The rolling power blackouts of California have been making business a challenge for companies and residents up and down the Golden State. But not for the state's only automaker, New United Motor Manufacturing Inc.
|Fruit of NUMMI's megawatts|
NUMMI is the only auto plant operating on the West Coast, NUMMI builds cars for General Motors and cars and trucks for Toyota
Chevrolet Prisms: 49,893
Toyota Corollas: 147,493
Toyota Tacoma: 146,131
But so far, NUMMI has managed to escape the blackouts for months.
It may be a matter of lucky planning, or it may be a reflection of Toyota's tendency toward bearish attention to advanced planning and smooth factory flow.
Among the top 20
A decade ago, long before California's power crisis appeared in anyone's crystal ball, NUMMI officials sized up their own power needs. The big plant builds about 350,000 vehicles a year and has a major-league power draw. It is one of the state's 20 largest power consumers.
California's foray into utility deregulation yielded an uncertain situation in NUMMI's eyes. Power provider Pacific Gas and Electric Co. began offering customers options on their service. There would be interruptible customers and non-interruptible customers. There would be full-price customers and customers who - if they agreed to endure blackouts when necessary - received a discount on their utility bills.
None of it sounded good to NUMMI. One of the underlying precepts of the Toyota Production System is maintaining an "even flow" to the work. In the eyes of a Toyota factory boss, a steady, predictable production flow is desirable, even if it requires the factory to run at a lower volume than it could. Steadiness means that all parties are working at their planned pace, and that leads to fewer mistakes and higher product quality, according to the production system.
Megawatts to kilowatts
NUMMI opted for a different power plan: It purchased its own power substation, not far from the plant. Rather than waiting for its place inside the utility's power grid, the private transformer put the automaker in the position of taking raw mega-doses of electricity from the source and converting it into usable, daily electricity to run stamping presses and welding lines, operate personal computers and brew coffee.
It ended up being a lucky decision.
In the first two months of this year, California's utility crisis led to 37 "Stage 3" power emergencies. Each time, businesses and homes received as little as two hours' advance notice and were then temporarily shut down.
For a chic Los Angeles restaurant, a blackout is an enormous inconvenience. An entire wave of lunch customers could be sent away hungry and perishable food stocks could be ruined.
But for an auto plant, the interruption would have an enormous ripple. A two-hour blackout might catch 200 vehicles in various stages of painting, in ovens that are suddenly cooled and have to be reheated, or in dip tanks that would begin to coagulate without circulation.
The interruption would create inventory back-ups, with delivery trucks arriving with parts for which there is no storage space. Thousands of high-wage employees would be idled. Just-in-time supplier shipping orders would be rendered inaccurate.
Because it has been operating outside the power grid, those have been unrealized problems for NUMMI so far.
But not for the automaker's 28 California auto suppliers. Most of the parts makers also escaped the rolling blackouts, according to NUMMI spokesman Jean-Yves Jault, but they remain vulnerable.
In January and February, two local suppliers were pinched by the utility problem, resulting in parts shortages. The problems did not affect production at NUMMI, but required the suppliers to schedule weekend production to catch up with the schedule.
Since then, NUMMI's suppliers have been taking precautions to protect the business, Jault says. Some are producing "safety stock," or a buffer inventory to be able to continue shipping, even if the plant shuts down.
NUMMI itself embarked on an energy conservation drive to help the crisis. It began with a series of quick fixes. Non-essential lights were cut off. Heating and air conditioning were turned off in areas of the plant where people don't work. Lights were turned off between shifts. Employees were instructed to turn off computer monitors when not in use. "Our need is to have some predictability," Jault says. "We fully expect to have to participate in the blackouts that occur. We just need some warning so we can adjust accordingly and keep things running smoothly."