Dennis Pawley trying to reshape thinking in industry, education

To say that Dennis Pawley, 71, of Waterford is the big man on campus at Oakland University would be an understatement. Pawley was recently reappointed by Gov. Rick Snyder to the Oakland University Board of Trustees for a third term, marking another milestone for the proud alum who graduated from the school in 1982. He made a name for himself in the Motor City by serving as executive vice president of manufacturing for Chrysler, in addition to vice president for manufacturing at Mazda and working in other management positions with General Motors (GM). His experiences in those positions inspired him to help found the Lean Learning Institute in Novi in 2002 to help organizations develop lean operating systems. Pawley then went even further by giving to Oakland University a $1 million endowment in 2002 to create the Pawley Lean Learning Institute to spread the lean method to higher education. Pawley and his wife of 28 years, Carlotta, then gave a $4 million leadership gift to the university in 2004 to name the School of Education and Human Services building Carlotta and Dennis Pawley Hall, which still stands today. Pawley recently spoke to the Spinal Column Newsweekly about lean learning, his experiences in the automotive industry, and about his thoughts on whether the federal bailout of GM and Chrysler was the right thing to do.

(click to listen)

You were recently appointed by Gov. Rick Snyder to serve an eight-year term on the Oakland University Board of Trustees. What does it mean to you to return to the board once again? What will be your main priorities for this new term?

DP: This will be my third appointment. I served from (1996) to (1998) my first time and left the board because I left the state for a short period of time, then came back and was reappointed again in 2002 for an eight-year term and served until 2010. I then came off in 2010 and then Rick (Snyder) asked me to come back on for another eight-year term, which I accepted.

I’ve been associated with Oakland in some way ever since the fall of 1959 when I first started classes at Oakland, and I was on the Oakland Foundation. I’ve been involved with several of their fund-raising drives.

Having served all the terms on the board, I did some guest lecturing in the business school, the engineering school, and the HRD school out there.

So in some way, I’ve been involved with Oakland ever since when it became a four-year college in 1959. It’s almost become a second home to me. I’ve watched it grow from when I went out there the first year in September 1959 and there were two buildings there — North and South Foundation Hall and a very small student center. I’ve watched the thing grow all the way up to recent times and have been involved with helping it to grow all the way up through 2010, when we created the medical school — and at that time, I was the chairman of the Board of Trustees.

I think the board has several challenges. Obviously, the constant reduction in state funding has made the budgeting process at Oakland really tough. You’re charged with trying to keep the costs of operating the university down as low as you can and at the same time constantly increasing the quality of education, and you have to do all that by balancing and keeping the tuition as low as you can keep it. Balancing constantly reduced funding from the state, constantly increasing costs to run a large $300 million dollar operation, and trying to keep tuition as low as possible while keeping a high level of quality is a real tough balancing act.

I plan on doing my best with some of my past experience in my career to help the board and … administrative staff work through all those issues.

Oakland University recently reached a tentative agreement with it’s professors on a 3-year contract effective until August 2015. What is the latest update on the ratification of that contract? What are some other decisions that the Board of Trustees currently has on its plate?

DP: I just received an update from (University President) Gary (Russi) on that. All I can tell you is that the ratification process is going on right now and it will be up to the members of that union as to whether they accept a contract negotiated by their leadership.

We’re going to build a new engineering center and the plans are well under way for that. I think parking out there is a nightmare and we’re going to have to find some way to alleviate some of the parking conditions.

The other one I think we have to take a look at is student housing. The last I looked at it, everything was fully occupied, 100 percent filled and they’re even leasing outside space right now to try to put students up, and even with that there’s a waiting list for kids who want to live on campus. As the university grows, the demand for more on-campus living is going to be something that we’re going to have to deal with, and we’ll probably have to make some decisions on that in the near future.

You are a major advocate of a method that is known as “lean transformation” for business and education. Please explain what “lean” is and why you believe it is so effective.

DP: I teach a seminar on that which takes about 40 hours, but let me give you a quick one.

“Lean” is really showing organizations, corporations and staffs a new way of looking at their daily operations through helping to eliminate waste wherever it exists. It’s quite an involved process you put organizations through to teach people how to look at their current operations that they look at every day with a completely different set of glasses, which helps them look at and identity where waste is and then introduces them to a process to eliminate that waste.

