Flexibility is the future
At the AutoMan Europe conference delegates were given detailed insight into some of the leading OEM production systems as well as the opportunity to visit some of the most exciting facilities in Europe. Susan Brown reports
Flexible approaches to automotive manufacturing were detailed during the inaugural European forum, organised by Automotive Manufacturing Solutions magazine.
The event – attended by more than 150 delegates – was hosted by the City of Leipzig and held at the Porsche plant on June 7-9. Themes that emerged ranged from labour and locations, and the use of new technologies to increase productivity while keeping costs under strict control.
Major topics on the agenda included stamping, body-in-white, new technologies and powertrain, assembly, and business strategies.
Some of the specific technologies discussed were hot stamping, laser welding and flexforming using a fluid cell process. Though the costs of some of these technologies seem higher than traditional ones, what is crucial is the way they are implemented in improving the quality of the product.
Production systems also came under the spotlight. Many manufacturers are moving to produce cars to customer order rather than dealer order, with an emphasis on reducing the order-to-delivery timeframe. In the following pages we chronicle the views of some of the industry's key players.
Atheme that was emphasised throughout AutoMan Europe was the importance of people. A positive and strong relationship between team members and management is crucial. At the same time, a “make or break” aspect of any business is focusing on customer satisfaction, and a company's success can be measured by its response to customer requirements. Recurring observations included the need to be flexible, to have common systems, standards and processes. To achieve this, communication and sharing technology between partners is essential. The challenge is to achieve maximum flexibility while taking advantage of common systems.
Executive Director, Planning, Production, Technology
Technology delivers on price
Frank Löschmann explained how high technology links in with the company’s strategy to focus on customer benefit and, in particular, keeps the final price down. For example, the new Passat was designed with the goal of offering additional customer benefits while keeping the same price as the previous model. He also explained that with the new module – or Baustein strategy – which has replaced the Volkswagen Group’s platform strategy, it is much easier for the benefits of investment in new technology to be extended throughout the model ranges.
Hot stamping is an example of the new technology first adopted by Volkswagen on the T5 Golf but then used more extensively on the new Passat. About 10 parts on the new Passat are hot-formed. Volkswagen has now developed hot stamping as a core competence. In response to a question from Michael Wombacher, Senior Vice President of Comau Deutschland, about the expected future use of hot stamping, Löschmann explained that costs for hot stamping are still higher than cold pressed parts and that the challenge is to optimise the cooling system.
Laser welding has also been increasing in importance at Volkswagen. Used for the first time in 1997 on the previous Passat, it is now used extensively on the T5 platform and by Bentley.
Another new technology is flexforming, which is being used for low volume production. Metal body parts for the Bugatti Veyron 16.4 are formed entirely by flexforming, using a fluid cell process in a one-stage operation. The tool set for doors, for example, costs €150,000 ($180,000), much less than the equivalent tools needed for a high volume press.
Dr Hans-Otto Bode explained the company’s experiences with plasma coating aluminium crankcase cylinder walls. The plasma spray process is used for the 5- and 10-cylinder diesel engine and the new Bugatti W16 engine. Since Volkswagen started producing the 5- and 10 cylinder engines in 2002, it has done a lot of work to optimise the system. The company has just installed a new plasma coating line for V10 and W16 cylinder blocks, which is designed by Volkswagen Group and based on robot technology.
Senior Vice President, Manufacturing and Logistics
Pursuing the ten day vehicle
Michel Gornet spoke extensively about the Renault production system and, in particular, about building cars to customer order. Renault has been a leading light in Europe in terms of building cars to customer order, but while it once targeted an orderto- delivery period of only 10 days, 21 days is now considered sufficient, and an easier target to reach in the interim. This is mainly because of challenges in the vehicle distribution network. Once this target is reached to a high degree of reliability (95 per cent of cars delivered on time) then it may be realistic to aim for a shorter timeframe, explained Gornet. As of now, around 70 per cent are delivered on time but that figure includes plants with 95+ per cent reliability and plants that are new to the system.
