You talked about how companies that do a good job managing their capacity will be winners in the future. What role does assembly plant flexibility play?
If (an automaker) had not built that flexibility in, you'd have this plant over here running 120 percent and all the overtime that goes with it.
Over there you'd be under capacity, and you'd have the extra fixed cost that you're spreading over fewer vehicles. So you've got costs in both cases - excess cost. So, if you move this (production) over and balance them, you're better off.
Some of the most efficient plants in North America have dedicated lines. Is there a place for dedicated lines?
As long as you can fill that plant and consistently over the years sell all the capacity, yeah - I mean, why bother? But the truth of the matter is that the flexible systems that are the best in the world don't cost more than a dedicated system.
Where do you see Honda and other manufacturers going in 10 years in terms of flexibility?
I think they'll keep working toward a system that can give them equal or greater flexibility for less cost. If we would have had this conversation 10 years ago, if you went and you saw (Chrysler's) plant in Belvidere (Ill.), it has relied heavily on robots for years.
Frankly, robots are cheaper than they've ever been - they're a third of (the cost of) what they used to be. So you see a lot more robots not only doing spot welding but also locating geometry and doing all kinds of stuff. There are plants now that have robots that pick up the entire underbody and put it up on a higher level, instead of using some elevator or some lift conveyor.
It's shocking the lack of people you see in plants.
The other thing is that 10 years ago, a robot was not precise enough to hold tooling and the geometry of tooling in space. Now the precision is so much greater that they can do that. So now we're talking about in 10 years how much better will it get? If we get another twice as good, then we may be able to do all kinds of things.
So you think robots are one key to the future?
They'll be an element. I mean, it's overplayed, but it'll be an element because anything that makes it simpler, more repetitive and all that is a good thing. I'm not sure what that technology will be, but I think that every plant is going to have the ability to build a variety of different vehicles
Toyota's engine plant in Buffalo, W.Va., is the most efficient engine plant in North America, but it does a lot of little things to make that happen. What kind of model is this operation?
I still believe the differentiator is going to be who is the most creative with doing the most with the least. When I walk through that plant and I see a lot of really unique, innovative little solutions to things that they do by themselves, or there's just really, you know, cardboard-and-string kind of solutions. This is kind of a cultural thing, too, in the sense that in the general society, you're basically an engineer and rewarded on innovation and creativity. Because the solution isn't always the most complex, the most high tech and all that, but the solution is the end in itself rather than what it did for the quality or the environment.