Automotive News - October 27, 2008 - (Page 14) 14 • OCTOBER 27, 2008 What flexibility is and what it isn’t The purpose is to react quickly to market changes Laurie Harbour-Felax The auto industry and the U.S. economy are enduring hard times. Consumer confidence is down, fuel prices are going up and down, and a major credit crunch is under way. Consumers realize that they cannot control the economy and have begun to modify their vehicle-buying habits. Many are not buying vehicles during this tough time while others are moving quickly from big, gas-guzzling trucks to cars and crossovers. The vehicle mix will likely never be the same for consumers or manufacturers. As consumer preferences change, manufacturers must be able to react and react quickly. Demand for small, fuel-efficient cars and crossovers is strong, but more than 50 percent of the Detroit 3’s capacity is in trucks. So what’s the challenge? Just convert plants to cars and begin meeting demand, right? Unfortunately, it’s not that simple. To meet consumer demand, vehicle makers must retool their assembly plants quickly, and that is not possible because of the Detroit 3’s lack of flexibility. Flexibility is commonly misunderstood. Simply, it is the ability to manufacture any vehicle in a company’s lineup in one assembly plant through the same system and within cycle time. For example, it would be flexibility if Chrysler LLC could produce the Dodge-Chrysler minivan, Chrysler 300, Dodge Caliber and Chrysler Sebring with the same equipment; if Ford Motor could make the Ford Fiesta, Taurus, Edge and Escape together; or if General Motors could make the Buick Enclave, Cadillac CTS, Chevrolet Malibu, GMC Yukon and Pontiac G6 in the same system. EDITORIAL STAFF 313-446-0361 E-mail autonews@crain.com Web site www.autonews.com Keith E. 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To achieve flexibility, the following are essential: Common vehicle architecture: All vehicles and platforms must be designed to be assembled in the same order. Common assembly processing: Equipment and sequence of assembly operations must be the same in all plants. Training: Employees must be trained in common methods for design, engineering and manufacturing. Suppliers: They must be on board with common design and processing and must be able to react to volume and complexity. For years, many analysts have said flexibility is key to the long-term viability of vehicle makers and suppliers, but many companies didn’t take it seriously. Now as the market shifts, companies that can meet consumer demand will gain market share as North America grows back to 20 million units a year. The Detroit 3 now seem to have the right focus. Let’s hope it’s not too late. A worker at Honda’s East Liberty, Ohio, plant installs a steering wheel on a CR-V. The plant builds cars and light trucks on the same assembly line. were four Fiesta platforms? Chrysler LLC boasted that it had full flexibility at its plant in Belvedere, Ill. But the reality is that the Caliber and Jeep Patriot and Compass are on the same platform — there is no multiple-platform flexibility (i.e., Caliber and, say, the Sebring). GM was applauded for full flexibility on its seven full-sized light-truck plants in North America. Those plants are mirror images of one another, with common body, paint, assembly lines, tooling and processing. It was a huge achievement and represented a major cost reduction for GM. But now the market has turned, and those plants are limited to one platform: trucks. So what is true flexibility? Honda and Toyota can produce any vehicle in their lineups within their body, paint and assembly shops. For example, Honda of America Manufacturing makes the Honda Civic and Ridgeline and the Acura CSX and MDX at one plant in Alliston, Ontario. In East Liberty, Ohio, it produces the Honda CR-V, Civic and Element. Toyota Motor Manufacturing North America recently announced that it will move the Toyota Highlander, planned for its new Mississippi plant, to Princeton, Ind.; move all Tundra production to San Antonio; and begin building the Toyota Prius in the new plant in the South. Flexibility is part of the reason Toyota was able to do that and stay the course on timing. Thus, Toyota can react to consumer demand. Interestingly, Japanese automakers have not had to use their flexibility much in North America to this point because most of their models are in