By the end of this year Renault is projecting that 88 per cent of cars will be built on time and 60 per cent within the 21-day window. The 95 per cent target for cars delivered on time within 21 days is expected to be reached by 2010. Sixty per cent of cars will be built to a specific customer order, rather than a dealer order, by the end of this year (51 per cent at the end of 2004).
It was interesting to note that the Renault production system and its facilities are kept entirely separate from those of Nissan, but Gornet explained that Renault had started changing over to a one-model-one-plant and one-plant-one-model production system a year before the alliance with Nissan was formed, so it was decided to keep the two systems separate. Nevertheless, the manufacturing philosophies of the two companies are close and they share knowledge and expertise.
President and CEO
Toyota Motor Manufacturing France (TMMF)
Focus on employee trust
Didier Leroy highlighted the importance of people in any organisation, and how it was important to ensure that workers are considered the most valued asset of a manufacturing plant. While he described manufacturing innovations and achievements at the Valenciennes plant, he said that the key to the plant’s success is that this basic underlying principle is demonstrated every day. Mutual trust and respect between team members and management, as well as between the OEM and the supplier, are absolutely fundamental, he said. As far as team members are concerned, the company should provide stable employment, while job satisfaction and performance rewards should be linked to the overall performance of the company.
“The main way to become really competitive is to involve the team members via standard processes and continuous improvement,” said Leroy.
Toyota management in France spent two years developing ‘the TMMF way’. This involved time spent studying and comparing the Toyota Production System with traditional French management styles.
The ability to develop a positive and strong relationship between management and team members was key in selecting management and team members. Managers should give priority to safety, trust and mutual respect and always be very practical. At the same time they should focus on customer satisfaction, said Leroy, while potential team members were tested for their ability to make proposals and improve themselves. To conclude, Leroy said that this kind of relationship has to be built up over time and added that Valenciennes is now so successful that it is starting to be considered a benchmark within Toyota globally.
Andrew Davis of Bosch Rexroth asked why Toyota didn't use European suppliers to supply equipment for the body-in-white facility at Valenciennes? Leroy explained that Toyota still designs and develops a lot of its own welding equipment and that close to 90 per cent of Toyota’s body-in-white equipment is designed by Toyota in-house. Even the Kawasaki robots that Toyota uses contain controllers that have been developed by Toyota.
Executive Vice President, Production and Logistics
Preparing for profit and expansion
The perceived view of Porsche is that it is the most profitable car company in the industry and, although Macht concurred with this view of his company, he said that Porsche experienced "a crisis in the early 1990s". Since then, the Porsche board has become "down to earth". Macht said: "The Board remains well prepared for future challenges and does not assume that Porsche will always be the most profitable company."
The next challenge for the company is to start thinking and acting like a large business, he said. Annual production has increased fourfold since 1995, to 81,500 vehicles in the latest financial year. A new organisation structure is being put into place that means removing the traditional pyramid organisational structure and placing more emphasis on team work, with their remuneration linked to performance. In response to a question from Wolfgang Freiblicher, responsible for production strategy at Mercedes Car Group, about why Porsche is introducing so many new models when its production facilities at Zuffenhausen are already stretched to the limit, Macht explained that the Porsche production system is scalable. The important point is to grow in a controlled manner, building on the company’s core strengths, he said. By the end of July a decision will have been made on a fourth model. Porsche is not being secretive about this, he said, but rather communicating openly that an internal discussion is under way. A number of evaluation meetings are planned before then. The new Cayman S, which shares a platform with the Boxster, will be assembled by Valmet in Finland.
President and CEO
Pressure forces expansion
Manfred Remmel showed how Magna Steyr's customers can achieve a competitive advantage through outsourcing production. The company is by far the biggest contract manufacturer in Europe, with 227,000 cars assembled in 2004. It is now looking for growth outside of Europe. The main opportunity appears to be in emerging markets, such as China. Japan's OEMs tend to send out contract manufacturing to subsidiaries or affiliated companies and in the US there is not much demand. There are only two contract assemblers in America – ASC and AM General.
