Multinational sheet polycarbonate and PVC manufacturer Palram had endeavoured for several years to marry manning levels and remuneration successfully with marked seasonal variations in demand. Production lines could not always be run efficiently and overtime costs were high. Pasfield Curran devised a flexible, multi-shift, annualised hours scheme for production employees at both UK sites and secured the willing co-operation of everyone involved. The scheme gave Palram the necessary flexibility in manning levels so it could respond much more cost-effectively and competitively to changes in seasonal demand.
The UK operation of Palram, which is also home to the company’s European HQ, consists of a manufacturing facility at Newton Aycliffe, County Durham and a management and production facility at Doncaster, South Yorkshire. The company employs around 220 people in the UK, around 150 of whom work in production at the two facilities. The company’s products are polycarbonate and PVC sheeting, used extensively in the building industry and DIY markets.
A large proportion of Palram’s production for construction is exported to continental Europe, where lengthy shutdowns and de-stocking take place in July and August. For several years this seasonality has given Palram real production, manning and logistical issues. Various complex options have been tried, but none have really solved the problems of periodic over-manning, wasted production and excessive overtime costs.
Palram CFO Mike Burton takes up the story: “What we’ve always done is runa fairly rigid shift system of working pretty much 50 weeks of the year and 24 hours a day, seven days a week and with just a shutdown in December for two weeks. We’ve generally found that we reach June/July and we haven’t got enough production scheduled to keep our lines and people busy. So the question arises as to what we do with our people, who are hourly paid and the company did not want to enter into lay-off agreements - to be able to lay employees off as the business required - as they believed this would make a skilled workforce feel insecure. Previously we said we would have an extended shutdown in the summer of two weeks and then people could pay the time back or take it as unpaid holiday.” He continues: “This didn’t work particularly well, however and that led me to believe that we needed more flexibility in the system, where we can get people to work when we’re at our busiest, but still guarantee the workforce a monthly salary when we’re not and don’t need people because the production isn’t there. What was happening was that because we knew we had these people who had to be kept busy somehow, inevitably we were fighting in the market against decreasing demand and so reducing prices.”
In December 2011 the company decided a new strategy was required and began looking for a solution. This turned out to be harder than had been imagined, as internet searching threw up very few consultants with the necessary specialist knowledge. Eventually two were selected and asked to present and Pasfield Curran, led by Neville Henderson, was chosen.
Pasfield Curran had its beginnings in a consultancy called Philip Lynch Associates. Philip Lynch had been the first person to introduce annualised hours in the UK - to the tobacco industry - in the mid-1980s from Scandinavia, where the concept originated in paper production. Pasfield Curran have since successfully introduced annualised hours for distribution businesses, breweries, ice cream, pet food and medical product manufacturers and ports amongst others.
Mike Burton explains how the choice was made: “The MD, HR Manager and I were impressed with Neville and he came across well and was obviously very knowledgeable. He’d been doing this kind of work for a long time and he struck us as a very credible person who would be able to assist us with this project and be able to carry out both the project management and work out the detail around the shift patterns and associated calculations etc.”
The process began with a two and a half day exercise in December 2011 to identify and analyse the potential benefits of introducing best-practice annualised hours or flexible working at the Doncaster and Newton Aycliffe sites. Henderson was to benchmark the current ways of working, leading to an assessment of performance and likely productivity increases achievable. He was also briefed to look out for any benefits for employees, assess the capability of the management teams to bring about the change and work out a way forward. This initial exercise was carried out at the Doncaster site, with additional input from
From the exercise Henderson was able to produce some general observations:
With the evaluation exercise complete, a decision on a way forward was necessary, so Henderson devised a plan that justified change in the light of the numbers thrown up by the analysis. He showed that it would be possible to implement annualised hours at Palram and offered several work-pattern scenarios to demonstrate its viability. The company was given the option of rolling out the new system at one site first, then the other once it had been proven, but because the projected savings and improvements were so good it was decided to roll out companywide.
Henderson explains what happened next: “As the project got underway, the aim was to find a way forward and implement on April 1st without having to force the changes through.” This careful and thoughtful consultation process allayed many staff concerns about the impact of the proposed changes on their wages, job security and lifestyles. The vast majority could see that the changes were in the interest of the business and its long-term viability and that if anything they were likely to benefit directly. Consequently, out of the combined workforce of around 150, only one person didn’t want to accept the changes, which made it easier to go ahead, especially with the unanimous support of the line management.
Each area had been asked to nominate a representative who could take the key information about the changes back to their colleagues and canvass their thoughts and feelings about them. Burton explains: “We used management and the representatives to work out and understand what the workforce wanted and what their views were on the proposed shift patterns. At Newton Aycliffe for instance they had been working on a three-on, three-off basis that gave them full weekends off, within a 24/7 production environment with different numbers of lines running. A vote was taken over a change to the shift pattern – two days, two nights, four off, with time off and this was passed virtually unanimously. All the shift patterns for all departments were based on matching the true demand profile and seasonality. Based on a 5% increase in demand and with only natural-wastage staff losses, the following year was modelled with no staff increase at all, so no layoffs were needed. Essentially this meant that more could be produced, for the same money, with fewer staff.”
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