high demand and fill their assembly plants. But with the current changes in the economy, this may be more important for automakers, and Honda and Toyota have the ability to react quickly. Four essentials Honda tried out the flexibility theory a few years ago when demand for the Accord surged. In late 2004, Honda temporarily launched the Accord in East Liberty, Ohio, alongside the Civic, which is on a different platform. Honda accomplished it in little more than a weekend because it didn’t need to retool the factory; it just reprogrammed the robots. Honda produced Accords there for about three months with no problems. Each of the Detroit 3 has announced a plan to meet consumer demand by 2010 or 2011. Let’s hope that it’s not too late and that the automakers do not lose more market share — or, worse, that consumer preferences have not changed again and their systems can’t react. Why is flexibility so important? It’s not just the ability to react to consumer demand; it is financial. Any manufacturer can react quickly with an open checkbook. But flexibility means investment savings. What do you think? We would like to hear from you. Send a letter to the editor via e-mail (autonews@crain.com) or to the Detroit address near the top of the box at right. Here’s what we need. No more than 250 words Your name and title, company name if we can print it, city and state; or tell us about your connection to the auto industry Your phone number or e-mail address Your permission to print it What is true flexibility? None of that is possible today. Ford recently announced that it is moving to flexible, common plants throughout assembly and powertrain. Ford will reduce the number of platforms from 25 to nine worldwide and will cut the Fiesta from four platforms to one. How many people knew there Take a good look: Toyota is losing its halo Guido Reinking When senior executives of Volkswagen AG in Wolfsburg, Germany, said that VW intended to overtake Toyota Motor Corp. in global sales, profit and quality, more than a few industry watchers thought they had lost touch with reality. I was one of the skeptics. Overtake Toyota? The industry’s gold standard for productivity, quality assurance, efficiency and customer orientation — to say nothing of being global leader in profit and sales? Impossible! comment Guido Reinking is editor of Automobilwoche, a Crain publication that covers the German auto industry. In Germany, Toyota Motor’s sales are off 22 percent this year. In the United States, it has been hit even harder. Its U.S. sales collapsed 32.3 percent in September, worse even than the fall taken by sickly General Motors. For nine months, Toyota’s U.S. sales were down 10.4 percent. Contrary to popular perception, Toyota Motor’s dazzling growth during the past 10 years has been led by light trucks, not the fuel-efficient small cars and hybrids that are so associated with the Toyota brand. Sales of Toyota Motor’s large vehicles — SUVs, crossovers, pickups and luxury Lexus sedans — have more than doubled in the past decade. Competition helps That is why the current automotive crisis is hitting Toyota harder than many other manufacturers. Its profit is projected to decline http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - October 27, 2008 Chrysler dealers under GM? States would rule Survey: Worried dealers flee GMAC Va. dealers turn to local credit unions Anxiety over Chrysler: Deal or no deal? Ford, GM execs join panels looking at eco-friendly options Big pickups, SUVs gain share Chrysler will cut 4,300 salaried jobs by year end BMW seeks joint vehicle electronics effort Runkle: Give tiny suppliers a chance VW goal: 80% N.A. content for Tenn. plant April Wortham China's BYD plans U.S. hybrids Lucky Icahn lost Lear Mahindra's U.S. launch to get $60 million ad drive Toyota may renew no-interest loans Hesterberg, Thomson will address congress Desperate industry begs feds for help Hyundai dealers want ads to pitch favorable loans Toyota, GM top global r&d spending After Detroit 3 take back design, supplier sitting pretty Germany's Preh supplies F-150 ventilation part Buehler is Volt supplier Freescale: New infotainment chip Are they too big to fail? A goal for GM: Buy back full control of GMAC Tax credit would move domestic cars GMAC loan bonus is a bad idea Take a good look: Toyota is losing its halo What flexibility is and what it isn't Toshiba joins battery battle