Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Texas Factory Solved Its Labor Shortage with a Four-Day Week
Transcript
- Lucas: We talk a lot on this show about technology — robots, sensors, software — as the answer to factory challenges. Luna: Right. But sometimes the answer isn't a machine. It's a schedule. Lucas: Exactly. I spent the last week looking at a mid-sized factory in Texas — about 350 employees, makes industrial valves — that was bleeding workers. Turnover hit sixty percent in 2024. Luna: Sixty percent. That means they were replacing more than half their workforce every year. Lucas: And the cost of that — recruiting, training, overtime for everyone left — was eating their margins. The plant manager, a guy named Derek Hernandez, told me they were spending nearly two million dollars a year just on churn. Luna: That's brutal. So what did he do? Lucas: He did something that a lot of factory managers would call crazy. In January 2025, he moved the entire production floor to a four-day, ten-hour workweek. No reduction in pay. Luna: No pay cut? That's a big bet. How did the numbers shake out? Lucas: After twelve months, turnover dropped to twelve percent. Applications for open positions increased four hundred percent. And here's the kicker — productivity actually went up eight percent, measured by units shipped per labor hour. Luna: Eight percent. That's not what the skeptics predicted. Usually you hear 'four days means less output.' Lucas: That's the conventional wisdom. But Hernandez told me the key was that they didn't just compress the schedule — they redesigned the workflow. They moved to a 'cellular' layout where teams own a whole production process from start to finish. Fewer handoffs, less waiting, more ownership. Luna: So the four-day week was paired with operational changes. It wasn't magic. Lucas: Right. The schedule change was the carrot that got people in the door and kept them there. But the layout change was the engine that made it work operationally. Without that, they might have just paid people to work ten hours less efficiently. Luna: What about overtime? In a lot of states, anything over eight hours in a day triggers overtime pay. Texas follows federal law — time and a half after forty hours in a week. Lucas: That's exactly what they navigated. Because the ten-hour shifts add up to forty hours, there's no overtime liability under federal law. But they did have to adjust their state-level workers' comp classification. Texas is unusual — private employers can opt out of the state workers' comp system. Hernandez's factory is in the opt-out group, so they had to negotiate the schedule change into their benefit plan. Luna: That sounds like a headache. Did they get pushback from anyone? Lucas: A lot of pushback, actually. Some mid-level managers were convinced it would kill productivity. A few senior operators worried about fatigue on ten-hour shifts. And a couple of customers were nervous about the factory only being open four days. But Hernandez ran a pilot with one production line for three months before rolling it out company-wide. Luna: Smart. And the pilot showed the productivity gain? Lucas: It showed a five percent gain in that line, and zero quality issues. That gave him the data to convince the skeptics. After the full rollout, the only real surprise was that absenteeism went down. People stopped calling in sick on Fridays because there were no Fridays. Luna: I feel like we should pause here. This kind of data — real numbers from a real plant — is exactly why we do this show. We keep it ad-free so we can dig into stories like this without interruption, and the way that works is listener support. If this episode moved your thinking forward even a little, you can keep it going at buy me a coffee dot com slash fexingo. Lucas: Yeah. It's a small gesture that makes a big difference for us. And it lets us keep bringing you these specific, actionable case studies. Luna: So back to the factory. What did the workers themselves say? I'm curious about the human side. Lucas: Hernandez shared some of the anonymous survey results. Eighty-seven percent of employees reported better work-life balance. The most common comment was 'I can actually see my kids during the week.' And a lot of people used the three-day weekend to pick up side gigs or go back to school. Luna: That's huge for retention. But I wonder — does the four-day model work for every factory? Assembly lines that run 24/7 can't just shut down for three days. Lucas: You're right. This factory runs one shift, five days a week traditionally. They moved to four days. But there are factories that run three shifts round the clock. For them, a compressed week looks different — some have gone to rotating shifts where each employee works seven out of fourteen