Nissan team pushes a hemispheric approach

Recruits from Honda and Toyota expand company's horizon

Bill Krueger, right, Nissan's new head of manufacturing in North and South America, came to the automaker from Toyota. Nissan has recruited most of its North American executives from Ford.
SMYRNA, Tenn. -- Nissan Motor Co.'s new North American manufacturing management looks remarkably like its competition.

Nissan is preparing for a significant shift in how its U.S.-based business works. But in building its next-generation management team, Nissan has recruited from archrivals Toyota Motor Corp. and Honda Motor Co.

And at a time when CEO Carlos Ghosn is trying to stoke the fire on Nissan's bogged-down global revitalization, Nissan's Tennessee manufacturing team will go from North American to "hemispheric." The team's responsibilities will be stretched to include markets and factories across the Western Hemisphere.

Over the next two to five years, engineers in Smyrna will help launch vehicles in Brazil and Argentina. The group will coordinate with Nissan and Renault suppliers in Mexico and South America. They will buy parts in new markets, including Brazil, for vehicles made in Tennessee, Mississippi and Mexico.

Smyrna's product quality efforts will extend to Nissan and Renault operations in South America. They also will oversee South American plants that eventually will build Nissan or Renault vehicles for other markets, including the United States.

It's a different business model than Nissan has followed for the past 25 years of making vehicles in the United States. It is even different from the business model Nissan crafted in 1998 when the Smyrna company became Nissan North America Inc. and assumed oversight of Nissan's small plants in Mexico.

Ford and Toyota

To manage the latest evolution, even the cultural influences of Nissan's top U.S. managers have changed.

Since Nissan started building its first U.S. auto plant here in 1980, it has been guided by a team of executives recruited mostly from Ford Motor Co. In April, that dynasty ended with the retirement of Dan Gaudette as senior vice president of North American manufacturing and quality. Gaudette led the company through its lightning-fast expansion under Ghosn's original revitalization plan.

The new head of manufacturing to oversee operations across North and South America is a man recruited from Toyota just 18 months ago, Bill Krueger.

Krueger's ascension was unusual for a company rich in ex-Ford managers. Before his arrival, originally to run Nissan's Smyrna car and truck factory, the Wisconsin native had been general manager of Toyota's Camry/Avalon plant in Georgetown, Ky. Nissan recruited him to bring an outside perspective to the company.

"I'm coming in with a fresh set of eyes, looking at every role and every function in the company," says Krueger, who assumed his post last month. "I'm going to be asking a lot of questions."

Help from Princeton

Krueger is not Nissan's only high-level free agent.

A year before he arrived, Nissan also went head-hunting at Toyota to lure away Doug Betts, head of quality for Toyota's Tundra pickup plant in Princeton, Ind. Betts quickly ascended last year to the new job of senior vice president for total customer satisfaction. Betts' job is to tackle broad issues from the assembly line to the car dealership.

What triggered his move to Nissan, he notes, was the troubled debut of Nissan's $1.4 billion assembly plant in Canton, Miss. Ghosn scheduled Canton to launch five nameplates in just two years. Three of the vehicles were new to the company, including its first full-sized pickup, the Titan. The project was part of a $3 billion North American investment surge by Ghosn to help get a stagnant Nissan back into the game here.

But when the Canton lineup scored at the bottom of the industry on J.D. Power and Associates' Initial Quality Study and in Consumer Reports, Betts was hired with a free hand to change the way Canton performed. Using methods honed at Toyota, Betts installed new quality checks on the assembly line. In the body shop, he had wide-screen monitors erected so workers could better check for metal blemishes before bodies were painted.

Roots of the new regime
Nissan has brought new blood to its North American manufacturing team. Here are 4 key players.
Bill Krueger
Title: Senior vice president, manufacturing, purchasing and supply chain management for the Americas
Background: General manager of Toyota's Georgetown, Ky., car plant
New role: Turn Nissan North America into "Nissan Americas," with manufacturing and engineering consistency from Michigan to Argentina.
Doug Betts
Title: Senior vice president for total customer satisfaction
Background: Head of quality at Toyota's Princeton, Ind., truck plant
New role: Enable Nissan to achieve the same quality goals from the supplier to the assembly line to the dealership service shop.
Brad Thacker
Title: Vice president of quality
Background: Was Betts' replacement as head of quality at Toyota-Princeton
New role: Create practices throughout Nissan's plants and suppliers that make quality targets easier to reach.
John Miller
Title: Vice president of purchasing
Background: Managed purchasing at Honda of America Manufacturing
New role: Help Nissan weave supply chains in the U.S., Mexico and South America into a cohesive network.

