News (Stellpower)

USA vs Japan: plant changes for a new Chrysler (1989-94)

By the late 1980s, it was clear to pretty much any American that domestic automakers were in trouble while the Japanese were rapidly gaining ground. At that point, the main German automaker in U.S. sales was Volkswagen, and they had already started losing ground with the renaming of their most popular car from “Rabbit” to the globally-correct but far less catchy “Golf.”

Windsor Assembly Plant

Chrysler executives knew there were problems, and were working on resolving them. Purchasing AMC in 1987 was a major step forward, since, like the Japanese companies, AMC developed cars using cross-functional teams; that system was not yet in place, but would soon produce the Dodge Viper and, perhaps more important, the big LH cars and then the 1994 Dodge Ram 1500, the pickup that changed the industry.

In the midst of the engineering process changes, a group of people met to discuss how to handle plant changeovers. By October 1989, they had researched the Japanese approach and compared it with the American approach—using, among other examples, Toyota’s Kentucky plant in Georgetown. Chrysler had already started talking with Toyota about reviewing the facility itself.

The working group, led by Al Bosley, noted that Japanese companies reduced downtime through a number of methods:

They had a stable long-range product plan, which allowed them to develop (and keep to) master timing schedules.
They tried to keep new vehicles within the manufacturing envelope of the current plants.
Their engineering was precise enough to avoid product or process changes between engineering and manufacturing.
The supplier base was small but dedicated, compared with American companies; and, as Chrysler later did with SCORE and the Extended Enterprise, suppliers were given opportunities for higher profit in return for loyalty and help.
Vehicles were developed using modules, which could be built elsewhere and installed in the final assembly plant, simplifying matters and making substantial changes less frequent.
Plants were designed from the start with parallel systems, duplicate tooling, and idle stations, so that the plant could make one model while piloting another (a facility Chrysler later gained). Toyota had both dedicated and flexible lines, the former to minimize costs. Mitsubishi used idle stations so they could install and try out new tooling while the older versions were running. The new design had to fit into the factory’s process envelope for that to work; they couldn’t run Corollas and try out Tundras.
Japanese companies tended to keep the same platform, but reengineer systems within it, to reduce plant changeover time and cost.
New technologies were introduced when ready, rather than waiting for new models. Mitsubishi, as one example, scheduled three one-week downtimes per year or so to deal wtih such changes.
Obsolete and worn-out equipment was replaced when needed, rather than at the last possible minute (a policy Chrysler never really did get the hang of); robot controllers were updated every five years, and robots replaced every ten.

Chrysler, in contrast, replaced models completely every six to ten years, with facelifts in between; successor models were designed without much thought as to existing manufacturing envelopes, so there was little flexbility. In addition, worn and obsolete systems were all changed at once, which meant that changeovers took extra time and capital. Chrysler had made some progress with the use of modular framing, adding the Imperial to Belvidere with only two weeks of downtime, and being able to make one model while changing out another at Warren Truck (which made two different vehicles; one could keep running while the other was replaced).

The company planned to introduce a new, Japanese-style process as brand new vehicles were introduced: with the Grand Cherokee (ZJ) at Jefferson North, with the LH at Brampton/Bramalea, the Neon (PL) at Belvidere, the JA (cloud cars) at Sterling Heights and Newark (DE), and the new minivans (S) at Windsor and St. Louis.

The new Chrysler process included several new features:

Facility stations were independent from product stations.
Process stations were independent of the layout.
A parallel process system was launched, which could make from 1 to 4 models at a time.
These changes meant that changeover could take place in one week or less.
Independent pallets would be used to convey vehicles, removing restrictions on vehicle size.

The team estimated that capital investments would be cut by up to 40%; changeover costs would be around half the original investment for similar models, though 70-80% of the original investment for very different models. Quality would also be increased by using more robots.

Aside from plant changeovers, Bob Lutz and Tom J. Osborn agreed that the company would look into supplier relationships in the early 1990s; one part of this was relying more on suppliers to engineer components, so they could cut in-house engineering costs on their new small car. This was essential to make a profit in a segment where no American company did—indeed, GM, Ford, and Chrysler all lost thousands of dollars on every Cavalier, Escort, and Shadow they sold. The new small car, the Neon, would actually have thousands in profit per car, even after unexpectedly high warranty costs; but that’s a story for another page.

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Books by MoTales writer David Zatz