St-Lawrence Sawmill case

The case of St Lawrence Sawmill: Risk Analysis in a setting of organisational change.
By Marc-Andre Leger
Adapted from: Bernoux, P. (1985), Le cas Rhone-Poulenc textiles, (p.225-236), dans La sociologie des organisations, Point, Paris
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The case arose in a sawmill producing lumber wood used in residential construction. The sawmill started operating in 1954 in the small city of La Tuque, in the Mauricie region of Quebec (Canada). In the 60’s and 70’s, it employed 2 000 to 3 000 workers, but international competition in a context of globalisation and the fluctuations of the economy brought a series of rationalizations, reducing the number of workers to around 800 in 1996. With the exception of managers, the majority of the workers are relatively unskilled workers with about half having a High School Degree. The sawmill operates uninterrupted 24×7 (3 shifts of 8 hours), 365 days per year. The factory is an establishment of a great industrial group, Bois St-Laurent, whose Head Quarter is located in Montreal.

A taylorian organization

The production and operations of the sawmill (squaring and cutting) represent the essence of the work in the factory and requires little qualification. Pre-production work consists of the unloading of the trucks coming directly from the forest and the loading of that wood on a conveyor. In the factory the work consists in the operation of machines (restart in the event of stop, change of worn parts or repair in the event of breakdowns) and of the controls of various automated processes. Thereafter the finished products are assembled on pallets and are loaded on trucks to be dispatched to a distribution center located in Trois-rivières (150Kms south). In the factory work is done in a hot, high humidity, noisy environment and the rate or rhythm of work is steady

The organization operates in a very taylorian fashion. The tasks have been broken up into a maximum of different functions, the manufacturing process split, procedures meticulous documented and constraints have been developed in the past. Each stage of the production has been organized in workshops, directed by a supervisor. The role of the supervisors had become that of monitoring of the proper application of processes and procedures in their workshop. They had at their disposal possible repressive measures, in particular a performance bonus that could be reduced in the event of non-observance of procedure or of production targets.

During the years of installation of a first system (1990-1996), the factory derived towards an increasingly conflictual situation, in particular with the degradation of supervisor-workmen relations. This so-called first system is the management information system in place at the start of this new project.

One of the sources of conflict at the time was the distribution of work and the measurement of the quantity to be produced. In 1996 it was decided to computerize the maximum of data relating to these two variables (distribution of work and measurement of the quantity to be produced). A central minicomputer (an IBM AS400) calculated the optimal theoretical distribution and imposed it to the workmen. A custom-built information system (Oracle RDBMS) was put in place by IT consultants. At workstations each workman received a card indicating to him with precision the place he was to go, the operation to be carried out and allocated time for these operations. The supervisors had a copy of these cards and were responsible to check instructions where respected as contained on the card. After shifts, cards were then conveyed to administrative staff for manual integration within the management information system.

This computerization accelerated and accentuated the degradation of the relationship with the workmen. The  supervisor’s control function was reinforced at the same time as the workers lost that of organization and technique. The workman lost any autonomy they had, he could not take advance or delay any more. While being able to take its station, he did not know at which time his lunch would be scheduled, a four hour variance was possible. Workmen felt more and more controlled, threatened of sanctions, in particular on the performance bonus. The rate and the intensity of conflicts increased at the same time as the economic situation, without being bad, was threatening. Management started to seek another type of organization.

The introduction of change

It is the tension within the organisation which initiated the change process. It was necessary to evolve to a more flexible structure and processes to alleviate conflicts. In 2004, began an unforeseen increase in exchange rates in an already difficult economic context in the wood industry. This and a change in ownership which brought a change in the factory’s management team. Thereafter a national lumber wood crisis occurred, which brought the temporary closing of the factory in November 2005 until May 2006. In May 2006 it was purchased by a Swedish forest group: SWP (Svirge Wood Products).

Following the purchase, in May 2006, a new management team was put in place under the leadership of a General Manager from SWP (Sweden). This new team wanted to bring in innovative solutions, without being able to clearly define the mission other than asking all employees to help change the climate. The control of the factory had been lost by the old direction and almost as much as by the trade unions, which did not control the many spontaneous strikes. It was necessary to do something quickly.

What was done?

There were tensions within management, some whom where put in place before the arrival of the new General Manager, recommended the reinforcement of the former authoritative hierarchical system. The new management wished for an in-depth revision and modernization of technologies and processes in place. However, with the assistance of a management consultant and because a similar change had already taken place in a European factory of SWP, the decision was to gradually move towards semi-autonomous workgroups.

Initially a vast training exercise was launched, first with the supervisors and then all the workers. Its goal was to start a analysis of the situation of the factory, on its causes, the need to change and on the requirements for management controls. At the same time, the idea of change was promoted by the open dialogue on all the levels. For the workers there were meetings where persons in charge of all the various business units of the factory came to present their activities. As well, a presentation by consultants on the proposed new structures and on empowerment.