Pruning

Betts also changed the measurements Nissan was using to determine how well problems were being uncovered and corrected. "We had too many measures," Betts says, "and they weren't all measuring the most important things. I did some pruning."

When Betts moved to Nissan, he in turn recruited from Toyota the man who had just replaced him at Princeton, his ex-colleague Brad Thacker. Thacker, now Nissan's vice president of quality, has been reshaping practices in Nissan's factories in the United States and Mexico since last year.

Thacker's most recent improvement is a factorywide information system that tracks problems as they progress through the factory. When workers on the Smyrna assembly line identify an imperfection, they walk to a wall-mounted color monitor and call up a photo of the vehicle. They make a note of the glitch by touching the screen photo exactly where the problem is and enter notes about their finding.

Once the note is made, the vehicle cannot leave the plant until the problem is solved.

The system is being tested at Smyrna and will be expanded to Canton this summer. This year it also will be introduced at Nissan plants in Mexico, Japan and Europe, Thacker says.

John Paul MacDuffie, a management professor at the University of Pennsylvania's Wharton School who has studied the Japanese industry for 20 years, says Nissan is not "doing away with a culture." Instead, Nissan is developing a management culture that supports a more global integration under Ghosn.

"Nissan's Smyrna management was always very independent - more so than any other Japanese company," MacDuffie says. "And it was also always among the best performing operations of Nissan worldwide.

"But under the new plans, Nissan needs to develop a more integrated management. There is a lot more sharing going on at Nissan now - with vehicle platforms, with component purchasing, with factory production."

Far, far south

The new hemispheric approach will put greater emphasis on developing a regional supply chain, which likely will mean developing suppliers who are not familiar with Nissan's ways.

To oversee that, Nissan has named another recent recruit, John Miller, to vice president of North American purchasing strategy. Miller came to Nissan from the purchasing operations at Honda of America Manufacturing Inc. in Marysville, Ohio. Honda and Toyota both have been outperforming Nissan on supplier relations.

Miller faces the challenge of developing an expanded supply chain in Mexico and South America. Nissan's situation in Mexico is changing rapidly. It already holds the No. 2 sales spot behind General Motors there. Last year its Aguascalientes plant introduced production of two big-selling U.S. nameplates, the Sentra and Versa, after an $800 million project to modernize and expand the plant.

Nissan also upgraded production at its Cuernavaca plant, and just last month began exporting the global version of the Versa car, called the Tiida, to 18 European markets.

All of that creates more pressure to develop and improve suppliers south of the U.S. border.

Together, Krueger, Betts, Thacker and Miller will prepare Nissan to take a larger regional approach to doing that. They will attempt to unite Nissan operations in the United States, Mexico and Brazil under a single management with common engineering resources, standard procedures and common supply chain procedures.

The team has created an organization called Parts Quality Engineers of the Americas, which will have engineers at different manufacturing locations. Now all are at the Smyrna headquarters.

Some of Nissan's regions in North and South America still follow different rulebooks on production. Nissan now will launch a separate Parts Quality Engineering team that is based permanently in Aguascalientes. They not only will support vehicle programs there but work with Mexican suppliers whose parts are shipped back to Smyrna and Canton.

"The concept in the past was to support our suppliers from here in Smyrna," Thacker says. "If your engineers are in Nashville and your suppliers are in Mexico, it doesn't make much sense. We ended up working a lot through e-mail.

"Now we want to work with the part where it's made, not where it's installed into the car. That means doing it in Brazil as our supply base grows there, or in Argentina or Africa."

For now, the U.S. engineering group in Smyrna will take responsibility for vehicles produced in Brazil. But eventually Smyrna will develop a dedicated quality engineering group for Brazil that supports both vehicle production there and parts that are made there and shipped to U.S. assembly plants.

The supply base in Brazil is going to be important to Nissan, Betts says. "We need for quality engineering in Brazil to grow and develop so they can solve problems for us in the future.

"That's part of our mission now," he says. "We want to help all of these places develop to the point that we can support each other."

You may e-mail Lindsay Chappell at lchappell@crain.com

You can reach Lindsay Chappell at lchappell@crain.com
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