During a global productseminar in Fayence, France, GM executives laid out their common vision of how to use the corporation's massive size to competitive advantage. By Gary S. Vasilash, Editor-In-Chief, Automotive Design and Production.
As Rick Wagoner, General Motors chairman and CEO, sees it, there is "no one correct, evolutionary path" in the auto business because each company's antecedents are different. In the case of General Motors, the roots of the corporation (founded in 1908) are just that: general, as in wide-ranging. That is, GM is fundamentally the result of the accumulation of disparate companies brought together so that there was—and still is—in the phrase of Alfred P. Sloan (GM president, 1923-37; chairman, '37-'56), "a product for every purse and purpose." While many people in North America think of GM in the context of its current Chevrolet, Pontiac, Buick, Saturn, GMC, HUMMER, and Cadillac divisions (and brands), there are other GM organizations in other parts of the world, and in North America, too. Saab, which is synonymous with "Swedish auto builder", is a GM company. As are Opel, Vauxhall, Holden, and, most recently, GM Daewoo. Historically, at one point or another, each of these companies played its own game. In effect, there were cases (or standard business practices) wherein the goal for a given organization was to optimize its own individual position in the market. Which didn't necessarily serve the greater good of the general organization.
The Manufacturing Game.
A way to think about this is through the analogy of what was occurring in GM manufacturing plants prior to 1996. Before '96 there was the tendency for a manufacturing plant's leaders to want to do things in the way that (1) they'd always been done at the plant or (2) in a way that was financially and productively beneficial to that particular plant. It didn't much matter if another plant was making a similar (or the same) product and was doing something distinctly differently—and doing it much better. A plant's leaders would just go their own way.
But in 1996, Gary Cowger, now president of GM North America (and Global Process Leader for Manufacturing, which he laughingly refers to as his "night job"), began what continues to be an on-going, resolute program of fully implementing the global GM Manufacturing System (GMS). Admittedly, GMS is a variant of the Toyota Production System (GM has a joint venture with Toyota in Fremont, CA, NUMMI (New United Motor Manufacturing Inc.), so the experience with the Toyota system is direct, not second-hand or learned from a seminar or book). But what is keenly important is the fact that GMS represents a common, unified way to work. It transforms the multitudinous ways of manufacturinginto a single method, one based on the same set of principles (people involvement; standardized work; built-in quality; short lead-time; continuous improvement) everywhere GM manufactures. Commonality is key.
Further bolstering this are the Bill of Process—which effectively describes and defines how products are to be manufactured (i.e., A-B-C-D, not A-D-C-B or some other formulation)—and the Bill of Equipment—which describes and defines the equipment and machinery to be used based on the determination of best practices. (It shouldn't be thought that the Bill of Equipment is a regime that has the same equipment installed everywhere: Cowger indicates a nine-box matrix. The vertical axis is labeled "Production Rate." The horizontal axis is labeled "Labor Rate". Each is measured as low, medium or high, thereby creating the nine boxes, with 1 in the lower left-hand corner and 9 in the upper right. This means where there is low production and low labor rates there will be the least implementation of automation; where there is high production and high labor rates, there will be the greatest amount of automation. So whereas there may be manual assembly equipment used in facilities wherein the situation is measured as a 1, at a plant where the measures are 9, the equipment will certainly be heavily automated—perhaps even going toward hard automation rather than flexible, although one of the tenets that they're working toward in GMS is flexibility.)
