GM takes its time in planning new line
The company first must decide what type of vehicle will be made at the plant.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
LORDSTOWN -- General Motors seems ready to approve a $500 million overhaul of the Lordstown Assembly Plant, but it has one question to answer first -- what will be built there?
"What kind of a small vehicle they want to build is uncertain," said David Cole of the University of Michigan. "They can build a plant faster than they can plan that vehicle."
A top GM official said this month that GM is considering giving its small-car lineup a hatchback and a cross-over vehicle, which would be combination minivan-car.
As soon as the lineup is decided, the investment in Lordstown will be announced, said Cole, who is director of the school's Office for the Study of Automotive Transportation.
Raising profits: GM is taking its time because it wants its new small cars to be profitable, which its current small cars aren't, and it wants them to match the success of the Chrysler PT Cruiser and Ford Focus, which provide an ample amount of space affordably, he said.
Lordstown plant and union officials have been working for years to get a new product to prevent GM from closing the plant. Herman Maass, who just retired as plant manager, said in January he expected a decision by June.
John Mohan, a union official at the plant, said he expects an announcement soon but couldn't predict when because of the uncertainty with small car designs and the weaker economy. GM recently said it was delaying the start of construction of a new plant in Lansing, Mich.
Mohan said, however, all indications are that GM will approve the overhaul of the plant, which makes the Chevrolet Cavalier and Pontiac Sunfire.
He said one of the best signs was Ron Zarella, president of GM North America, saying the next small-car sedan will be similar to the Opel Astra, which is sold in Europe, but other designs may be needed to add pizzazz.
"His saying that GM absolutely will be in small cars is a good sign because we weren't sure they were a few months ago," said Mohan, shop chairman of United Auto Workers Local 1112.
He said the plant redesign proposed by union and plant officials calls for the assembly line to be flexible enough to build more than one type of vehicle. Building a hatchback or a cross-over vehicle in addition to a sedan would be good because it would require more workers than just a sedan would, he said.
Considerations: Other possibilities exist, however. A small truck, for example, would require fewer workers because trucks have less content to assemble, Mohan said. GM has talked about having the remodeled plant ready in 2004.
The unknown product makes it impossible to say how many people would be employed at a remodeled plant, Mohan said. It definitely will be less than the 4,400 hourly workers on the job now, he said.
Dropping numbers: The plant employed as many as 7,500 workers before renovations in 1995. Fewer workers were needed because of increased automation and improved engineering of parts.
The number has continued to drop in recent years because of retirements. About 700 workers retired last year, and hundreds more are expected to retire this year.
Mohan said the work force won't fall as low as 2,500, which was the number GM talked about three years ago when it was considering building a new assembly plant in Lordstown. The new plant would have put together large sections of the car, called modules, built by outside suppliers, which would have employed about 2,500 at a nearby suppliers park.
While GM declared that idea dead in 1999, it is still pushing for increased use of outside suppliers, Mohan said.
The UAW's national labor contract allows GM to move work outside the plant, but it first must allow the UAW to make a counterbid to keep the work. He said Local 1112 is counterbidding on work about twice year, although the number varies.
Usually, GM wants to move small parts, but now it's trying to move engine preparation work, which includes installing alternators, hoses and other parts. About 200 people now do that work inside the plant.
This is the largest proposed outsourcing at the plant since GM and the UAW agreed to move seating work and 300 workers outside the plant in 1993.
The current proposed outsourcing involves Android Industries of Michigan, which has received a local tax abatement to open a plant in Vienna to do the engine work with 185 nonunion workers. Android doesn't have a contract yet with GM.
Not worried: Mohan said he doesn't think the talks with Android are a signal GM intends to move large amounts of work outside the plant. The Android deal is proposed because one of the plant's departments must be moved out of the plant for the remodeling to begin, he said. Moving a department is necessary to keep production running while the plant is reconfigured, he said.
Once construction is complete, GM has agreed to consider bringing back the work that left the plant or other work with a similar number of jobs, he said. It hasn't been decided what department will be moved out, he said.
Cole said modular assembly is a key way to bring down manufacturing costs, but not just because of the labor savings between UAW wages and those of an outside supplier.
Building a section of the car, such as a cockpit, off the assembly line improves the quality because its built in a more controlled environment. With better quality, warranty claims go down, which is a huge cost saver, Cole said.
The modular work can be done in the assembly plant as well as by a supplier, he said. The design of the system is the important factor, not who does the work, he said.
Mohan said moving the assembly of the cockpit, which could include brake and gas pedals as well as instrument panel, may be part of the remodeled plant, as well as doors-off construction. With this technique, doors are put on the car at the end of the line, which makes assembly easier because workers don't have to walk around open doors.
World class: Such changes are part of a plan to get the plant down to world-class quality in terms of productivity.
The plant took an average of 28 labor hours to build a car in 1999, according to the latest study by Harbour & amp; Associates, a Detroit consulting firm. That left Lordstown seventh among 10 subcompact plants in North America and 28th out of 44 plants overall.
GM wants to reduce that number to 15 hours per car with the remodeled plant, Mohan said. That would make Lordstown the most productive plant in North America, according to the 1999 statistics. Four plants led the rankings with averages of 17 hours per car.
Cole said he thinks 15 is a reasonable goal for the remodeled Lordstown plant. He said improved worker training and better understanding of when to use robots and when to use people will allow automakers to push the number lower, however.
"The new standard will get closer to 10, but that will happen later on. It will take a while," he said.