Embracing new ideas on the plant floor helped fuel GM's success.
General Motors experienced phenomenal growth during its formative years. Through a series of various strategic acquisitions and shrewd business moves, the company quickly became the largest automaker in the world. For most of the 20th century, GM ranked as the world’s largest enterprise.
By the mid-1940s, GM accounted for 44 percent of U.S. automotive sales, compared to 12 percent in 1921. In 1956, GM became the first corporation to report annual net profit of more than $1 billion. At the time, it controlled more than 50 percent of the U.S. market.
General Motors grew into an industry behemoth through strategic acquisitions, savvy marketing and financial wizardry. The company thrived on a decentralized decision-making structure that was supported by systematically gathered data.
However, GM’s innovative manufacturing strategy also deserves equal credit, especially when it comes to exploiting the economies of common, interchangeable parts and components.
“Although the marketing strategy [of annual model changes] stands out in the popular mind, only the manufacturing behind it made the marketing shift possible,” notes Daniel Raff, associate professor of management at the University of Pennsylvania’s Wharton School of Business (Philadelphia). “Production plans to minimize costs were a central part of the strategy . . . and they provided the practical foundation for making the marketing idea so profitable,” he argued in an article in the Winter 1991 issue of Business History Review.
Over the last 100 years, GM engineers also pioneered concepts such as changeover, flexible assembly, automation, computer simulation, machine vision and robotics. They have continually innovated on the plant floor with new assembly processes and production tools. As a result, manufacturing has been the underlying force behind the company’s marketing and financial success story.
Manufacturing engineers at GM have developed several innovations over the last century that have dramatically improved assembly line productivity, product flow and efficiency. One of those actually predates the creation of GM itself.
By developing the process of “progressive assembly,” Ransom E. Olds and his employees at Olds Motors Works (Lansing, MI) were able to manufacture 2,500 copies of the curved dash Oldsmobile in 1902. Up until then, the leading manufacturers in the fledgling auto industry were only producing several hundred vehicles a year. For instance, Olds assembled just 425 vehicles in 1901.
The progressive assembly technique pioneered by Olds used wooden tables and metal stands mounted on wheeled dollies to speed production and improve workflow. The carts were manually moved from one workstation to the next as parts and components were installed and assembled in sequence to become a completed vehicle. When GM acquired the Olds operation in November 1908, the factory was assembling more than 6,000 cars a year.
At the time, Buick was GM’s other production champion. But, it still lagged behind rivals such as Ford Motor Co. (Dearborn, MI). When a former railroad shop supervisor named Walter Chrysler became works manager at Buick in 1912, he implemented a series of innovations to reduce the time and cost of final assembly. He set out to streamline the production process by eliminating wasted time and materials, and making Buick cars easier to assemble.
Chrysler introduced methods and techniques that were new to the auto industry, such as determining the cost of a car in advance of production, rather than setting the price by guesswork after it was assembled. Chrysler had honed his skills while employed in the locomotive manufacturing industry.
Buick assemblers had been using traditional carriage-building methods. It took 4 days to produce one automobile frame. Each wooden frame was sanded, painted several times and dried for 12 hours between coats. Chrysler slashed production time in half by eliminating several coats of paint and reducing drying time by increasing the temperature in the drying rooms.
The building used for final assembly had numerous posts scattered about the floor to support the roof. To increase the amount of available space and improve material flow, Chrysler braced the roof with stronger trusses and removed the support beams.
When Chrysler arrived on the scene, each Buick model was almost completely assembled in one spot on the factory floor. Crews carried parts to each workstation, assembled part of the vehicle and then moved on to the next workstation.
To speed up production, Chrysler installed a track throughout the plant that was made from two-by-fours. After the wheels and springs were attached to the frame, vehicles were pushed along the track and, as the car came to assemblers, they each attached a part before the car was wheeled to the next workstation. Chrysler claimed that Ford operated its final assembly line on a chain conveyor after Buick had begun its own nonmotorized system.