In today’s environment — especially in academia with the state constantly reducing the funding coming to you and having only a certain level of height to raise revenue by increasing tuition — you have to concentrate on things like how do you get the most out of your processes and operations you have going on on a day-to-day basis to try to reduce costs.

In line with that, a number of years ago, I gave Oakland University a million dollars to set up a “lean” learning type of an operation. There are classes being taught at Oakland today because of that endowment, across all of the curriculum — whether you’re an engineer or teacher, you’re going to get introduced to some sort of “lean” thinking in your education.

You helped found the Lean Learning Center in Novi in 2001. How did the inspiration for that come about and what does it provide?

DP: I retired from Chrysler in January of (1999) after being executive (vice president) of manufacturing, running all of Chrysler manufacturing. When I was there, I introduced a lot of the concept of “lean” thinking and “lean” learning by developing a Chrysler Operating System. When I left there, I looked back at that experience … the automobile industry was really entering some crisis times right then and I saw a real need to continue the types of “lean” learning and “lean” concepts that I introduced into Chrysler across a whole supply industry. The suppliers were really under pressure from the Big 3 to constantly eliminate costs and in most cases the CEO’s of those companies thought “Have we really done everything we can, there’s no more costs to cut?”

Well, I knew better because having done a lot of the operations, I saw a lot of the waste going on. So it was an attempt to try to help the supply base in (the automotive industry) by offering to them a $40 course that they could bring some of their top people in to and we would train them in those concepts and they could go back and apply those concepts to help them reduce costs. All the pressure was coming from the OEM’s to reduce costs and get the price down. So that’s why we started that and it was a very, very successful operation.

We had thousands of people come through that in the first five or six years and then we even began to expand beyond (the automotive industry) and we taught people anywhere from law firms to the food industry to pharmaceuticals to aeronautics — we just spread this across anybody that built anything and provided a service, we had those types of companies come in and we’d show them how to get the waste out of their operations.

You then funded a $1 million endowment to Oakland University for the establishment of the Pawley Lean Learning Institute in 2002. Why did you feel that an extension of the lean method was needed in higher education? Did you ever envision that you would have a building on campus named after you?

DP: One of the things that I saw in the years that we were teaching the concepts at the Lean Learning Center, was companies would come through and ideally what you’d want is to get the top level people, CFO’s, COO’s, CEO’s, those types of people to come through so they can take what they learn back into their companies and apply it from the top down, and show them how to create a learning culture that has to go along with the hard tools. But we were never able to get the top guys, we were always getting mid-management, sometimes a little above mid-management and some of the folks would go back in and they’d try to do things and because the top folks didn’t understand it, in many cases they didn’t buy it and they didn’t get the improvements in the organizations that they should. So, I just thought a natural extension of that would be to go over to the university level and teach these types of things through college students, so that when they come out as graduates, they take a lot of the lean learning and thinking and understanding of the tools into their new workplaces with them. They can begin to take it up to their organization to begin to implement this better and understand it better and teach it within their new jobs.

(I never envisioned a building on campus named after me) no, not really. But, it was really an honor to have that done, but over the last 10 to 15 years, my wife and I have given a lot of money to Oakland and we didn’t do it to get our name on a building. Both of us believe that education is what’s going to save and make this country greater and I think there has to be major change in the way we train and educate our kids. There’s no better place to put money than into a university, especially one that’s right in our backyard and one from which I was an alum.

You also previously served as executive vice president of manufacturing for Chrysler in addition to vice president for manufacturing at Mazda and other management positions with General Motors. What are your feelings on the current state of auto manufacturing compared to when you were front and center as a executive vice president?

DP: Things have changed a lot. No. 1, if I would have looked at the landscape of automobile manufacturing in 1999 and what it is today, the players are all different — so many mergers, people going out of business, brands going out of business — it would have been hard for me to envision when I walked out in 1999 what the automobile industry would look like today.

I think there’s a lot of exciting things going on in the automotive world today. You look at Fiat and Chrysler and how they’ve come back. I think (Sergio) Marchionne and his guys have done a tremendous job in restructuring and changing Chrysler. Unfortunately, crisis drove that … but change has just been happening so fast, particularly in that organization. Look across the street at General Motors and see what’s happened. They too have great products coming out, they’ve really streamlined their organization, and changed the whole culture of the company.

