General Motors will replace its largest and oldest factory complex in Europe with a new, lean assembly plant.
Rather than modernize the sprawling, two-story Opel plant in Russelsheim, Germany, GM has decided to build a new factory on the same site.
The new plant will be another step in GM's global effort to cut its bloated manufacturing costs with modular assembly and new, greenfield assembly plants.
In the United States, GM plans at least two new plants under so-called Project Yellowstone.
Thus, GM will use on three continents elements of its radical Blue Macaw assembly plant in Brazil.
GM will cut production costs by asking suppliers to deliver complete modules rather than individual components. GM's Delta car - which will include the next-generation Chevrolet Cavalier, Pontiac Sunfire and Opel Astra - is designed to be built using 15 modules.
For example, UT Automotive will deliver Delta's instrument panel and cockpit as one module. The cockpit can be installed in the vehicle in three minutes, down from 22 minutes for a conventional system.
Project Yellowstone's new U.S. plants will cost up to $400 million apiece, about as much as the new Russelsheim plant.
In Europe, GM has adopted a mixed strategy of greenfield plants and renovations. GM renovated plants in Antwerp, Belgium, and in Bochum, Germany. Meanwhile, the new Russelsheim plant and a newly opened assembly plant in Poland are greenfield factories.
The 700 million German mark ($415 million) plant in Russelsheim will cost only $59.3 million more than the cost of refurbishing the existing factory, Opel said.
The plant employs 24,600 workers. With a new factory, industry sources estimate that between 5,000 and 7,000 jobs could go. Some sections of the Russelsheim complex date to the 19th century. Most of the assembly buildings were constructed shortly after World War II.
Production volume in Russel-sheim is expected to remain at the current annual capacity of 315,000 units.
MINIVAN MAY MOVE
The new plant will produce the next Vectra and Omega - Opel's two largest cars - starting in 2002. The Omega replacement will be based on a stretched version of the Vectra platform, code-named Epsilon.
The Opel and Vauxhall Sintra minivan, now assembled in Doraville, Ga., also may be built in Russelsheim.
Funds for upgrading the existing plant were approved last year when Opel signed a pay and benefits agreement with German unions.
However, support later grew for scrapping the plant and building a new one.
The plant will adopt many of the lean assembly ideas used at GM's modular plants in Argentina and Poland. It will begin production in 2002 in time for the Omega changeover.
GM President Rick Wagoner said the state-of-the-art plant would use GM's 'best current concepts.
'It will build on everything we have learned since we constructed our first lean plant in Eisenach, Germany, in the early 1990s,' Wagoner said.
Currently, GM's state-of-the-art assembly plant is Blue Macaw, newly completed in Brazil, which will start producing an entry-level Corsa this summer.
Like the Delta, the Corsa is designed to be built using 15 modules. Blue Macaw's suppliers are in an industrial campus next to the plant.
Mark Hogan, general manager of GM North America's small-car group, oversaw Blue Macaw in his previous assignment as president of GM do Brasil.
Now he plans to use Blue Macaw as a pattern for Project Yellow-stone.
Hogan wants to reduce GM's North American small-car production costs by up to 20 percent.
That is an ambitious objective at a time when GM is losing up to $1,000 per small car in North America.
Michael Burns, president of GM Europe, said a public announcement on Russelsheim will be made in six months to a year, although the final details of the project have yet to be approved.
'We have to work it out with our employees and everyone else,' Burns said.
A source said construction must start by late 1999 for the factory to be operating in three years.
The launch of the new Russelsheim factory would coincide with the end of the current four-year union contract, giving GM muscle in negotiating the pact for its lean plant.
The union was given job guarantees only until the end of 2001.
Staff Reporter David Sedgwick in Detroit contributed to this report