Treadway Tire Case Study

2189
JUNE 12, 2008

WICKHAM SKINNER HEATHER BECKHAM

The Treadway Tire Company: Job Dissatisfaction and High Turnover at the Lima Tire Plant
“We have a serious problem.” The words of Brandon Bellingham, the plant manager at Treadway’s Lima, Ohio, Tire Plant, rang in Ashley Wall’s ears. She had just attended a tense meeting where she had presented the projected year-end turnover figures forthe plant. Out of a total of 50 foremen at the Lima facility, 23 of these positions had turned over in 2007. Ashley Wall had transferred to the Lima Plant as Director of Human Resources when Treadway’s plant in Greenville, South Carolina, had closed down in 2006. She was a seasoned human resources professional with over 10 years of experience at Treadway. Wall knew the turnover rate of foremen washigher at Lima than at other plants in the division; reversing this trend was her top priority. It was now November 28, 2007—approximately one month before Christmas. The plant would be closed from Christmas to New Year’s for retooling and annual maintenance. By the time the plant reopened in January 2008, Wall intended to complete a thorough analysis of the problem and a plan of action tocorrect it. The Treadway Tire Company employed almost 9,000 hourly and salaried staff in North America. The company was a major supplier of tires to the original equipment manufacturer1 and replacement tire markets, selling Treadway Primo, Treadway Performance, and private tire brands. The Lima Tire Plant was one of eight manufacturing plants operated by the Treadway Tire Company. For the prior severalyears, tire manufacturers had been faced with a variety of challenges, including skyrocketing raw material costs and intense global competition. Raw materials represented about 55% of the cost to produce a tire, and petroleum derivates were an important ingredient in the mix. Raw material costs were thus highly dependent on the price of oil. The price of standard crude oil climbed from below$25/barrel in September 2003 to $92/barrel by October 2007, pressuring the economics of tire companies.

1 Original equipment manufacturers (OEMs) included companies such as Ford, General Motors, and Chrysler.

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Professor Wickham Skinner and Heather Beckham prepared this case solely as abasis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration. Copyright © 2008 Harvard Business School Publishing. To ordercopies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of HarvardBusiness Publishing. Harvard Business Publishing is an affiliate of Harvard Business School.

2189 | The Treadway Tire Company: Job Dissatisfaction and High Turnover at the Lima Tire Plant

Wall sat down in her office, staring at the blank computer screen. She was acutely aware of the rising cost of raw materials and its impact on the company. Although she could not solve this problemdirectly, she could help cut overall costs and improve productivity at the plant by reducing turnover. But Wall knew that turnover was the tip of the iceberg. Serious morale issues had been brewing for some time with the line-foreman segment, and their dissatisfaction was beginning to infect the entire plant. Wall’s thoughts swirled around the myriad factors causing the problems.

Treadway’s Lima...