NORMAL, Ill. - Through the eyes of any Mitsubishi old-timers who are working at the automaker's only North American car plant, it may well look as if Richard Gilligan is tearing the place apart.
Not just the building - the whole Mitsubishi way of doing things.
Two years ago, the ex-Ford Motor Co. plant manager was brought in as executive vice president and chief operating officer, charged with turning the then-10-year-old Mitsubishi factory from a money loser to a money maker.
Gilligan, 57, has done that. Despite continuing financial troubles at the parent company in Japan, the U.S. manufacturing company is running a profit after a decade of losses. It is enough of a profit to pay for the tooling and launch of a new U.S.-built Mitsubishi sport-utility, as well as the launch of a new sedan and sports coupe in the next three years.
More than that, it is enough of a profit to give Mitsubishi Motors Corp. in Japan new hope for the North American market, and Mitsubishi Motor Sales of America Inc., the U.S. sales company, a second wind to compete here. Speaking before the Mitsubishi board of directors in Japan in November, Gilligan told Mitsubishi's top brass their U.S. plant would post a profit of between $185 million and $190 million for the 2000 calendar year.
Pocket of profit
That stands in dramatic comparison with the rest of the corporation's outlook. Mitsubishi is bracing for worldwide losses of $1.3 billion for the fiscal year. Those troubles have complicated Mitsubishi's new alliance with DaimlerChrysler AG, with whom Mitsubishi will be sharing both products and plants.
Gilligan had more upbeat news to report to the board: The U.S. operation is narrowing the quality gap between Mitsubishi and its chief Japanese rivals, Honda Motor Co. and Toyota Motor Corp. In 1998, Gilligan reported, owners of the Illinois-built Mitsubishi Galant reported 211.1 problems per 100 cars, according to J.D. Power and Associates' Initial Quality Survey. By comparison, the Accord-Camry class in general saw 175.7 problems.
This year, Gilligan said, the Galant has improved to 167.6 problems per 100 cars - a 13-point distance behind the class' results of 154.4. At the same time, the plant's Eclipse line has improved from 248 problems per 100 in 1998 to 177.2 this year.
The board took the news as reassurance. Earlier this year, based on the U.S. plant's encouraging signs in 1999, Mitsubishi approved a new investment and production plan for the subsidiary, called Project America. According to the capital spending program, the U.S. company will build a new U.S.-designed sport-utility, sedan and coupe. The trio will provide the backbone of Mitsubishi's U.S. sales volume.
The iron is hot for Mitsubishi. The brand's sales rose 20.3 percent in 2000, allowing Mitsubishi to promote itself as one of the fastest-growing Japanese brands for much of the year.
But without shaping up the Normal factory, it was not clear what role the U.S. manufacturing company would play in the brand's future, Gilligan said. 'The company could have been in jeopardy in America,' Gilligan said. 'The changes we've made here in quality and productivity were absolutely necessary for our future. Without them, we wouldn't be getting ready to build the SUV right now.'
Gilligan credits Mitsubishi Motors President Takashi Sonobe, former CEO of the Illinois subsidiary, with recognizing the Japanese automaker's need to make drastic changes. Sonobe gave the U.S. companies more freedom to respond to the North American market.
He also called for the U.S. plant to prove itself - to make itself profitable and support its own needs.
How Gilligan executed that assignment has a decidedly contrarian flavor. To stop the losses, the ex-Ford manager did the opposite of what many manufacturers have been doing for the past decade. Gilligan began making Mitsubishi look less like a Japanese auto plant and more like a Ford plant.
Gone are some of the robots that Mitsubishi proudly demonstrated during the plant's late 1980s ramp up. In their place are humans working at different paces - some faster, some slower - than the machines supplied by Mitsubishi's sister robotics company.
'Some of our robots had become pinch-points to our growth,' Gilligan said. 'We had people waiting for automated equipment to finish its job.'
Last year, Mitsubishi removed automated installation equipment on front and rear bumper fascias and radiators. Over its Thanksgiving and year end shut down, Mitsubishi tore out robots that had been installing hoods, trunk lids and tailgates.
It scrapped a vehicle shuttle system that delivered cars one at a time to line workers and replaced it with a continuous conveyer system. Workers can move upstream to a new vehicle if they want.