Clearly there is pressure to look for capacity elsewhere as the Magna Steyr assembly plant in Austria is bursting at the seams. Six different models are produced, namely BMW X3, Jeep Grand Cherokee, Chrysler Voyager, Mercedes-Benz E 4MATIC, G-Class, Saab convertible. Facilities will be stretched further with the addition of the Chrysler 300C. Production on this model started at the beginning of June. Production on the Jeep Commander rolls out from 2006.
Remmel described the Magna Steyr Production System, which he says is key to managing the complexities of assembling such a variety of models for different OEMs. The system demands commonality, standards and processes, and that areas such as material systems, quality and workplace organisation are managed centrally, as they would be for any other OEM. The system is core to Magna Steyr’s ability to respond to customer demands. “We don’t just talk about flexibility,” said Remmel, “we have proven we can manage it many times over.” He described how, once the decision was made to have the Chrysler 300C assembled by Magna Steyr, it was integrated into the Chrysler assembly in an impressive six months. Magna Steyr’s reputation as strategic partner has been enhanced by the success of the BMW X3 programme, which Remmel described as the biggest programme in Magna’s entire history. “For the first time BMW entrusted a supplier with the complete development and manufacture of a vehicle,” he said. “The benefits for BMW were that it could expand its model range very quickly.” In this respect Remmel is confident that Magna Steyr met or exceeded BMW’s expectations.
Remmel also went on to propose a new concept for flexible manufacturing for the future – a scalable blueprint for a new flexible plant concept. He admitted, however, that the concept actually describes fairly well what already exists at Steyr.
Car chassis technology and global supply
Just-in-sequence is the real goal
Many Tier One suppliers are in the position that every time they win a new contract they have to build a new plant or facility to meet demands for just-in-time and in-sequence delivery, and ZF is no exception. Peter Buckermann, Vice President, Global Supply Management and Technics, ZF Division Car Chassis Technology, and Head of Logistics, ZF, spoke about how the company’s core competence is not just component assembly, but also logistics, quality, information technology and customer liaison management. “The challenging part is just-in-sequence,” said Buckermann.
Buckermann described the process at ZF Lemförder’s plant in Lebring, Austria, which supplies front and rear axle assemblies for the BMW X3 assembled by Magna Steyr. The plant is 30km away from Magna Steyr and sends out around 33 trucks a day to the final assembly plant. Magna Steyr gives ZF Lemförder 1-2 days notice of the models that will be built, but the precise insequence order is only received 280 minutes before it is required for assembly – not the shortest time that ZF has to deal with. In Chicago, it delivers assemblies for the Ford 500 platform in just 180 minutes: “We need a very robust production system and also a very robust logistics concept.”
Dr Gyula Meleghy
President of Europe and South America
Europe Towers over America
One of the biggest challenges facing the automotive industry is the continuing increase of the price of raw materials. Meleghy spoke at length about the impact that the increase in steel prices will have. This has contributed to the Chapter 11 status of Tower Automotive’s North American operations (since the beginning of February 2005). Seventy per cent of the cost of a stamping is material content, said Meleghy.
He said that the market outside of North America is very different and that there are many opportunities. The company’s key challenge is how the OEMs define their core business. Many OEMs have large press shops but they are increasing their outsourcing. But to what extent will they outsource? Meleghy thinks that the supplier share of the body structures market will rise from around 35 per cent today to 50 per cent. He quoted the recent Mercer Management Consulting/Fraunhofer Society study, which shows a major shift of value-added from the OEMs to suppliers by 2015.
Meleghy said the key to survival in this sector is better utilisation of expensive capital. He cited the example of Tower Automotive’s Zwickau plant, which he said is the most successful press shop in Europe. It produces parts for a number of OEMs including Volkswagen, BMW and Mercedes-Benz. Tower has a clear strategy to try to concentrate press shops rather than keep investing. Press shops can feed component assembly plants, which can be located as close to the customer as needed.