The introduction of greater autonomy started with a single workshop, the most difficult from the point of view of management, where most conflicts have emerged in the past, often stemming from minor incidents. According to supervisors’, for historical reasons this workshop is the key to successful change. The key individuals in this group have significant moral influence on the whole of the factory workers. Management benefitted from the wind of revival in the factory and the anticipated impacts of the change which made it feasible to mark a noticeable victory if this group where to succeed. It equipped the group with a budget and assigned full-time consultants in order to facilitate the transition. With the assistance of experts in communications, an additional training was given in order to explain the change and to allow key individuals to take ownership of the project. It was then suggested, to move to a new form of organization: semi-autonomous with a small wage increase but participation in the profits.

The new organization was characterized by the attribution of greater autonomy for the workers. Work was allotted to a groups of workers with the objective of doing it according to production plans, but by organizing themselves. A management framework proposed a kind of contract to the autonomous groups called SLA or Service Level Agreement. These groups, comprised of four to six people, were to deal with the whole of the tasks in their workshop.

Finally in September 2006, it was decided to revise in-depth the information system to set up a management information system of company connected to the central system of management SAP, located in Sweden. In preparation with the launch of this project, St Lawrence Woods and it’s CIO has put you in charge of the IT (Information Technology) portion and deliverables.

Technological change

Current technological environment:

  • Minicomputer (IBM AS400)
  • Custom built information system created by an external consultant
  • Five workstations (PC) for administration used for the integration of data into the information system
  • Printer for reports
  • Oracle

Technological environment considered: corporate management information system connected to the corporate management system (ERP or enterprise resource planning), SAP, located in Sweden (Project name: SIGES)

  • Server: SUN Microsystems Sun Fire E20K
  • Storage: Sun Microsystems Sun Storage Teak 9900
  • 100 pc’s for factory (adapted for use in factory)
  • 10 workstations (Windows – INTEL) for management
  • printers for reports
  • Local area network 100-baseT commuted (switched) with high bandwidth for the management network
  • Wireless Local area network in factory
  • Wireless Local area network access for conference rooms
  • Virtual private network (VPN) with Sweden via Internet
  • SAP connected by VPN with Sweden

Budget of the project of change (Maximum allocated)

  • Equipment: 500 000$
  • Wiring and infrastructure: 100 000$
  • Service Contracts for the equipment: 50 000$ per year as of the second year
  • Software: 150 000$ + recurring license fees of 15 000$ per year
  • Configuration and conversion of the data: 150 000$
  • Training: 50 000$
  • Consulting services: 350 000$
  • Installation: 200 000$
  • Contingencies (10%): 150 000$

Constraints

Contraints of a political nature
  • The factory now makes party of a great Swedish group and must adopt the organisational policies resulting from SWP.
  • new management team under the control surface of a General manager coming from SWP (Sweden), expects innovative solutions
Territorial constraints
  • Only one factory in the area of Tuque, in Mauricie, in Quebec (Canada).
  • The factory is an establishment of a great industrial group, Bois St-Laurent, whose registered office is located in Montreal.
Economic Constraints
  • the international competition in a context of globalisation of the markets
  • fluctuations of the economy, in particular in the sector
Functional constraints
  • The factory must operate 7 days per week and 24 hours per day.
Constraints relating to the staff
  • The work of production (squaring and cut) represents the essence of work in the factory and requires little qualification.
  • Unionized workshops.
Time constraints
  • Must be completed for June 2008.
Constraints of a budgetary nature
  • Total budget of the project of 1 500 000$

Diagram of Project SIGES in a WLAN scenario

Figure 1: WLAN Scenario

Diagram of Project SIGES in a wired scenario

A wired scenario was considered but has been determined as too expensive. The cost of running conduits was estimated at 200 000$. This high cost is justified by the age of the building, local fire codes and problems due to the plan layout. In addition the cost of cabling is 300$ per drop (or per workstation), for a total of 112 (100 in saw mill, 10 in office and 2 in conference rooms). The cost of the cable racks and termination equipment is estimated at 10 000$. The total cost of cabling is estimated at (200 000 + (300 x 112) + 10 000) = 243 600$ but the budget for networking is 100 000$, as indicated in the project budget previously in this page.

Figure 2: Wired scenario

Saw mill layout

The saw mill building was constructed in 1921 and was originally used as a military storage area untill 1946. It is located here. Figure 3 Saw mill plan.

LocationGoogle earth link: 

Bois St-Laurent (Fictionnal for Business case)1.kmz

 Bois St-Laurent (Fictionnal for Business case)1.kmz

Bibliography

Adapted from: Bernoux, P. (1985), Le cas Rhone-Poulenc textiles, (p.225-236), dans La sociologie des organisations, Point, Paris