Because of the new assembly process, Buick output increased from 45 to 200 cars a day. As a result, production increased to 28,000 units in 1912. By 1915, Buick assemblers were turning out 150,000 cars per year. Within 4 years, Buick was generating $48 million in sales annually-more than half the money GM earned.
Chrysler left GM suddenly in 1919, because he was frustrated by a long-running feud with Billy Durant, the company’s flamboyant founder and president. A few years later, Chrysler started his own company.
The Buick manufacturing complex in Flint thrived as GM’s most vertically integrated facility. All parts were made in-house, including cap screws, nuts and bolts.
In 1926, Buick engineers developed a “unified assembly line.” It was hailed as the largest and most efficient car assembly system in the world. The goal was to bring all final vehicle assembly into one factory, and to connect the supply of parts from the rest of the factories by an intricate system of overhead conveyors.
The main assembly floor had a maze of automated conveyors converging from all angles to bring parts directly to each assembly station. The highlight was the engine line conveyor, which was hailed as the longest in the world. Each six-cylinder engine traveled one-half mile from the engine plant to the assembly line in an enclosed conveyor. Because of the new line, annual production at the Buick plant was boosted from 170,000 vehicles to 240,000.
General Motors engineers also pioneered the concept of interchangeable parts. In 1909, Durant arranged to have the wooden body of a Buick Model 10 cut in half lengthwise and crosswise. He then tinkered with the chassis, increasing its length and width. The result was christened the Oldsmobile Model 20 and it went into production a few months later.
During the Model 20’s first year, more than 6,500 units were sold. “Billy had cut Oldsmobile’s lead time and development costs to a fraction of what they would have been if Oldsmobile had tried to develop the car on its own,” says William Pelfrey, author of Billy, Alfred, and General Motors (Amacom). “It was another industry first: the use of shared components among different brands.”
Just a few months before GM was born, Henry Leland, the founder of Cadillac, received the Dewar Trophy from the Royal Automobile Club of England for developing the first vehicle equipped with interchangeable parts. At Brooklands Motor Circuit, three Cadillac Model K runabouts were driven 10 laps around the banked track. Then, each vehicle was stripped down into a pile of 721 components. The parts were jumbled into a heap and reassembled by a couple of mechanics. The three cars were then driven 500 miles around the track.
Use of standardized, interchangeable parts for various models eventually helped GM grow into an industry giant, thanks to the efforts of Alfred Sloan. While many individuals have led GM over the last century, Sloan is more synonymous with the company than all the others. He served as CEO from 1923 to 1946. Sloan also served as chairman of the board from 1937 to 1956. During that time, GM experienced steady growth and phenomenal market share.
When Sloan took over the reins, GM was little known outside of Wall Street, which recognized it as a giant holding company that controlled several nearly autonomous automakers and various parts-making subsidiaries. General Motors was comprised of a dozen car companies that were each managed separately, with a high degree of product overlap. The manufacturing operations of GM’s various divisions essentially had nothing to do with one another.
Sloan implemented systematic management and created divisions that were managed objectively from a corporate headquarters. Top management in Detroit focused on the numbers generated by each division, such as sales, market share and inventory. They left the daily operations up to division heads scattered in Dayton, Flint, Lansing, Pontiac and other towns. Many of those general managers were rewarded for their performance by being promoted to the headquarters office.
In the early 1920s, too many cars were being manufactured for market conditions and not enough raw materials were available to sustain production. To solve the problem, Sloan developed a product strategy targeted at consumers’ specific aspirations. The “car for every purse and purpose” policy, which was first announced in GM’s 1924 annual report, divided the market into price segments ranging from Chevrolet on the low end to Cadillac on the high end.
“The future problem of the automobile industry from the financial or business viewpoint is the great question of volume,” Sloan wrote in 1925. “This is one of the points in which General Motors has not made the gain . . . that it has got to make from now on.”
To achieve high-volume production, Sloan urged all GM divisions to start using common parts. In 1923, he established a general technical committee of engineers from the various divisions to discuss problems of common interest.