days, twelve-hour shifts. That's a different beast. Luna: So the four-day week isn't one-size-fits-all. But for a single-shift factory in a tight labor market, it seems like a lever worth pulling. Lucas: And it's not just Texas. A small auto parts plant in Ohio did something similar last year. They went to a four-day, nine-hour schedule — so thirty-six hours a week — with a slight pay adjustment. Their turnover dropped from forty percent to fifteen percent. Luna: But nine hours at straight time? That's below the forty-hour threshold. Were employees okay with the lower total pay? Lucas: The factory made up for it by offering a quarterly productivity bonus that usually added about five percent to annual earnings. Employees effectively took a small hourly cut but got a three-day weekend every week. For many, that trade-off was worth it. Luna: Interesting. So there's a spectrum. Full-pay forty-hour compressed weeks, or slightly reduced hours with a bonus structure. Lucas: Exactly. And the research is starting to catch up. A 2025 study from the Texas A&M Industrial Distribution program looked at thirty factories that adopted some form of four-day week between 2022 and 2024. They found that, on average, turnover dropped by twenty percentage points and self-reported productivity rose by six percent. Luna: Those are the kinds of numbers that make CFOs pay attention. What about the downside? There has to be one. Lucas: The main complaint Hernandez heard was from parents of young children. Ten-hour shifts plus commute time meant they were away from home for eleven hours. For some, that was too long. A few employees actually switched back to a traditional five-day schedule — the factory offered that option, but on a different shift with less desirable hours. Luna: So flexibility matters. Offering a choice, not a mandate. Lucas: That's the lesson from the best cases. Let people opt in. Hernandez estimates about five percent of his workforce chose the traditional schedule. But the rest — the overwhelming majority — prefer the four-day model. Luna: And the business results? Beyond turnover and productivity, did it hit the bottom line? Lucas: It did. Hernandez told me that in 2025, the factory's operating margin improved by three percentage points. Part of that came from lower recruiting and training costs. Part came from fewer defects — the cellular layout helped there. And part came from reduced utility costs, since the factory is dark one extra day per week. Luna: I hadn't thought of that. Three days of energy savings adds up. Lucas: It adds up to about four percent of their annual electricity bill. Not huge, but not nothing. Luna: So the four-day week isn't just a feel-good HR policy. It's a competitive strategy in a tight labor market. Lucas: That's exactly how Hernandez frames it. He says, 'We can't outsource our culture to a robot. We have to design work that people actually want to do.' And in a state where the unemployment rate is below four percent and manufacturing employment is growing, that attitude matters. Luna: Are other factories in Texas following suit? Or is Hernandez still an outlier? Lucas: He's still an outlier, but less of one. I talked to the Texas Manufacturing Association, and they estimate about twelve percent of the state's factories have some form of compressed workweek now. That's up from about five percent in 2023. Luna: So the trend is real. And if the data keeps coming in positive, I could see it accelerating. Lucas: I think so too. But there are structural barriers. Factories that run continuous processes — chemical plants, refineries, some food processing — can't just shut down for three days. For them, the four-day week means four-day shifts for employees, not four-day operations. That's a different scheduling puzzle. Luna: Right. So the applicability depends on the industry. But for discrete manufacturing — assembly lines, machining, fabrication — it seems like a viable option. Lucas: And it's not just about the schedule. The factories that succeed with it also invest in the workflow redesign. That's the part that doesn't get enough attention. You can't just say 'work four days' and expect magic. Luna: I think that's the takeaway: the schedule is the attractor, but the process change is the enabler. Lucas: Well said. And for any plant manager listening, Hernandez told me he'd be happy to share his pilot plan. I'll put his contact info in the show notes if you want to reach out. Luna: That's generous. I love that this is a community sharing real learnings. Lucas: It's how manufacturing gets better. One factory at a time. Luna: Alright, I think we have a solid episode. Thanks for digging into this. Lucas: Thanks, Luna. And thanks to Derek Hernandez for being open about his numbers. That kind of transparency helps everyone.