|GM'S FOUR-POINT PROGRAM|
|According to GM chairman and CEO Rick Wagoner, GM has been following a four-point business strategy for the past few years, one that it will continue to pursue, but with increased vigor:|
|1. Introduce more new vehicles around the world|
|2. "Continue to be very aggressive in the market place" so as to grow in all global regions|
|3. Improve quality and productivity|
|4. "Generate cash to fund our future product programs."|
|Wagoner says that these efforts are being driven by its approach of "increasingly acting as 'one company.'"|
|GM vice chairman-Product Development and chairman-GM North America Bob Lutz on what's required: "At GM, we know we need to be among the top products in all major segments—in value for money, quality, customer satisfaction, technology, refinement—in everything."||GM chairman and CEO Rick Wagoner on the approach the company is taking to compete in all global markets: "Our focus is on leveraging our capabilities, on using our best ideas, products, and what we've learned from around the General Motors globe, and embracing those ideas to do the best job we can in our local markets." They're working to create global vehicle platforms that can then be tailored to meet local requirements.|
What the commonality of process does, when coupled with a global vehicle architecture strategy and an emphasis on putting flexible manufacturing tools in the plants (e.g., C-Flex that allows such things as building different doors in a single line and Tru-Flex, which allows the production of different underbodies on a line) is provide GM with the opportunity to shift production from one plant to another in a comparatively seamless, fast, and economical manner. In this way, playing the same game within the organization as a whole—from plant to plant to plant around the world—provides GM, the largest vehicle manufacturer in the world, with a competitive advantage. What Rick Wagoner is talking about is this same sort of thinking applied to other aspects of the organization. The game is changing at GM. As the former Duke Blue Devil roundballer puts it, "We're playing our own game—taking advantage of our own unique heritage and strengths to grow our business all around the world."
|GM POWERTRAIN: A GLOBAL FOOTPRINT, BUT FAST ON ITS FEET|
|GM Powertrain, observes, Tom Stephens, its group vice president, has 91 facilities in 14 countries and employs more than 72,000 people. They're producing some 43,000 engines and 40,000 transmissions per day (with the difference between the two numbers being absorbed by engines for applications including boats and gen sets).
Between 2002 and '04, GM Powertrain has been aggressively launching new products through the world. For example, in Europe it brought out 16 new engine variants—including a 1.7-liter diesel for the Opel Astra, which Stephens claims is the first to meet Euro IV standards—and 71 new engine/transmission combinations. In North America it planned to launch 20 new engine variants and did (including the 400-hp, 400-lb-ft 6-liter LS2 for the C6 Corvette and GTO).
Going forward, they are being increasingly aggressive. "If you average the number of new engine variants we're bringing to market during the next three years, we'd average more than one new engine variant per month," Stephens says. The plan calls for more than 40, including a 2.8-liter V6 turbo, part of the corporation's global V6 engine family; its first application will be in the '06 Saab 9-3. There will also be a new front-wheel-drive 5.3-liter Gen IV V8 with displacement on demand, which will be the first engine based on the small block V8 architecture developed for front-drive, transverse mounting.
In the realm of transmissions, the focus going forward is on six-speed transmissions. "By 2008," Stephens says, "GM will be producing more than one million six-speed transmissions per year." The plan calls for 10 new six-speed variants within the next five years, including a compact front-wheel-drive unit being jointly developed by GM Powertrain and GM Daewoo for small cars and SUVs; it will have a maximum engine torque capacity of 258 lb-ft.
Cutaway model of the 2.8-liter turbocharged engine that will debut in the '06 Saab 9-3. According to GM Powertrain group vp Tom Stephens, the organization will roll out with 50 new powertrain variants by the end of the decade, including an array of engines and numerous six-speed transmissions.
Architecting the Globe.
"We're making our size work for us," he says. Essentially, GM has a vast array of resources. If these resources are operated as individual units, even though there may be localized optimization, other parts of the organization are not benefiting as much as they could be. The only way that there can be sharing is if there is an infrastructure in place whereby the ideas, approaches and methodologies can be communicated. Recognizing this, GM is being restructured. The resources are being leveraged so that while there can be local "wins," as in products for one's own market being designed, engineered and produced, these local developments can be deployed elsewhere in the world to great benefit.