Sloan noted a gap in the GM model spectrum between Chevrolet and Oldsmobile in 1926. He decided to make a car largely from standard Chevrolet parts to fill the void. Sloan suggested combining an Oldsmobile engine and a Chevrolet chassis, to be assembled in Chevrolet plants. The new car was called a Pontiac and the strategy proved to be a profitable success, because of the small capital investment involved due to little or no need for new tools, jigs and fixtures.
Sloan’s concept of scale economies yielded great profits for GM, especially during the Great Depression. By the mid-1930s, Buick plants were making chassis and engine parts for use in Oldsmobile and Pontiac vehicles. All three brands also shared similar body shells.
In fact, GM’s plants in Linden, NJ, and Southgate, CA, assembled cars under the Buick, Oldsmobile and Pontiac nameplates. At the same time, Chevrolet shared many under-the-hood parts with Cadillac and LaSalle, which was introduced in 1927 to fill a price gap between Buick and Cadillac.
“The common parts strategy enabled GM to meet [the] competition with lower costs,” claims Raff. “GM’s rise to dominance really began with economies of scope in production. Only then did model changes, and the multi-product line along with them, become an important force in the evolving industry and firm structure.”
Sloan set up GM’s vast parts-making divisions as independent profit centers to make specific categories of parts for the whole company. For instance, the New Departure Div. (Bristol, CT) made ball bearings, while the Saginaw Div. (Saginaw, MI) mass-produced steering gear for GM vehicles.
By treating the in-house companies as independent businesses, Sloan sought to “impose the cost and efficiency discipline of the market while preserving the coordination advantages of a unified company,” says Jim Womack, chairman of the Lean Enterprise Institute (Cambridge, MA).
“Sloan’s innovative thinking seemed to resolve the conflict between the need for standardization to cut manufacturing costs and the model diversity required by the huge range of consumer demand,” adds Womack, coauthor of The Machine That Changed the World (The Free Press). “He achieved both goals by standardizing many mechanical items, such as pumps and generators, across the company’s entire product range and by producing these over many years with dedicated production tools.
“At the same time, [Sloan] annually altered the external appearance of each car and introduced an endless series of ‘hang-on features,’ such as automatic transmissions, air conditioning and radios, which could be installed in existing body designs to sustain consumer interest,” explains Womack.
One of GM’s greatest contributions to the auto industry was the annual model change or the so-called theory of planned obsolescence. That required the automaker to pioneer numerous changeover techniques. Executives at GM began to discuss the concept in the mid-1920s, but “change became regularized some time in the 1930s,” Sloan wrote in his autobiography, My Years with General Motors (Doubleday).
As a result, Ford’s commanding market share dwindled from 55 percent in 1921 to 30 percent in 1926, a year before it stopped producing the Model T and unveiled the Model A. Ford’s biggest competitor was GM’s Chevrolet division. By adopting state-of-the-art mass production techniques and incorporating annual styling changes into its vehicles, Chevrolet sales rose dramatically during the 1920s.
In 1922, Sloan hired a former Ford engineer named William Knudsen. He previously served as production chief at Ford’s famous Highland Park plant, which perfected the moving assembly line. His first task at GM was to develop a long-range production plan for Chevrolet. When he took over, Chevrolet sold 153,270 vehicles annually; within 5 years, the division became the industry’s top seller, with sales topping 752,000 units. By the late 1920s, Chevrolet sold more than 1 million vehicles and became the No. 1 brand in the United States.
Some GM executives had wanted to get rid of the money-losing Chevrolet division. But, under Knudsen’s leadership, Chevrolet became the foundation for GM’s long-term production strategy. “He built an organization and production system that could accommodate change and expansion,” says David Hounshell, professor of technology and social change at Carnegie Mellon University (Pittsburgh).
Knudsen pioneered the concept of flexible mass production. At the time, manufacturing at GM was far more decentralized and much less vertically integrated than at Ford.
“Sloan had reasoned that GM would have to make the same profit on capital invested in plant and equipment for the manufacture of its various components as outside suppliers charging reasonable prices for these components,” says James Flink, author of The Automobile Age (MIT Press). “So, GM depended more on outside suppliers. This alone gave GM far more flexibility than Ford.”
