PLASTCO PACKAGING LTD.
Plastco Packaging Ltd. is a medium-sized manufacturer of plastic bags, located on the West
Coast. These bags are used in the retail sector for purposes ranging from groceries to clothing
and other goods. These bags are made from a variety of types of plastic and in a variety of sizes,
depending on the intended purpose. Usually the retailer's name is printed on them.
There are three main phases in the bag-manufacturing process: (1) producing the plastic
sheeting (produced as rolls of tubing); (2) printing the retailer's name on the tubing; and (3)
passing the rolls of tubing through bag-making machines that cut and seal the tubing into bag
lengths.
This case focuses on the third step of the production process, the bag-making department. The
department has 12 bag-making machines. Each machine operates semi automatically but has to
be manually loaded, set for the type of bag to be produced, started, monitored, and adjusted.
The machines need frequent servicing to replace the cutting knives, adjust slipping belts, and
lubricate the many moving parts. These functions and major repairs, when necessary, are
carried out by mechanics from the maintenance department, a separate department reporting
to the plant manager. The mechanics report machinery problems and future replacement and
servicing needs to the maintenance supervisor, who reports significant problems to the plant
manager. The plant manager then conveys any implications for production of bags to the
bagmaking supervisor.
There are six bag-making machine operators, with each operator tending two machines. There
are also six inspectors/packers, who inspect the bags to ensure quality and pack them into
boxes. Defective bags are thrown into waste bins, based on the type of plastic. They are then
melted down and remanufactured. Whenever an inspector/packer discovers poor-quality
output, she must notify the operator to correct the problem. If the inspector/packer deems
waste to be excessive, she is expected to report the operator to the bag-making supervisor.
In addition, four utility workers handle miscellaneous tasks, such as delivering rolls of plastic
tubing and hauling boxes of finished bags to the shipping department. Traditionally, operators
and utility workers have always been male, while inspectors/packers have always been female.
When a new operator is needed, the bag-making supervisor selects one of the utility workers
and assigns him to an experienced operator for on-the-job training. It takes up to six months
before a new operator is able to consistently produce an acceptable-quality product without
supervision, since the machines are "finicky" to operate. The length of time needed to do bag
changeovers also declines as the new operator gains experience.
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The plant is unionized, and pay is based on an hourly wage. Operators receive approximately
$28 per hour, utility workers $21 per hour, and inspectors/packers $14 per hour. Overall,
benefits constitute about 20 percent of total compensation and increase with seniority.
The bag-making supervisor sees a number of problems at present. First is the high turnover
among the inspectors/packers, as high as 100 percent a year. Turnover among the utility
workers is about one-third of that, and lower than that among operators, who quit or retire at
the rate of about one a year. Second, while the department usually meets the minimum
production levels, the bag-making supervisor believes that productivity could be much higher.
He also believes there's a high level of waste. However, whenever he questions an operator
about this, the operator either blames maintenance for doing a poor job servicing the machines
or the inspectors/packers for being unnecessarily fussy. It is also difficult to pinpoint specific
operators for performing poor-quality work, since inspectors/ packers seldom report an
operator to the bag-making supervisor. When one does so, the operators usually accuse the
inspectors/packer of incompetence. All in all, there are very poor interpersonal relationships
among the operators, mechanics, and inspectors/packers. Few members of the department
appear to enjoy being at work.
Another problem is that customers are complaining about inconsistent quality in the products
they receive. Sometimes the bags are of very high quality, but at other times, many bags are
defective. These complaints are a concern to the plant manager since a new competitor has
recently opened up nearby and is competing aggressively for business. This competitor seems
to be producing a product with fewer defects for a lower price. As if this weren't bad enough,
the overall market for plastic bags has become more uncertain, as they have become the target
of environmentalists; some communities have actually banned the use of plastic bags.
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