Personnel Hyundai slows Ala. output of Sonata, Santa Fe Picture this LaNeve: GM marketing budget faces '09 hit Hyundai counts on luxury, hybrid hopes Keogh: Audi belongs with top luxury brands Dealers Court overturns class-action status in Blue Oval suit 2 major lemon-law lawyers lose right to practice in Md. Auctions offer more online for just-in-time dealers Used-truck prices higher in September Lack of used Minis limits certified program Wood trim maker expects to avoid worst of woes VW: U.S. may get Scirocco after all Ford's new F-150 is built for jobs, not jaunts Think of it as GPS for tools Feds look at China-made valves on Ford tires Shareholder value tumbles in 3rd quarter Shareholder value tumbles in 3rd quarter Ford truck marketing exec: Hybrid pickup 'publicity stunt' Survey: Ford Motor reliability improves Chrysler heir: Get back to basics Farley has bright idea to boost auction action Kerkorian speeds away from autos Names familiar? NADA leadership is a family affair Mitsubishi bucks trend on profits New trade debate in the works? Beware the 'vital' deal Automotive News - October 27, 2008 Automotive News - October 27, 2008 - (Page Intro) Automotive News - October 27, 2008 - (Page Bellyband1) Automotive News - October 27, 2008 - (Page Bellyband2) Automotive News - October 27, 2008 - Va. dealers turn to local credit unions (Page 1) Automotive News - October 27, 2008 - Va. dealers turn to local credit unions (Page 2) Automotive News - October 27, 2008 - Chrysler will cut 4,300 salaried jobs by year end (Page 3) Automotive News - October 27, 2008 - VW goal: 80% N.A. content for Tenn. plant April Wortham (Page 4) Automotive News - October 27, 2008 - VW goal: 80% N.A. content for Tenn. plant April Wortham (Page 5) Automotive News - October 27, 2008 - Hesterberg, Thomson will address congress (Page 6) Automotive News - October 27, 2008 - Hesterberg, Thomson will address congress (Page 7) Automotive News - October 27, 2008 - Toyota, GM top global r&d spending (Page 8) Automotive News - October 27, 2008 - Toyota, GM top global r&d spending (Page 9) Automotive News - October 27, 2008 - Freescale: New infotainment chip (Page 10) Automotive News - October 27, 2008 - Freescale: New infotainment chip (Page 11) Automotive News - October 27, 2008 - GMAC loan bonus is a bad idea (Page 12) Automotive News - October 27, 2008 - GMAC loan bonus is a bad idea (Page 13) Automotive News - October 27, 2008 - What flexibility is and what it isn't (Page 14) Automotive News - October 27, 2008 - What flexibility is and what it isn't (Page 15) Automotive News - October 27, 2008 - Hyundai slows Ala. output of Sonata, Santa Fe (Page 16) Automotive News - October 27, 2008 - Picture this (Page 17) Automotive News - October 27, 2008 - Picture this (Page 18) Automotive News - October 27, 2008 - Picture this (Page 19) Automotive News - October 27, 2008 - LaNeve: GM marketing budget faces '09 hit (Page 20) Automotive News - October 27, 2008 - Hyundai counts on luxury, hybrid hopes (Page 21) Automotive News - October 27, 2008 - Keogh: Audi belongs with top luxury brands (Page 22) Automotive News - October 27, 2008 - Keogh: Audi belongs with top luxury brands (Page 23) Automotive News - October 27, 2008 - Dealers (Page 24) Automotive News - October 27, 2008 - 2 major lemon-law lawyers lose right to practice in Md. (Page 25) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 26) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 27) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 28) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 29) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 30) Automotive News - October 27, 2008 - VW: U.S. may get Scirocco after all (Page 31) Automotive News - October 27, 2008 - Feds look at China-made valves on Ford tires (Page 32) Automotive News - October 27, 2008 - Ford truck marketing exec: Hybrid pickup 'publicity stunt' (Page 33) Automotive News - October 27, 2008 - Ford truck marketing exec: Hybrid pickup 'publicity stunt' (Page 34) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 35) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 36) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 37) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 38) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 39) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 40)
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