Just weeks before Nissan North America Inc. broke ground on its Mississippi truck plant last Friday, April 6, thousands of local business managers passed through the hallways of the Jackson Crown Plaza Hotel in hopes of involving Nissan in new relationships.
|Mother lodes of invention|
Recent plant investments offer a chance to try something new:
Old way: Vertical integration with close internal controls on quality and productivity
New way: Heavy outsourcing of modules; increased reliance on close suppliers to assure quality
Old way: Large-scale, centralized engine production; production lines dedicated to high-volume models
New way: Small-scale on-site engine manufacturing; production lines flexible enough to switch to new models as needed
Old way: Production is standardized and simplified; largely manual, little automation
New way: More complex vehicles require more automation, more robotic cells
A former Ford Motor Co. factory manager, Hassan has risen through the ranks of Nissan's U.S. manufacturing management to now wear four hats for the Japanese automaker. He is Nissan's senior vice president in charge of all North American manufacturing, purchasing, quality and logistics.
The Mississippi business seekers know Nissan's plant will bring big changes to their economy, which has no presence in the global auto industry. And chances are, many of them will snag a contract with the expanding automaker for security services, lawn care, office supplies, environmental engineering, legal service, tool repair, landscaping and paving.
But what they probably don't know - what Hassan has not broadcast to the industry at large - is that many of Nissan's traditional automotive suppliers are going to face tough competition for their usual share of the Mississippi business. Nissan is planning to change the way it builds vehicles at its new plant, moving its components into more modules and having them delivered on an in-sequence basis. Many U.S. suppliers probably will find the Mississippi project a strange new world.
"It's going to be a big challenge for our suppliers," Hassan acknowledges. "We're not going to try to reinvent the wheel. We have a lot of ideas that work very well for us. But we want our suppliers to help us achieve new economies of scale."
Like other automakers in the South, Nissan is at a crossroads. Nissan has successfully built cars and trucks the same way since building its first U.S. auto plant in Smyrna, Tenn., 20 years ago. That operation repeatedly has been ranked as the most efficient plant in America. But now, as Nissan constructs its first factory of the 21st century, it has an opportunity to try something new.
A Nissan first
Located 500 miles southwest of the Smyrna production offices, the Mississippi truck plant will allow Nissan to attempt modular assembly for the first time. That will mean that a small number of key suppliers - the company has not completed its selections - will deliver large, complex vehicle modules to the Canton, Miss., production site. Delivering them in sequence means that each axle or exhaust system, for example, is directed to a specific vehicle on the Nissan assembly line.
The module assemblers will have supply-chain management responsibility. The cockpit supplier will take charge of dozens of instrument and electronics subsuppliers. The axle assembler will integrate parts that link drive and handling. Some of the suppliers to the Nissan plant will set up plants either on the site with Nissan, or in the immediate vicinity. They will share a communications system that will broadcast production schedules, coordinating component assembly with vehicles that are moving into production.
The auto industry has been poking around this concept for half a decade. In the mid-1990s, BMW Manufacturing Corp. set up its only North American auto plant with a heavy reliance on modules. The plant's Z3 line used just 30 suppliers to deliver 90 percent of its content.
In 1997, Mercedes-Benz U.S. International Inc. opened shop in Vance, Ala., using module suppliers to deliver axles, cockpits, wheels, exhaust systems and other component groupings on an in-sequence basis.
And the Big 3, too, have been exploring modular assembly as well. All three U.S. automakers have launched modular production plants in Brazil.
"We're not doing this just to do it," Hassan says. "It has to make financial sense. It's got to pay.
"Our objective is not to increase the number of suppliers we have. It's to decrease suppliers," he adds.
Nissan is not the only New American Manufacturer at a juncture in its planning. Late last year, Mercedes-Benz U.S. International had to decide whether to alter its approach to production for a project in Vance, Ala.
The Mercedes unit is spending $600 million to nearly double the size of its 4-year-old plant, the source of its M-class sport-utility. That plant's operating concept was influenced heavily by the Toyota Production System when Mercedes' managers designed it in 1995.
Since then, DaimlerChrysler AG has become a crossroads of global ideas and approaches. Only last year, the Mercedes-Benz unit of the corporation adopted a Mercedes-Benz Production System for worldwide factory consistency. That system is distinct from the Chrysler Operating System embraced by the U.S. half of the family. The Alabama's subsidiary's conclusion: Don't change anything.
"It was a real question," says Bill Taylor, president and CEO of Mercedes-Benz U.S. International. "There are so many new ideas going through this company, globally, and the question is always out there: Do we change and begin doing things this way? Do we change to do things that way? A lot of people come here and propose new technology."
Taylor and his management team wrestled with manufacturing philosophies in the mid-1990s as Mercedes built its first non-German assembly line in Alabama. Voices from within the Stuttgart automaker pressed for a roomier factory; one that would allow expansions; one that had extra receiving bays; and one that had room for error. Taylor held tight to a lean-manufacturing religion, developed while head of manufacturing at Toyota Motor Corp.'s Canadian operations. The philosophy there, he explains: "Don't build what you don't need."
"We're a product of where we came from," Taylor says. "There's always a risk when you try something different from what you've succeeded at. In the beginning we had to take a risk.
In South Carolina, BMW Manufacturing Corp. took a sharp turn in production methods two years ago when it launched production of the X5 sport-activity vehicle. BMW had embraced Japanese-style lean production methods when the plant opened in 1994. Workers were focused in teams to produce the Z3 sports car. There was little automation and work was standardized to make it easier for the largely inexperienced work force to reach high-quality goals.
The start-up of the X5 followed a different path. The key reason: The vehicle was much more complex, requiring more automation and more rigid procedures. While the Z3 consists of 3,000 parts, the X5 has closer to 9,000. Where the Z3 employs team members with welding guns, the X5 has robotic cells performing 75 percent of the welding.
Back in Alabama, Honda Motor Co. also is taking a new path as it readies its minivan plant in the small eastern town of Lincoln. There, Honda is testing the idea of building vehicles and engines in sequence at the same plant. Engine volume is surprisingly small to start: just 120,000 units to supply 120,000 Odyssey minivans. By contrast, Honda's engine plant in Anna, Ohio, churns out more than 1 million engines a year.
But Honda now wants each vehicle plant it constructs to supply its own engines. Honda believes that will give it more flexibility as an automaker, making each plant less reliant on other plants in case it shifts products to respond to a changing market.
Not far from Lincoln, in Huntsville, Ala., Toyota Motor North America Inc. also plans to produce a low-volume engine plant to supply V-8s to the Tundra. But the ever-cautious Toyota intends to stick close to established production methods in Huntsville. Fujio Cho, president of Toyota Motor Corp. in Japan, says its approaches are proven in Japan, and then closely maintained in other markets.
"Whenever we are interested in new things or in trying to do something new, there is always the risk of failure," Cho says. "In order to make sure an idea will work well, we will first try it in Japan and make sure that it works. After confirming that, we would then move it to the United States or overseas. That approach will not change."