in human resources and administration that teach them the business side of the operation. Right now, Medellin is working in personnel, where he is gaining experience in tasks that will serve him when he moves into one of the shift positions, such as managing payroll and benefits, scheduling vacations and identifying training needs.

Production is organized around four shifts that keep the highly automated Zytel plant running 24/7. Each shift is comprised of team members possessing skills in all critical areas, including the business side. Team members rotate through an eight-person executive committee charged with making management decisions. These core groups have responsibility for dealing with any operating issues of the day, fully briefing the next shift, scheduling maintenance and planning ahead.

Zytel employees don’t focus exclusively on internal matters--they keep up with trends outside the plant. “Tom [Takacs] keeps us well informed. We get monthly updates on financials for both local and global operations,” says Larry Kelley, a former Navy man with nuclear submarine experience. The plant also sets up special teams to learn as much as possible about targeted customers. “We find out what their needs are, what their wants are. We want to be bonded to our customers.”

The ultimate test of any management system, of course, is how well it deals with adversity. The High Performance Work System faced a major challenge in the last recession when the auto industry, a dominant customer, cut back its orders. Word came down from above that Richmond Zytel had to cut expenses. At most plants, the target savings would have required layoffs, but Zytel employees figured out how to salvage their jobs. First, they tightened up operations. And second, they farmed out employees with special skills to other DuPont operations. “Our guys had skills,” says Gulash. “They were very attractive to other plants.”

Not surprisingly, a system that places such a high value on employees engenders fierce loyalty to the team. Eric Sanders, a former chemistry graduate student at Virginia Commonwealth University, compares the Richmond Zytel operation to King Arthur’s round table. “You’ve got people with military experience, electricians, mechanics and mill wrights–they’re sort of like the knights. You’ve got Tom, the plant manager. He’s like King Arthur. All the knights have a seat at the table. They’re all equal [with one another], all working for their fair share and the greater good.”

Nobody at Zytel pretends that the High Performance Work System is perfect, but they do say it’s better than anything else they’ve seen or heard about. DuPont obviously thinks highly of the facility: When the company was ready to invest in a multi-million dollar expansion last year, it considered several existing plants as well as the possibility of expanding to China, but decided in the end to add the operation in Richmond.

Employees think well of the operation, too. Turn-over is low. When people leave, it’s usually to take promotions elsewhere in DuPont.

From the perspectives of industrial productivity and social equity, one could argue, DuPont’s egalitarian, High Performance Work System represents the most highly evolved form of capitalism. After eight years, the system is ’s still going strong--it’s clearly not a fluke. But can the model be replicated? Can the Richmond Zytel plant point the way to U.S. industrial capitalism generally?

Plant manager Takacs would be reluctant to make such grandiose claims. “We have to be careful not to believe our own hype,” he insists. Furthermore, DuPont has mixed success transplanting the work system elsewhere. A number of factories from both inside and outside DuPont have sent delegations to watch the Zytel teams in action, but many say the system wouldn’t work for them. The change in corporate culture is so radical that the system can be difficult to graft onto an existing organization. But, with help from a Zytel team from Richmond, DuPont has successfully implemented HPWS in a South Carolina plant built from the ground up. Takacs also thinks it may be possible to introduce the work system for specific functions, such as maintenance, at other manufacturing plants.

Another factor holding back the spread of the Zytel experience is its extraordinary selectivity. In a nation where people put far more emphasis on their rights than their responsibilities, not everyone possesses the right attributes to work well in self-directed work teams. It’s one thing for DuPont to hire a handful of employees in a metro region of one million people. It would be quite another if the entire manufacturing sector in the Richmond region decided to adopt the same approach.

At the very least, though, the Zytel experience sends an optimistic message. Employees of all ethnicities, education levels and cultural backgrounds work together as a highly effective team. They’ve proven that the economic dynamism of capitalism can be achieved without sacrificing the American ideal of equality. As Alan Gulash puts it: “We cut out the distinction between ‘us’ and ‘them’. We consider ourselves all one in the same."

-- November 29, 2004