Optimism takes place of gloom at Automotive Research conference

Posted on August 2, 2011

TRAVERSE CITY — The doom and gloom in the automotive industry is lifting, judging by the comments and presentations at the annual automotive conference that started Monday in Traverse City.

During the first day of the Center for Automotive Research’s Management Briefing Seminars, speakers talked about expansion possibilities at Volkswagen’s U.S. assembly plant, new uses for communication technology such as OnStar and a rapidly changing factory culture at Chrysler.

About 800 have registered for the conference, although 1,000 are expected to attend.

Even against the backdrop of stalled automotive sales and a shaky economic recovery, attendees were upbeat.

“I really do think there is optimism. Clearly, that is translating into very direct investments here,” said Bruce Brownlee, the top executive for Toyota at its Toyota Technical Center in Ann Arbor. “It’s a very different environment from two years ago.”

Lessons from Fiat

Chrysler has saved $316 million since it began adopting Fiat’s manufacturing process, said Massimo Risi, head of world-class manufacturing for Chrysler.

Risi, who spoke on a panel Monday, said Chrysler plant workers have offered more than 230,000 suggestions, and about 10,000 significant improvement projects were undertaken.

The company is having success with the new processes because it recognizes that employees in different countries are motivated by different communication approaches, Risi said.

In Turkey, Risi said, Fiat gave employees new flat-screen televisions when a new car was launched. “In the U.S., employees are justifiably proud of a history of adapting to a new environment to build a new country,” Risi said.

Since June 2009, Chrysler has invested nearly $3.2 billion in its U.S. plants. Fiat, which began with a 20% stake in Chrysler in 2009, became the majority owner last month.

Praise for the UAW

The UAW’s image as a union that fights progress and plant improvements is outdated, two speakers said Monday.

Ron Harbour, a partner with the automotive practice of Oliver Wyman, said the UAW has helped GM, Ford and Chrysler improve their quality and manufacturing processes.

“Most people … do not realize how much has been done in the plants by the UAW and (the) CAW,” Harbour said.

Kenneth Knight, GM’s executive director of global and North American manufacturing, agreed.

“In many cases, the UAW hasn’t gotten the credit it deserves for helping our business come as far along as it has today,” Knight said.

The UAW is in national labor talks with the Detroit Three to replace a four-year contract that expires Sept. 14. UAW President Bob King is to speak Wednesday.

VW poised for growth

Volkswagen hired its 2,000th employee at its new, $1-billion plant in Chattanooga, Tenn., in July and is capable of building another car at the plant, said Don Jackson, president of manufacturing for Volkswagen’s manufacturing operations at Chattanooga. He spoke at the conference Monday.

Jackson said Volkswagen expects to build about 150,000 Passats per year at the plant, which opened in May and is capable of making about 220,000 vehicles per year. “We really built it with expansion in mind,” Jackson said.

Volkswagen executives have talked about adding Audi production in North America, but Jackson said it is unlikely that Volkswagen would make an Audi model at the plant.

Sonic production starts

Conference speaker Knight said Monday that GM started regular production of its Chevrolet Sonic subcompact car Monday at its Orion Assembly plant.

The Sonic, which goes on sale this fall, is the only subcompact car manufactured in the U.S. GM also will build the 2012 Buick Verano, a luxury version of the Chevrolet Cruze compact, at the plant and has invested about $500 million to prepare the plant for the new cars.

GM expects to make a profit on the Sonic through a combination of flexible manufacturing processes and a special agreement with the UAW.

The union agreed to have 40% of the work force make about half the UAW’s standard $28-an-hour wage at the plant.