When Knudsen began to revamp Chevrolet’s assembly lines, all old machines were discarded. “New heavy standard machines (not single purpose) were installed, and the fixtures strengthened so as to withstand the spring, which is the greater factor [in causing inaccurately machined parts] than wear,” Knudsen wrote in an article published in Industrial Management magazine in 1927. “Sequence lines were established . . . to pave the way for the conveyors which were to follow.”
“This new direction allowed limits of precision to be lowered, resulting in the reduction of scrapped material,” says Hounshell, who is the author of From the American System to Mass Production, 1800-1932 (Johns Hopkins University Press). Machines were not permanently dedicated to a single part or operation. Instead, their operations were dedicated through jigs and fixtures, which were much less expensive to replace or update.
Under Knudsen’s flexible automation strategy, each plant manager was responsible for selecting and purchasing production equipment. He also convinced GM executives that a Fisher Body plant should be attached to each assembly plant so that body production could be coordinated precisely with the daily output of each plant.
In late 1928, when Chevrolet switched from a four- to a six-cylinder engine, the entire changeover only took 3 weeks. As a result, when the new model was introduced in January 1929, buyers did not have to wait. Within 8 months, GM plants turned out more than 1 million six-cylinder engines.
“Knudsen and his Chevrolet production men achieved the desired high volume by replacing old machine tools with new ones and adopting sequence lines or, as Knudsen called it, ‘getting all noses pointed in the same direction,’” says Hounshell. “Knudsen played a critical role in raising the level of General Motors’ mass-production know-how.”
All that effort eventually paid off for Knudsen. He was promoted to president of the Chevrolet division in 1924, and served as president of GM from 1937 to 1940, when President Franklin D. Roosevelt asked him to oversee the government’s national industrial defense production operations.
Hard, Colorful Bodies
When GM was founded 100 years ago, wood ruled in the auto industry. Bodies, chassis and wheels were made from ash, elm and maple following centuries-old carriagebuilding techniques. After they were sawed and shaped, individual pieces of wood were glued and screwed together in a labor-intensive process.
Until the mid-1930s, most car bodies were framed in wood and covered with sheet metal skins. But, it was an expensive and time-consuming process. Among other things, wood took months to cure and required special kilns to reduce moisture.
The auto industry consumed more hardwood lumber than the furniture and building trades combined. Fisher Body, a division of GM that pioneered “closed” cars for Cadillac, used 250 million board feet of lumber in 1924 alone. To supply that thirst, it owned huge tracks of timberland in Arkansas and Michigan, and operated several saw mills.
Engineers at Fisher Body developed jigs and fixtures for mass-production applications. As a result, large body parts, such as doors and roofs, could be built-up as subassemblies.
General Motors was one of the last automakers to switch to all-steel bodies in 1937. But, Fisher Body developed the auto industry’s first one-piece all-steel roof, called the Turret Top, in 1934. Previously, car roofs had been built around a wooden frame covered with canvas, limiting both the vehicle’s structural integrity and its design potential.
The new roof, formed from a single sheet of seamless steel, was introduced on all GM vehicles beginning with the 1935 Chevrolet lineup. In 1936, GM introduced the Unisteel body, which was formed by welding the steel inner and outer panels into a permanent, shock-resistant structure.
In addition to experimenting with new types of materials, such as fiberglass, GM engineers pioneered new painting methods and techniques. Painting was a laborious process that created a big production bottleneck. Early car bodies were manually painted with 12 or more coats of varnish, with sanding and polishing in between.
Drying time was a huge limitation on production capacity, because the multiple coats of varnish would require 3 to 8 weeks to dry. As a result, some manufacturers used black enamel, which dried faster, to reduce cost and boost production. But, that still required at least 4 days of drying time.
In 1920, scientists at E.I. du Pont de Nemours & Co. (Wilmington, DE), a major GM shareholder at the time, developed a liquid celluloid laced with sodium acetate. The substance was capable of carrying extra pigment in suspension, thereby yielding much more brilliant colors. It could also be applied with a spray gun instead of a brush, and it dried in only a few hours.
