RESENDE, Brazil - Roberto Barretti feels distracted. From his glassed-in office overlooking the assembly line of Volkswagen's Plant B, Barretti must churn out commercial trucks and buses in a half-built factory.
The plant's paint and body shops are unfinished steel skeletons rising next to the building that houses the final assembly line. And just as two visitors are settling in for an interview, the burly director for VW Truck and Bus Operations learns that engine production has been disrupted.
A worker has become ill and must be replaced. But the sick employee is not a Volkswagen worker. In fact, none of the assemblers in the clean, well-lit factory work for VW.
Instead, Barretti rides herd on 450 employees of seven suppliers that share space under the same roof. VW employs 140 engineers, designers, supervisors and administrators - but not one assembler.
It is Volkswagen AG's factory of the future, the controversial project launched two years ago by J. Ignacio Lopez. By having suppliers work together, VW hopes to achieve unprecedented productivity.
'This system is possible for any product built on an assembly line,' Barretti bragged. 'It could be a car, a refrigerator or a TV.'
Lopez once claimed that his concept could cut production costs 50 percent.
Barretti's efficiency goals are more modest. Only after the Resende facility adds a second shift this year, will Barretti be ready to calculate his plant's efficiency. However, he estimates that Plant B can build a truck in 35 hours, down from 52 hours in VW's old Ipiranga facility.
Some skeptics question whether VW will ever enjoy the savings promised by Lopez. Others note that slow sales growth and suspicious unions would doom Plant B-style facilities in North America and Western Europe.
But Volkswagen appears determined to transplant the concept to emerging markets. In the Czech Republic, for example, Volkswagen's Skoda Division has launched a second Plant B to build small cars.
If the plants in Brazil and the Czech Republic prove successful, VW will use them as blueprints for production around the world.
Moreover, Volkswagen is banking on suppliers to become more deeply involved in vehicle production than at any other auto company.
VW's efforts have drawn the attention of General Motors, which complains that this facility bears a striking resemblance to its Plant X. When Lopez jumped from GM to Volkswagen in 1993, GM claimed he took boxes of plans for the experimental factory.
Barretti plays down the Lopez connection, insisting that his own Brazilian team hatched the concept.
In any event, Plant B is real. GM's Plant X, though slated for construction in southern Brazil in 1999, is still on the drawing board.
FOLLOWED FORD SPLIT
Plant B began production in November 1995, after Volkswagen and Ford decided to break up Autolatina, their joint venture in Brazil and Argentina. VW lacked a plant to build trucks, so it scouted locations in this cattle-ranching region west of Rio de Janeiro.
VW found an unused warehouse near the Paraiba River and quickly converted it into a temporary assembly plant. On Nov. 1, 1996, VW moved to its permanent assembly plant.
Nestled among the lush Mantiqueira mountains, the Resende plant is worlds away from the industrial heartland of Sao Paulo. That was no accident.
Volkswagen wanted to start with a blank slate, with no preconceptions about how a plant should operate. The result is unlike anything an auto executive might see in North America.
'This is a revolutionary plant,' said Julie Trausch, a Sao Paulo-based consultant who works for J.D. Power and Associates. 'This is the only one of its kind around the world.'
With their own workers in the plant, suppliers say it's simpler to design components for ease of assembly. The suppliers also can make quick decisions with Volks-wagen to change designs, assembly procedures or the product mix.
'When you change the mix, you can do it at once,' said Aivars Helmuts Grabis, manager of models for the VDO Group, which makes the cab interiors.
'You can change models very fast. We are doing the things we do best, with no red tape in between.'
THE MAESTRO'S JOB
A plant operated by eight partners might seem like a prescription for chaos, but the goal was to simplify final assembly as much as possible. To do so, VW divided truck assembly into seven modules, with a supplier responsible for each.
The plant complex's floorplan reflects that arrangement. Yellow paint indicates the floor space controlled by each supplier.
To make sure the truck is built properly, troubleshooters called 'maestros' track the journey of each chassis through the plant. One maestro is assigned to each chassis, and he or she signs off on each phase of assembly.
Strictly speaking, the maestros are not considered quality control inspectors. A second set of troubleshooters handles that task.
Here are some examples of the partnership between VW and the suppliers:
Employee solidarity is stressed. Each supplier hires and pays its own workers. But all hourly employees wear the same uniform and earn the same monthly salary of $500.
Inventory control is vital. To minimize inventory costs, VW has adopted the $10 rule. VW limits itself to a one- or two-day supply of any part worth more than $10. For parts that cost $5 to $10, VW allows up to one week's inventory. For parts less than $5, up to three weeks' inventory is acceptable.
Training is relentless. The workers look like recruits from the local junior college. They are. Most are no older than 19 or 20, and each hourly worker must get training at a nearby technical institute.
'The most difficult thing to do is to change minds,' Barretti said. 'The workers have technical knowledge, but they've never worked in an assembly plant. They have clean minds without preconceptions.'
Flexible job assignments require each worker to learn several tasks. In the VDO Group's section, employees start out on a scrap cab, learning how to install the interior. When they are ready, they move to the real assembly line. After a couple of weeks at one station, they move to the next station downstream to learn a new routine.
Production cells boost efficiency. The engine, cab and chassis are built on separate lines, minimizing bottlenecks. That enables VW to add or subtract production steps easily in any sector.
To help suppliers plan production schedules, VW guarantees its production rate nine weeks in advance. VW can change its production schedule if the suppliers agree.
Financial risk is shared by the suppliers, who raised one-third of the cost of the $250 million plant. Each supplier builds and equips its own work area.
Escape clauses in the contract allow Volkswagen to boot a supplier that does not perform adequately. VW owns the tooling and equipment, but it would compensate the supplier for its investment.
Additional escape clauses allow VW to look beyond its partners for new technology.
After six months of production, Plant B still has the feel of a work in progress. VW now produces 40 trucks per day, with plans to raise production to 52 a day in July.
Ultimately, the plant is capable of producing up to 100 commercial trucks daily, Barretti said.
Since the plant operates on only one shift, it's too soon to tell how productive it really is. Meanwhile, one expert wonders whether Volkswagen is gambling too heavily on the competence of its suppliers.
'You've got seven suppliers that control your product,' said Jim Harbour president of Harbour & Associates, a consulting firm based in Troy, Mich. 'Your product is only as good as the suppliers that assemble it. You are betting on them.'
That doesn't seem to bother Barretti, who says he is comfortable having suppliers on his management team. If something goes wrong, Barretti says he tries to avoid the autocratic problem-solving style of a traditional plant manager. Instead, he tries for a consensus among the partners.
'We have no fences between VW and the partners,' Barretti said. 'We try to do everything together.'