In June 2007, Nikolaus Bauer, the head of BMW’s 2,500-employee power train plant in Dingolfing, Lower Bavaria, was worrying about what looked like an inevitable decline in the productivity of an aging workforce in the years ahead. With two of his production managers, Peter Jürschick and Helmut Mauermann (a coauthor, with Bauer), he developed an innovative, bottom-up approach for improving productivity that the company is now testing and refining in plants in the United States, Germany, and Austria. The goal is to incorporate it across BMW’s global manufacturing organization.
BMW’s problem was that the average age of the plant’s workers was expected to rise from 39 to 47 by 2017. Because older workers tend to call in sick for longer periods and in general must work harder to maintain their output, bearing the full brunt of the demographic shift would threaten the plant’s ability to execute BMW’s strategy of enhancing competitiveness through technological leadership and productivity improvements.
BMW has not been the only company with this concern. Corporate leaders, politicians, and labor economists in most developed nations are worried about the consequences of demographic change in their labor markets, which increasingly consist of older workers. In the United States, for instance, the population older than 65 will grow from 12.5% in 2000 to 16.6% in 2020 (the corresponding numbers for Germany are 16.4% and 21.6%, and for Japan 17.1% and 26.2%). This trend will prove expensive: Across the developed world, the health care costs for a person over 65 are roughly three times the costs for someone between the ages of 30 and 50.
Traditional approaches to the problem include firing older workers or forcing them into early retirement. But this is not an option for companies like BMW, which earn their workforce’s commitment by being dependable employers, and it is certainly not an option for an entire nation: Wave after wave of early retirements in the 1980s and 1990s increased the ratio of retired to working citizens, making the financing of retirement more difficult. Another approach is to move older workers into jobs that are less physically demanding, but this is not an option if there are not enough young workers to take their places. Nor is it a solution at the national level, where such a move could be interpreted as discriminatory. To complicate BMW’s problem, the company was the largest employer in Lower Bavaria, so a decision to lay off or reassign older workers would have political consequences.
Let’s see how Bauer and his colleagues resolved this apparent dilemma.
The Line
To arrive at their solution, Jürschick and Mauermann chose one of the plant’s production lines for a pilot project. The line’s foremen, Günther Stadler and Kurt Dickert, staffed it with a year-2017 mix of workers—that is, workers with an average age of 47. (See the exhibit “A Pilot Production Line.”) Stadler and Dickert then worked with the people on the line, supported by senior managers and technical experts, to develop productivity-improving changes, such as managing health care, enhancing workers’ skills and the workplace environment, and instituting part-time policies and change management processes. The direct investment in the 2017 line project was almost negligible, approximately €20,000. But the 70 changes increased productivity by 7% in one year, bringing the line on a par with lines in which workers were, on average, younger.
The line, which was centrally located in the plant, produced rear-axle gearboxes for medium-sized cars and was operated by 42 employees. This relatively small line was one of the most labor intensive in the factory. It had started in 2003 with a per-shift volume of 440 gearboxes, which was slated to rise to 500 in 2008.
There was strong initial resistance to the project, which was quickly nicknamed the “pensioners’ line.” The younger workers already on the line felt they would suffer from an influx of less productive people, while older workers elsewhere in the plant feared that they would become much less productive if they were taken out of their comfort zones and assigned to the pilot line. To many workers, the project seemed like yet another top-down initiative that left them with no choice but to adapt. Stadler and Dickert had concerns of their own—namely, that BMW would reduce work-speed rates and performance goals and downgrade IT systems in an effort to accommodate the perceived deficiencies of older workers.
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