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Unformatted text preview: ~‘-—..... vvv-mv‘m ‘IAVL‘yna, pun. Luavnunu.» 1v, nvuJ. INDUSTRY FOCUS Fickle Consumers Force Auto Makers to Be More Flexible Toyota, Honda, GM and Others See Need to Equip Plants for Variety of Vehicle Types By NORIHIKO SHIROUZU Staff Reporter of THE WALL STREET JOURNAL EDETROlT—Auto makers are taking big ps closer to their dreams of making fac-_ ‘es nimble enough 'to switch within a few weeks from building one kind of car to another, the better to keep pace with fickle consumers. At Toyota Motor Corp. 5 big George- town, Ky., car factory, managers and work- ers have high hopes for the freshly rede- signed Camry family sedan. But just in case, sales fall short, the Japanese, auto maker has overhauled the plant so it could produce a variety of vehicle types, such as dar-trurk- crossover vehicles. - “The most important piece of our efforts is flexibility, ”said Gary Convis, head of the manufacturing operation. By refitting, as- sembly lines around the world to have com- mon assembly equipment and layouts, “we can build basically any vehicle type, ivhether a passenger car or a tall S Without going through a major retooling of the plant. He said the Kentucky plant is the - seventh Toyota plant and the first outside Japan toundergo the makeover. ,' If Mr. Convis’s plant wanted to switch in a car-truck crossover because of slow sales of its existing model, the plant could now do that in as little as six months. It used to take two years of so to prepare for such a move, Mr. Convis said. Quick-Change Artists Toyota isn’t alone in pushing to make its vehicle plants into quick—change artists. Blonda Motor Co. says its plants can put a newmodel into production in as few as three months. General Motors Corp, too, is pashing to create flexible “quick response” assembly plants, as are other rivals. “They’re spending a fair amount of money to build in flexibility in their plants,” said GM Vice Chairman and Chief Financial Officer John De‘vine. “They want the ability to get to customers Keeping Options Open Honda’s shipments of CR—V’s to North America were originally going to come entirely from Japan, but the company decided to shift about 50% of production to Britain to help out a struggling plant there. Honda also decided to make 15,000 for-North America Civic hatchbacks in Britain to further help the UK. plant. More than 60,000 CR-V’s 1 5,000 Civic hatchbaCks ..-' ..- -------- ................ Japan North ‘America United Kingdom ANNUAL ' ANNUAL - ANNUAL PLANT cAPAcITv PLANT CAPACITY PLANT cAPAch Suzuka 500,000 MarySville, Ohio ’ 440,000 Swindon* 250,000 Sayama 500,000 East Liberty, Ohio 240,000 *Refiects increased capacity of 00,000 per year from second Other plants 200,000 Alliston, Ontario 350,000 assembly line opened Summer 2001 Total: 1.2 million vehicles Total: 250,000 vehicles 1.03 million, vehicles Total: Source: the company very quickly. When they spend money like that, you pay attention." Mr. Devine added that right now, GM isn’t spending as much on flexible manufacturing systems as its two main Japanese rivals. Mr. Convis and his lieutenants aren’t sharing the blueprints of the new Toyota system, but they give a verbal sketch of what their revamped factories now look like. Much of the standardization of equipment, they said, is happening on the line where steel body panels are welded together. For instance, Toyota is able to fit 16 new welding robots—reprogrammable, more compact, and standardized across different ’lbyota plants—in one stretch of the body-as- sembly line at its Kentucky plant. Previ- ously, only eight welding robots would fit in the same area. That is a net space-saving of 50% and a significant boost in welding effi- ciency, Mr. Convis said. One motivating factor behind Toyota’s decision to boost the Kentucky plant’s flexi- bility is fear of rapidly changing consumer tastes. Many American consumers have been ditching traditional sedans to embrace car-truck hybrids such as the Toyota High- lander. Keeping factories flexible enough to cope with such rapid change in tastes, Mr. Convis said, is a good defensive move. “You never know what people are going to want to buy," he said. Toyota’s rival, Honda, knows this well. The Japanese auto maker, which has trans- formed several plants in Japan, Canada, the United Kingdom and the U.S. since the late 1990s, has been struggling to keep its plant in Britain humming because of weak sales in Europe. As sales fell 23% in the year ended March 31, Honda’s only Euro- pean car-assembly factory in Swindon, En- gland, which has capacity to. produce 150,000 vehicles a year, produced just- 76,500 vehicles, or 51% of the capacity. Making matters more complicated, a second assembly line opened in Swindon this summer adding capacity for an addi- tional 100, 000 vehicles a year The prob- lems at Swindon contributed to Honda post- ing a pretax operating loss of 55. 5 billion yen ($459 million) for its European opera- , tions for the year. Increasing Flexibility Honda executives say investments in making the Swindon plant more flexible will help fix the situation. As part of a European overhaul, Honda has said it will start produc- ing later this year the redesigned CR- V ‘ small sport-utility vehicle, and later a hatch- back version of the Civic in the U.K., both intended in part for export to the U.S. Though still tentative, Honda expects to ex- port 100,000 such vehicles a year from the UK. to markets around the world, including more than 60,000 CR-Vs and 15,000 Civic hatchbacks to North America. The timing of the manufacturing re- vamping was nearly perfect, if accidental, said Koki Hirashima, head of Honda’s manufacturing in North America. Honda was “running out of capacity in Japan and North America,”'thanks to brisk sales in both markets, he said. Honda hopes to reap economies with- out scale by doubling its speed and effi- ciency in manufacturing cars through its new flexible manufacturing strategy, he said. Honda has cut the investment in re- tooling to put a new model into production by more than half, thanks to the new sys- tem, he said. ...
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