FIAT CASE STUDY

Building a New Production Plant Instructions



Table of Contents

Question 11

Question 22

Question 34

Question 45

References7

Building a New Production Plant Instructions

Question 1

The ultimate objective of every organization apart from non-profit firms is to gain profitable growth. Fiat also maintains this main objective, however in pursuit of this objective several strategies need to be pursued. Among these strategies is the construction of new plants, with an effort to increase the production in a better way. Fiat was suffering from low productivity, poor quality and endemic industrial conflicts in the 1980s (Lanzara, Patriotta, 2007: 636). The Melfi plant was the outcome of re-engineering efforts by Fiat to tackle the crisis. The need was to develop a new model of governance and method of conducting operations in a way that is more efficient and takes advantage of external expertise in the form of high outsourcing along with higher involvement in new product Development. This led to an experiment design in the form of a new plant, which proved to be the plant in Melfi.

The factory of Melfi was built on a Greenfield site, located in southern Italy. The project of building the plant of Fiat in Melfi was basically considered an experiment, which was supported by pre-emptive agreement with the unions. Around one thousand workers knowledgeable and trained intensively in Turing, the Headquarter of Fiat, were prepared to go greenfield site in Melfi for building the factory, the factory was the same place, where these workers would later be assembling cars (Patriotta 2003). After this design experiment where the workers were actually involved in the building of factory, later became taken-for granted in the car manufacturing activities (Douglas 1986).

The objectives of building this plant were many including;

Improving the quality of cars manufactured at Fiat.

Reducing the Industrial Conflicts.

Higher productivity by designing the plant and operations in a way to facilitate efficiency in terms of output.

A design experiment for future plants.

The Melfi Plant is considered the first example of Fiat's transition principles of lean production, new work organization that is known as the Integrated Factory Model (Lanzara, Patriotta, 2007: 640). One of the premier objectives of this project was to serve as an example of how the involvement of employees in the building process of factory early-on can help reduce the conflicts and strikes. The venture of Melfi was based on pre-emptive agreement between the union of employees and Fiat. The employees were considered the guarantors and guardians of the company's productivity, which was another objective of building new plant at Melfi. The project was a trade-off between rights and jobs. Fiat was forgoing more suitable locations in favour of Southern Italy, where new jobs were to be produced, and workers would concede some of their rights concerning working conditions, wages and autonomous initiatives. This objective was also seemed to be fulfilled to very extent in the initial years as the industrial relation and manager's relations with employees were characterized with very little conflicts and resistance.

Question 2

The redesigning of the process can be due to several ...