A few weeks ago we had a post on 100th anniversary of Ford’s moving assembly line. Now the New York Times has an article on how the assembly line has evolved at Ford and other automakers (100 Years Down the Line, Oct 29). What stands out is how Ford and others are seeking to manage variety.
Flash forward to today, inside Ford’s five-million-square-foot, ultramodern Michigan Assembly Plant in the city of Wayne. Nearly 5,000 hourly workers staff the plant in three shifts. The assembly line is three miles long and features more than 900 robots. In the last four years, Ford has spent more than $500 million to refurbish the plant, which dates from 1957.
What makes the plant unusual is the variety of vehicles it makes. Its primary product is the Focus, one of the best-selling cars in the world. But the factory does not just build Focuses with traditional gasoline engines. It can also build them in electric and plug-in hybrid versions.
And the company recently added production of the new C-Max Hybrid — a smallish wagon that shares many parts with the Focus but has an entirely different shape and style.
Recently, as Focuses and C-Maxes hummed smoothly along the line behind him, Mr. Fleming, the Ford executive, said that the company was intent on making all its plants as flexible as Michigan Assembly.
“Within the next five years, our plants globally will be able to produce an average of four different models or derivatives of a model,” he said.
So how is Ford able to manage so much variety on one line?
In a nutshell, platform rationalization. In the auto industry, platforms refer to the mechanical parts that underlie a model. The sheet metal and interior that the customer can see may differ across models built on the same platform, but a lot of the stuff underneath all that are largely the same. This would mean, for example, that the points where the conveyor system can grab a body as it moves through are identical across models. Conveyors and robots then don’t need to be reprogrammed between different models coming down the line.
Ford currently has 15 platforms under production and is aiming for nine by 2017. GM is similarly trimming its way down from 30 platforms to 17. Note that in both cases, these are global numbers — not just for the North American market.
Trimming down platforms potentially limits consumer choice; for example, I am pretty sure now that the Crown Vic is no more that Ford is no longer producing a full-sized, rear-wheel drive car anymore. But to the extent that an automaker is able to serve multiple markets with models built on the same platform, it gains a lot of flexibility. It can support variety with fewer plants and hence lower capital expenditures. It can hedge uncertainty in demand across models; if one variant proves wildly popular it can shift more of the line capacity that way.
That’s all good, but arguably this isn’t all that new. The benefits of producing multiple models on one line has been touted for years. It gets plugged in The Machine that Changed the World and other books that go back 15+ years. So why the big hoopla now? Part has to be due to the expense that is involved. Shrinking platforms while maintaining variety means a lot of redesigned cars and that takes money. The US automakers are in a stronger financial position than they have been in a while so they can now afford to bring some new vehicles to market.
Another issue is capacity. As GM and Chrysler went through bankruptcy, they shuttered a number of plants. But if they are going to offer a full-line of vehicles, models need to find new homes. Said another way, if you are going to do more with less, you need greater flexibility. (A caveat is in order here. Some argue that car makers are bringing a lot of capacity online — either with new plants or expanding output of existing plants — so the stretching-capacity story may not hold for long.)
A final point. While the US auto market has rebounded from recession, the real growth opportunity is overseas and every automaker is trying to grab their share. Hence, common platforms that leverage engineering and development costs a global market are very attractive.