Gone, also, is the plant's reliance on Japanese-style kaizen improvements. Mitsubishi still practices kaizen, in which line workers are encouraged to seek better techniques as they work. But Gilligan's new Mitsubishi isn't relying on the practice to make the plant run better.
Instead, it is relying on variability reduction teams, or VRTs. Gilligan and his team learned VRT practices while working in plant management at Ford Motor Co.
At Ford, managers zero-in on issues that have shown up in warranty claims and tackle them one by one. They examine the factory specs, determine what went wrong and develop fixes to make sure it doesn't happen again.
Mitsubishi already was receiving consumer feedback through J.D. Power & Associates. But only a fraction of Power's vast research is directly relevant to the factory floor. It also reflects attitudes toward design, styling and materials.
Gilligan ordered warranty information that would be analyzed. While the plant previously saw warranty data to review as a financial tool, it now combs through warranty claims to find hardware problems that surfaced at the consumer level.
'This is the basis of what we did at Ford,' says Jerry Berwanger, Mitsubishi's vice president of quality control. Gilligan recruited Berwanger from Ford, where he had been at management at both Ford's Chicago assembly plant and its plant in Kansas City, Mo. Berwanger was one of a handful of Ford recruits.
'The first thing we had to do here was change the mind-set,' Berwanger says. 'We had to make management more responsible.'
The plant established 12 audit teams that would represent sections of each product. One took responsibility for paint, another for sheet metal, another for interiors and so forth. The audits take place six times a day, and the teams involve the plant's entire management team.
Human resource and finance managers must attend vehicle audit meetings.
Keith Lawrence, Mitsubishi's vice president of purchasing, for example, is in charge of the plant's doors and locks audit team.
Fix it on the spot
The audit teams are one layer of what Gilligan's team calls 'in-station process control.'
The teams' carry their findings directly to the assembly line where Mitsubishi's UAW-represented work force makes necessary changes.
Case in point: Some Eclipse customers were complaining about water leaks under the glove box.
Dealers assumed the problem was an inadequate factory seal on the windshield and replaced the windshields at a cost of $750 a car.
In fact, a plant associate working with the audit team discovered the real problem: Bolt holes were drilled into the engine compartment wall where they weren't needed, based on specs from an earlier design.
Heavy rains sent water through the empty bolt holes and into the passenger compartment.
Using the warranty data and other audits to troubleshoot on the line has meant there are fewer mistakes. Three years ago, a typical plant shift would have had as many as 800 cars parked at the end of the line awaiting remedial work to correct an assembly issue. Today, the plant will inspect 250 a day at the end of the line.
Gilligan also moved all mid-level manufacturing managers out of the plant offices and onto the production floor.
At the same time, he flattened the company's organization. Previously, there were 19 classifications of jobs. Today there are six.
All of this is intended to improve productivity - a critical part of the plant's viability.
Last year, Gilligan reports, the plant was building at a rate of 37 hours per vehicle. This year, it is at 24 hours per vehicle.
But if Gilligan's approaches look like an abandonment of the Japanese art of automaking, consider this: The Japanese art of automaking is all about flexibility. Flexible workers. Flexible management. Flexible supplier relationships.
In allowing Gilligan to turn the plant upside down, Mitsubishi is demonstrating a degree of flexibility few U.S. operations would have tolerated.
But clearly the Illinois plant was ready for change.
In the past five years, the unit had been battered by lawsuits claiming female workers had been harassed on the job.
The U.S. Equal Employment Opportunity Commission took up that controversy and brought it to a settlement after two years of negative publicity.
The plant also was running under capacity.
It had never reached its full-time production capacity of 240,000 cars a year, despite its longstanding arrangement to supply DaimlerChrysler with two-door cars. But in November, Sonobe told Automotive News Mitsubishi is considering expanding the plant's output to 300,000 vehicles a year.
Gilligan's boss, the U.S. subsidiary's president and CEO, Hirao Iijima, believes a cultural change was necessary at Mitsubishi to make the plant live up to its potential.
Iijima was one of the original Mitsubishi managers who launched the plant - originally a 50-50 joint venture with Chrysler Corp. He returned to Normal and was appointed CEO last year. He believes Mitsubishi's original Japanese management approach never captured the Illinois work force's spirit.
'Back then,' Iijima says, 'our poor English made people uncomfortable. They weren't sure what they were supposed to do. Now, with the new way we do things, they can see that this is their plant, and this is how it is supposed to be run.'