DaimlerChrysler Chrysler arm has trimmed about $US3 billion from projected manufacturing costs, allowing it to add two vehicles to its five-year new product plan, a senior company official told Reuters during a tour of a Canadian plant in Windsor, Ontario, on Wednesday.
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Reuters said the vehicles new vehicles will be on top of the approximately 30 new or redesigned models Chrysler plans to introduce over the next five years at a cost of $30 billion. The savings will come mostly from using factory tooling longer and setting up plants to build more than one model on the same assembly line, the news agency added.
The unspecified vehicles added to the plan would come by 2006, Reuters said.
Ewasyshyn told Reuters that the $3 billion saving would come mostly from tooling and facility costs.
Reuters said that, in the past, vehicle makers typically replaced all the factory tooling when vehicles were redesigned every five or six years.
But Chrysler was now expecting 10 years to 25 years of life from its machinery and the company has already said it was expecting to save $197 million this year alone through such changes, Reuters added.
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By GlobalDataEwasyshyn and other Chrysler officials told Reuters greater plant flexibility in Windsor would save about $100 million alone in the costs of launching the new Chrysler Pacifica ‘crossover’ wagon.
Instead of shutting down the assembly line to start building a new model, or building an all-new line, Chrysler will build Pacificas on the same line used for Dodge and Chrysler minivans, even though they share few components, Reuters said.
When Pacifica production begins early next year, Reuters said, the plant will continue to build 1,325 vehicles a day, slowly adding Pacificas until they account for a third of production, and the plant can then shift between Pacificas and minivans depending on demand.
“You want to maximise revenues and maximise production,” Ewasyshyn told Reuters. “The longer you’re off-line, the more money you’re losing.”
Reuters said Japanese car makers have had such factory flexibility for years, and have used it to build a cost and quality advantage over Detroit’s Big Three. In particular, Reuters noted, Honda has designed its plants and vehicles so that any assembly plant can theoretically build any of its vehicles from the Civic hatchback to the Odyssey minivan.
Thanks to incentives for new vehicles pushing down prices and profits, Detroit has recently turned to improved factory flexibility as a major way to cut costs and improve earnings, Reuters said.