Matrix management is the answer
A common theme among suppliers was the importance of a matrix organisation structure in managing a large global business. Magna Powertrain is formed from the merger of three former Magna divisions – Magna Drivetrain, Tesma and ECS – and President Günther Apfalter said the company is very lean and mean, focusing on disciplined and profitable growth. There are clear spending rules for capital investment and a clear definition of in-house manufacturing competencies. Generally, Magna Powertrain seeks value-added of around 30 per cent, with 70 per cent of value-added bought-in. Centres of Excellence avoid duplication of investment, competences and technologies and lead to optimisation of plant and space. Like Tower Automotive, Magna Powertrain is looking for long-term growth from reduced vertical integration at the carmakers and more opportunities from high-volume engine programmes.
Focusing plants on single customers
The impact of increased complexity on Tier Ones and Visteon’s ‘Focused Factories’ manufacturing strategy was emphasised by Reiner Greiss. “Tier Ones must focus on mass customisation, state-of-the-art order processing and logistics, and reduced complexity by standardisation,” said Greiss. By having factories focused on a single customer and located close to the assembly plant, Greiss maintained that the plant can achieve a far better material flow, which reduces the need for sequencing and warehousing. All focused factories are supported by central staff. Examples of plants operating in this way are the Visteon plants in Emden and Glauchau that supply Volkswagen. They make twin sheet fuel tanks.
Greiss said one of the most important advantages of the focused factory concept is improved communication, as there is a single point of contact for the OEM. This makes it easier to deal with quality problems and change management. Visteon also employs logistics service providers at its focused factories, which means that Visteon can concentrate on core competences and limiting risk.
Key Account Manager, BMW Group account
Full service – high competence
Stefan Schleimer spoke about the formation of ThyssenKrupp Drauz Nothelfer and how the company’s offering extends from concept-to-product planning to some core competences in highly specialised areas. He spoke about some key developments in general assembly technology. For example, ThyssenKrupp Drauz Nothelfer did the simultaneous engineering and supplied the dies and body-in-white for the doors on the BMW 1-series and new 3-series. It came up with a process for automatically rolling on glued door seals with a cycle time of one minute.
ThyssenKrupp Drauz Nothelfer is also responsible for a fullyautomated cockpit installation process that is now in use at four BMW plants.
Gernot Herwig, Senior Sales Manager for Eisenmann, looked at how to calculate the optimum level of automation in a low labour-cost country. He showed that any comparative calculations should focus on a unit price comparison since the investment costs do not vary significantly. He gave the example of Chevy NIVA assembly by GM/AvtoVAZ in Togliatti, which has a very low degree of production automation, and compared it with the lower volume Lada Kalina, assembled by AvtoVAZ in the same location, which is more highly automated.
The main factor is maintenance costs, since both plants still need a certain number of highly skilled staff. In a more automated plant these staff would be used more intensively.
CEO and Partner
One of the most popular presentations of the conference was from Ducati Consulting. Single-handedly representing the two-wheeler industry and Italian manufacturing, Contino spoke passionately about the turnaround of Ducati and the formation of a consulting division, which now helps other Italian manufacturing companies develop lean manufacturing strategies and lean thinking philosophies.
New Venture Creation Specialist
Delphi Technologies, Inc.
Delphi's Deformation Resistance Welding process is claimed as particularly useful for joining tubes said Jayson Pankin. The technology is being adopted by industrial heat exchanger manufacturers he said, but because it is useful in many different areas Delphi has formed a new spin-out company called SpaceForm to develop and market the process. Partners in SpaceForm include Automation Alley and the State of Michigan. The company is looking for new partners in Europe.
The best in body-in-white
Changing demands in body shop technology need to be accounted for said Comau's Franco Deregibus. He maintained that the optimum body-in-white equipment needs to be:
- Easy to set up and commission, by using robust and proven components
- Easy to service and maintain, so that it offers high overall business efficiency
- Able to cope with a high degree of variability, so that new modules can be introduced with little or no impact on current production or engineering
- Key new technologies are wireless connectivity and the ability to fully build and test new equipment off-line so that it can be installed in the plant quickly.
