Everyone should be doing ‘The Unipart Way’ as car components supplier’s boss seeks answer to Britain’s weak productivity
… Unipart’s chief executive, John Neill, 66, is obsessed with the problem of weak productivity and the damage it is causing to the UK economy. It is certainly a problem for the Chancellor ahead of this week’s Autumn Statement as the shift towards lower-paid, lower-productivity jobs in the wake of the crisis has led to smaller tax receipts and is making it harder for Osborne to shrink the deficit.
Neill, however, is convinced he has the answer. It lies, he says, in the ‘Unipart Way’ – a business system that he reckons can unlock potential, fire up demotivated employees and transform productivity. That is a big claim, but then Unipart did start life as the spare parts division of Seventies basket-case British Leyland.
Unipart: Chief executive John Neill is obsessed with the problem of weak productivity
There was a glitch this summer when Unipart Automotive, Britain’s largest independent car components supplier, fell into administration. Unipart Group had sold Automotive to private equity outfit H2 in 2011 and surrendered management control at that time. However, it retained a minority holding that it wrote down to zero in 2013, taking a £21million hit.
Despite that, Unipart Group is seen as being one of the most successful exponents in the UK of employee ownership. It has three divisions: manufacturing, logistics and consultancy, where it pits itself against the likes of McKinsey.
‘We moved from being the UK’s worst factory to being the best,’ says South African born Neill, who is also a director of engineering giant Rolls-Royce. ‘A small group of us began developing our system 25 years ago and in 1997 we started to brand it the Unipart Way.’
Neill even applies the Unipart Way to his everyday life.
‘People say don’t do the Unipart Way at home, but I do it for my breakfast, I position my orange juice and cereal bar for maximum efficiency as I was on my way to work. The joke was that I should have asked someone else to eat it for me, to save even more time.’
Britain’s woeful productivity performance, however, is no laughing matter. Neill points out that if UK manufacturers reached the average best practice levels of leading competitors, we could achieve a £60bn increase in gdp. If the public sector adopted better principles and practice, the increase could be £300bn.
‘There is a huge productivity gap, we have known this for decades. As the economist Paul Krugman said, productivity is not everything but in the long run it is almost everything.’
‘The US is 39 per cent more productive than the UK. The G7 countries are 20 per cent more productive. That is shameful, it is abysmal. Since the crisis productivity has been falling by nearly 3 per cent a year.’
UNIPART BY NUMBERS
Group turnover 2013: £1,056.3million, up from £1,010.8million
Operating profit: £26.2million, down from £28.8million
Employee ownership: two-thirds of the company
John Neill’s stake: 10 per cent
Given our national love of amateurism and our cultural aversion to systems and slogans, the Unipart Way sounds a bit eccentric.
‘When we started out people said it will never work here. I will freely admit a lot of the Unipart Way came from Japan,’ says Neill. ‘It is a designed system, not a management fad, and it is a long term approach. It has taken a quarter of a century to build.’
It could certainly be his specialist subject on Mastermind.
There are no fewer than 18 key principles – six more than the 12 steps in Alcoholics Anonymous. Isn’t that just too much to remember? ‘It sounds a lot, but you do need them all.’
Every wall, from the distribution centre to the finance department to the canteen, is festooned with charts with red and green stickers showing at a glance which targets are being hit and which are not.
Don’t employees find it oppressive? ‘We use information to empower people, not to beat them up,’ says Neill and those I meet, on the distribution centre floor, in the finance department and the canteen, do seem genuinely enthusiastic.
Among the ideas adopted from Japan is the ‘Insight Star’, based on the ‘Ohno Circle’, invented by Taiichi Ohno, a Toyota executive. The idea is that rather than walking round the shop floor with a clipboard, you draw a circle on the ground, stand inside it then observe, think and analyse.
Another is the OCC Circle, standing for ‘Our Contribution Counts’.
When an employee notices an opportunity to solve a problem, he or she can pull together a team or circle from among their colleagues, to hammer out the issue. ‘We save £3-5million a year through lots of little improvements that come from the creativity of our people,’ Neill says.
The Unipart Way even operates in the canteen, otherwise known as the Art Room, run by a genial French chef.
Given the size of the public sector, it is key to improving the nation’s productivity. Unipart has worked with HMRC and claims to have saved the taxpayer at least £440million. He reckons the Unipart Way could also work in the sprawling, difficult empire of the NHS.
‘I would say the NHS just continues to go backwards, at great cost to the nation. It absolutely is not about this continuous, stupid conversation about surgical gloves costing more in one hospital than another. It is about engaging the people,’ says Neill.
PUBLISHED: 19:46, 1 December 2014 |UPDATED: 19:46, 1 December 2014