Perhaps the best example of this is the "architectural" approach that is being taken in vehicle development. Consider, for example, the "Epsilon" architecture, which serves as the basis for the mid-sized Opel Vectra, the Saab 9-3, the Malibu, the Malibu Maxx, the Pontiac G6, and a forthcoming Saturn model. In the case of the Opel, Saab and U.S. products, there were representative leaders from each region, known as "vehicle line executives," each of whom worked toward the common goal of a single architecture, yet who worked to get the characteristics built in that would be singularly beneficial. Now there is a "global" VLE for midsize cars, Rüsselsheim, Germany-based Jon Lauckner, who is responsible for the overall development of the next-generation Epsilon. He talks about how one of the things that he's doing is assuring that this platform will be more standard, yet which will provide "bandwidth" that will accommodate differentiation (e.g., position of the A-pillar and angle within a set parameter) between models. The point is not to create some so-called "world car," as Wagoner and his colleagues believe that this simply doesn't work: local tastes are important. But what it does do is permit the leveraging of everything from engineering resources to equipment specification (imagine the benefits accruing to the corporation if the same equipment needed to produce Epsilons is consistent from one continent to another—within, of course, the constraints of the labor/production grid).*
|HOW THE GAME IS BEING PLAYED|
|Although the game metaphor is used by GM executives, if this is a game, it is like a cross between figure skating and a tough man competition. It must be executed with finesse yet is brutal out there in the market. For competitors in the major markets, GM's efforts are resulting in a more-resilient competitor. It continues to be the number-one vehicle manufacturer in the world and in several parts of the world, too, including North America and South America. In Europe, the corporation, says GM chairman and CEO Rick Wagoner, is "gaining share. . .but still losing money." Initiatives in Europe, including restructuring and selling products from GM Daewoo as Chevrolets, are targeted at increasing revenues. In China, the growth continues (in '98 it had less than 1% market share; it now has more than 9%), and it is adding Cadillac to the Buick and Chevrolet marques that are now available in that country.
With the emphasis on both flexibility and commonality through architectural designs, the situation for suppliers will continue to be demanding. Wagoner points out that there is a single worldwide purchasing organization rather than the multitudes that existed not all that long ago. The objective of this consolidation is to leverage the size of the corporation so as to get, in effect, volume discounts. GM North America president Gary Cowger describes this as "global throw power," and notes that a recent global sourcing of robots led to a 45% cost reduction and a global purchase of conveyance resulted in 60% reduction. "That's what the power of 'common' is," Cowger remarks.
Focus for Strength.
There are resources that the corporation has with regard to engineering that can be used Archimedes-like, as well. Jim Queen, vice president, GM North America Engineering, explains that since 1992, GM North America has gone from a situation wherein there were separate engineering groups for 12 different operations (Truck; Flint Automotive; Cadillac; Rear Wheel Drive; Midsize; Lansing Automotive; Saturn; Current Engineering; Advanced Engineering; Design; Advanced Manufacturing; Powertrain) to the situation today where there are two: North American Engineering and Powertrain. One of the benefits of this approach is that between '96 and '02 engineering costs were reduced by 40% and throughput was increased by 33%. So the push now is to take full advantage of the engineering resources that GM has on the globe: Warren, Michigan; Oshawa, Ontario; Toluca, Mexico; Sao Paulo, Brazil; Millbrook, England; Trolhattan, Sweden; Rüsselsheim, Germany; Port Elizabeth, South Africa; Bangalore, India; Melbourne, Australia; Seoul, Korea (GM Daewoo); and Shanghai, China (Pan Asia Technical Automotive Center). In addition to which, GM has four alliance partners that also supplement its engineering capabilities: Fiat in Turin, Subaru in Mitaka, Suzuki in Hamamatsu, and Isuzu in Fujisawa. Once again, the issue here is to accommodate local tastes while providing the platforms from which there can be global advantage. "We have created a Global Engineering Council and a Global Design Council," says Robert A. Lutz, GM vice chairman-Product Development, and chairman, GM North America. "We have knitted our worldwide product development centers together more closely." But even with that, Lutz knows that local distinctions matter. So the Australian-developed Zeta architecture that serves as the basis of the Holden Monaro was modified to become the Pontiac GTO for the U.S. market: local tastes, global leverage.
That's the game for GM.
*Other GM architectural platforms include: Kappa, small rear-wheel drive (RWD) that will be used for the forthcoming Pontiac Solstice; Sigma, the RWD platform used for the CTS, STS, and SRX Cadillacs; Theta, used for the Saturn VUE and Chevy Equinox; Zeta, the midsize RWD platform used for the Holden Monaro and Pontiac GTO; Delta, for the Chevy Cobalt and forthcoming HHR.