How to close a factory, responsibly?

Unilever Brasil Industrial / Fundação Dom Cabral (FDC)

— GOLD WINNER OF THE 2020 EXCELLENCE IN PRACTICE AWARDS —

In times of increased competition and logistical challenges, factory consolidation becomes a more frequent phenomenon. Closing and transferring production lines is not only an engineering challenge, but also a leadership challenge.

The right way to close an operation by Kenneth W Freeman, an article published in the HBR 2009 issue1, is one of the few references regarding responsible factory closings. Freeman observes: “Many managers never had to shrink their operations of workforce drastically, and as a result (…) they assume they have to be the tough guys who make the decisions and that afterward they can delegate the implementation to others with one marching order: go fast.”

In 2018 Unilever decided to consolidate operations in Brazil and transfer production from Goiânia to Pouso Alegre, closing the Goiânia site by March 2020. For the Operations Director in Goiânia this created first a relocation challenge: maintaining production and product quality until the last production line is transferred.

His second challenge was: how to do this responsibly, living up to the values of Unilever, which had turned into a global sustainability icon especially after announcing its ambitious Sustainable Living Plan – doubling growth, reducing environmental impacts and creating positive social impact. How can you close an operation and create positive impact?

Oscar Ramirez was responsible for the Goiânia production site and resumes the main challenge as “not only maintaining, but continue to improve results in the moment of transferring operations while keeping alive the sense of developing a better organisation and better people”.

He realised that beyond the engineering and logistical challenge, the main issue was of human nature.

First, the relocation causes employees of the site to worry about their future once the decision to transfer operations had been made public.

Second, the leadership needed to be prepared for a caring, humane and responsible way of managing the transfer, to keep the motivation of the team until the last day of operation and living up to Unilever ́s values and reputation.

Third, Unilever wanted to leave a legacy behind in Goiânia that would extend well beyond the last day of operations.

With these objectives in mind Ramirez was looking for suitable partners. Potential candidates needed to have the trust of employees and experience of providing executive education in challenging environments. Fundação Dom Cabral (FDC) had the advantage of having acquired a profound knowledge of Unilever Goiânia ́s business challenges, next to its people management priorities.

Additionally, being considered the best business school in Latin America for more  than 10 years by the Financial Times was also an  asset. In the words of Ramirez: “To initiate this journey it was necessary to find an experienced partner. Luckily, we found, an organisation which has helped us to train leaders in the past”.

Developing leaders – creating shared value

The leadership and development initiative FDC designed in collaboration with Unilever focused on preparing the senior leadership team for the upcoming challenge, emphasising resilience, building a relationship based on trust and inspiration. This relatively small team of eight was getting together in leadership sessions and applied the “coaching ourselves” methodology developed by Henry Mintzberg discussing and providing guidance on the day-to-day challenges each participant was experiencing.

The tactical leadership group consisted of  60 participants which were engaged in “Game Changer Projects” aiming to create shared value and a legacy in Goiânia. The projects had the following objectives:

  1. Employees – help employees to find new jobs
  2. Suppliers – transfer Unilever ́s management technology to improve the supplier ́s management
  3. Clients – transfer Unilever ́s competency in logistics and security to a client
  4. Community – help graduates of a public school situated in a low-income community find their first employment
  5. Competitors – define shared value projects that leverage synergies, help reduce costs and create positive impact in Goiânia

A mentoring process helped the teams to set up and meet deadlines, submit key deliverables and track results. All mentors were experienced in creating shared value and made sure that projects created results for Unilever Goiânia as well as stakeholders.

“This programme has shown that people are capable of incredible things when they pursue
a purpose. A courageous leader, a responsible organisation and a qualified team are capable of
dealing with any scenario. Certainly, the professionals who were involved in this programme developed competencies which help them in future challenges. And all of them became multipliers – they turned into ’Game Changers’”.  Michelle Demori, FDC Programme Director

Impact beyond the numbers

As operations are closing, the results become visible. Unilever Goiânia was able to meet 100% of production targets with no workplace accidents, quality or production issues; 25% of employees and more than 50% of local leadership could be transferred to other operations. By engaging in shared value projects, Unilever was able to save costs, improve turn-over and absenteeism and deliver value to stakeholders as the table on page 8 demonstrates.

Let us add some stakeholder voices to the numbers:

Employee

Abel Amaral, Machine Operator at the Unilever Goiânia site: “The courses helped me to envision my future. I discovered that I want to open my own business and I know which steps I need to take to get there.”

Community

“The Unilever team offered training in how to prepare for the first employment, how to work with Excel and financial education. This will definitely help me in my first interviews.”

Client

“The exchange of practices as well as the technical visits helped us to identify opportunities to improve our business.”

Competitor

“Even being competitors in some local markets it makes total sense to collaborate in projects which benefit the community.”

These shared value projects clearly contribute to some of the Sustainable Development Goals set by the United Nations.

Beyond the numbers, statements like the following posted on her last day at work by Fabiany Gonçalves, a quality management analyst participating in the programme give  a glimpse on what we were able to achieve:

Life is made of cycles. Cycles start and end along a journey. Today, I close one of the most beautiful cycles of my life. I had the opportunity to work in  the best factory producing Mayonnaise and Ketchup in the world. I learnt, developed and grew as a professional as well as a human being. I ́’ve travelled unimaginable pathways and obtained results that fill my heart with pride. Unilever plants in our hearts a feeling of pride and love. Pride to be part of the team and love for the culture and work. Today I am leaving Unilever with an aching heart and a feeling of mission accomplished. I am grateful to Unilever, to my team. You guys are the best! #Unilover

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