Delphi Corp. saved $30.4 million when it consolidated two Saginaw, Mich., steering gear plants into one, compared with what it might have spent if it had built another plant to replace the two.
Then came the real savings. The two plants, which had lost money for seven years, broke even while operating as one lean plant.
Delphi's Saginaw complex had seven plants making steering and drive axle components until Plant 2 was consolidated into Plant 7 between March 1999 and July 2001. Then Plant 7 was refurbished.
"There wasn't enough capacity to support two plants," says Vince DeZorzi, Delphi's director of Saginaw site operations. "We looked at building a greenfield site, but we decided we could make significant gains at a brownfield site."
Together, the two gear plants covered 1.1 million square feet. That has been reduced to 538,000 square feet at Plant 7. Plant 2 was demolished last summer.
Delphi says it invested $32.6 million on the consolidation and refurbishing of the remaining plant, compared with an estimated $63 million it would have spent for a new plant.
The consolidation involved moving 650 pieces of equipment, exiting the intermediate shaft business, adding a large heat-treat operation and changing 1,000 job assignments, which then necessitated training.