Look at what (Alan) Mulally has done at Ford. Here’s a guy who was an airplane maker … when he came into Ford, I know a lot of people around this town kind of raised their eyebrows and said “What the heck does a airplane guy know about the automobile business?” Well, people found out that if you build something, it really doesn’t matter what it is — if you have good managerial and executive principles, you can bring it in and be a success in almost any manufacturing company. Mulally has really proven that.

Look at what’s happened with the Japanese. I think the gap between the three OAM’s here in the U.S. and the Japanese has really, really closed in the last 10 years. I think that’s a tribute to the American operations in how much change they’ve had to do and how fast they’ve done it.

The next one on the horizon is the Chinese and the Indians. I think the next 10 years will see an even greater influx and probably even narrowing down of today’s manufacturers. I think you’ll see more mergers and you’ll see probably fewer auto manufacturers than there are today.

With the upcoming general election, there seems to be a lot of debate on issues related to the automobile industry, including government-mandated increases in fuel economy standards. Do you feel that mandated increases will help the industry or in the end make it more expensive for people to purchase cars? What’s your stance on the U.S. automotive industry bailout? Do you think the U.S. automotive industry could have recovered as well, or better than it did via a managed bankruptcy, as Gov. Mitt Romney has suggested?

DP: That’s really one of the things that I think is really going to be an issue both government and the OAM’s are really going to have to revisit. I think it was an admirable thing for the government and the auto executives to say we’re going to produce cars that get a range of 52 miles a gallon within a decade. How realistic is it? I don’t know. I know the technology to do that isn’t there today, but the hope and plan is that as they move toward those goals it will happen. If not, I think you’ll see government and the automobile executives sit down and say we all gave it our best shot, here’s where we are and let’s congratulate ourselves and toast our success, or they’ll sit down and say we need to back off a notch and maybe we want to only get to 42, 45, 46, 48 miles per gallon, but what is the new number?

A lot of that doesn’t depend just on the automobile manufacturers and government — the customer is the key here. You have to say to yourself, if you want a 50 mile per gallon car, it will obviously be much smaller than what the American public is buying today. It won’t do anyone much good if you get a whole fleet of vehicles out there that are 50 miles per gallon … you can congratulate yourself on doing it, but nobody buys it. It’s a matter of blending the technology that gets the right product out there, that gets you the mileage goals that you want, but also bridges over and also gives the customer the type of product that they want and somewhere in the middle, there is the answer.

(The bailout) had to happen. Obviously it’s unfortunate, but this country just could not economically stand to see General Motors and Chrysler cease to exist because all the jobs would disappear. If General Motors and Chrysler would have went under, you’d probably have a loss of automotive jobs within the OAM of probably about 100,000. But it’s the spinoff of that — the jobs that are lost in the supplier community, the gas stations, restaurants, bars, pubs, etc. that feed off the auto industries — that would have gone under and economists would come up and say that would cost you a million jobs.

At the time all this was happening and this country was teetering on the edge of depression, there was just no way that the government could allow that to happen, and that’s the reason for the bailout. As people look back on that, Chrysler has already paid back its share of that. GM still has a long way to go; however, if they’re successful with a lot of their new products coming and the sales go up and the stock goes up, eventually that all could get paid off, too.

Has the government today gotten all of its money back? No. Will it ever get all of its money back? Maybe, maybe not, but the bottom line is still — this economy could not afford to see a million jobs go away. That alone might have been enough to just push this country into depression.

I hear the rhetoric coming out of Mitt (Romney) and you can look back on it at that time, but at that time there was no way to do a traditional bankruptcy. Banks weren’t lending, they weren’t loaning, there was no money to do it, so there was no way to do a truly managed bankruptcy. And when it finally turned out, the government became the bank and that was really the only bank available. I think what Mitt is talking about is he would have liked to have seen them go through the managed bankruptcy, at least try it, and then if it didn’t work, then to come in and help them with a government-financed bankruptcy … The problem was, if you listen to the auto executives, there was no time to go through the formal (process). With all the bureaucracies and things involved with that, it was either give them the bailout in a matter of weeks or even days or both the companies would have liquidated.