“ The reason why Volkswagen, BMW and Porsche have chosen to locate in the Saxony region is because it is the historical industrial heartland of Europe”
Marcus Lötzsch, President & CEO of the Saxony Development Agency
“ There are a few myths associated with the use of aluminium in manufacturing. But there are a lot of advantages to using it. There is no easy way to reduce carbon dioxide emissions other than to reduce a vehicle's weight”
Dr Geoff Scamans, Chief Scientific Officer of Innoval Technology
“ There is a need to create value networks and to look for partners that can add value, rather than simply reduce cost”
Professor Jürgen Weigand, Professor of Economics at WHU Otto Beisheim Graduate School of Management
“ The automotive industry's future in Hungary is to focus on R&D, as increased labour costs mean it is losing new investment to lower labour cost countries such as Slovakia”
Dr Pal Lukacs, General Director of the Association of the Hungarian Automotive Industry
Added-value elements of AutoMan Europe were the visits to the impressive production facilities at Volkswagen, BMW and Porsche. By Susan Brown
The 2005 AutoMan Europe conference was spread over three days, the first of which included a visit to the Volkswagen 'transparent factory' in Dresden – built to assemble the Phaeton and as a customer reception centre.
Its primary purpose is to promote Volkswagen’s image as a premium brand. Particularly interesting is the 'clean image' wooden-floored conveyor for the main assembly.
There were a total of with 12 presentations from industry experts on Day Two and Porsche's plant, with its spectacular "glass cone", was the venue. The plant also features a centre where customers can collect their cars directly and includes a fascinating museum and conference facilities.
Coffee breaks were sponsored by Delmia (part of Dassault Systèmes) and Schneider Electric. Other stands which attracted interest were set up by IndustriePlanung Fischer, inGenics, KabelSchlepp, Woodhead, Arcelor Auto, Pilz, City of Sunderland, Uddeholm and the Saxony Economic Development Corporation.
After the presentations, delegates were taken to the BMW plant. In his welcoming address there, Peter Claussen, Plant Director, said two shifts a day will be in operation by August this year. He said capacity will be 650 cars per day, but that this could be doubled with minimum investment and maintaining the material flow.
A radically designed building at its centre links the plant's body shop, paint shop and final assembly line. Gerhard Wölfel, Paintshop Director, detailed developments in body finishing.
The body shop is almost fully automated, but will still employ almost 1,000 people, needed to 'supervise' the 500+ robots. The paint shop has the highest level of automation of any single line paint system in the world, according to Wölfel. A BMW innovation is the stop-and-go system: if a robot breaks down, another can take over its work.
The gala dinner was held in the main building of this plant, and delegates dined in the spectacular central hall, designed by award winning architect Zaha Hadid. Bodies-in-white and painted bodies travelled on blue, neon-lit conveyor lines.
Day Three's presentations included the latest business strategies from a range of industry experts. A highlight of the day was the opportunity to tour the Porsche plant, and, for the daring, to take a spin around a racetrack in one of Porsche's fabulous machines.
The Porsche Carrera GT and Cayenne are manufactured at this plant. It was noted that there is a low volume assembly line for the latter. Each team has a number of tasks to perform, with a task time of five minutes. The Carrera GT line seemed no more than 200m long. But nothing has been cut on quality – the quality inspection area seems as big as the assembly area itself! Delegates were then invited to take a spin around the test track in a Cayenne, 'taxi-driven' at high speed in two-car groups by the factory's test drivers. The track is used to test vehicles hot off the production line, as well as for training Cayenne and Carrera GT customers.
For those not keen on speed, there was an off-road driving experience. One of the most interesting aspects was a reminder that the area was part of the former GDR, and in fact, Porsche's plant is built on a former military site – several landmines had to be removed before construction could start.
'Extra-conference' activities included an afternoon of tours in Dresden, a visit to Volkswagen's Dresden plant and further informal networking during a cocktail reception at the Gohliser Schloesschen, a palace built in the 1750s in Rococo style.
According to the feedback we have since received from speakers and delegates following the event, the inaugural AutoMan Europe conference was a great success – in terms of the speaker presentations, networking and social activities and, most importantly, in extending business contacts and opportunities.