The new paint, called Duco, was far superior to traditional baked enamel. It was not susceptible to fading, cost less money and required less handwork than varnish did. The paint also didn’t require high-temperature drying ovens.
Before Duco, an automaker assembling 1,000 cars per day needed 21 acres of covered space to hold 18,000 cars while they were undergoing drying and finishing, which took at least 3 weeks. Duco reduced drying time from 336 hours to 13.5 hours and, eventually, just a few minutes.
The new paint helped GM shave 20 percent off the cost of a car body and 5 percent off the total cost of a car. Duco paint was introduced on Oakland models in 1924. By 1926, Chevrolet was using it on all of its cars. That served as a huge competitive advantage against its arch-rival, the all-black Ford Model T.
Robots, Vision and Computers
A major breakthrough for robots occurred in 1964, when GM ordered 66 Unimates for its new Lordstown, OH, assembly plant. The spot welding robots boosted productivity and allowed more than 90 percent of body welding operations to be automated vs. only 20 percent to 40 percent at traditional plants, where welding was a manual, dirty and dangerous task dominated by large jigs and fixtures.
Another milestone took place in 1978, when the first programmable universal machine for assembly (PUMA) robot was used at Rochester Products, a GM division that specialized in carburetors, fuel injectors and exhaust systems. It featured a robotic first-a special programming language that allowed the device to be controlled off line.
An article in the April 1978 issue of ASSEMBLY claimed that GM was using the robot as a test bed for automotive subassembly operations. “The purpose of the project is to demonstrate the feasibility of assembling a wide range of subassemblies with modest retooling and programming changes,” explained the article. A mix of robots, parts feeders, transfer mechanisms and people was used to assemble a variety of products weighing less than 5 pounds.
A few years later, ASSEMBLY visited the Fisher Body plant in Livonia, MI, which had recently implemented a flexible assembly system using state-of-the-art robotics technology. The system was designed to automatically assemble door trim panels at a rate of 424 assemblies per hour. A 37-station nonsynchronous conveyor used 13 robots for the assembly process, which included adhesive dispensing, clinching, screwdriving and stapling.
Vision systems and sensors were an integral part of the workcell. For instance, three sensors determined which car line and style of right- and left-hand trim panels were to be assembled. The information was relayed to a master programmable controller. In addition, the fastener attachment operation used data provided by two vision cameras to determine the correct location of the slotted holes in foundation boards.
The assembly line was designed to run 12 different trim panels for full-size Buick and Oldsmobile sedans. “It is significantly less labor intensive than conventional manual assembly lines and requires 50 percent less floor space,” reported ASSEMBLY.
General Motors also was at the forefront of applying computer technology. The world’s first programmable logic controller (PLC) was used by the company to control production equipment. It allowed manufacturing engineers to replace hard-wired relay systems with electronic devices. The first PLC application occurred in 1969 at GM’s Hydra-Matic transmission plant in Ypsilanti, MI.
In the 1970s, GM engineers experimented with early machine vision technology. SIGHT-I, the first industrial computer vision system on a U.S. automotive production line, was installed in 1977 at GM’s Delco Electronics Div. plant in Kokomo, IN. It was used to locate and calculate positions of transistor chips during high-energy ignition systems assembly. The camera system also verified a chip’s structural integrity and rejected defects.
Computers were also used to control pneumatic fastening tools at GM’s Fairfax Assembly Plant (Kansas City, KS). According to an article in the November 1971 issue of ASSEMBLY, the computer-based system “provides better control of critical assembly operations than can be achieved by 100 percent inspection made with conventional hand torque wrenches.” It performed two independent functions to guarantee that the correct torque value was applied to 30 critical fastened joints on Buick, Oldsmobile and Pontiac sedans.
At its futuristic Lordstown plant, GM used computers to simplify assembly line operations for greater efficiency and accuracy. A computerized system was used to balance workloads along the assembly lines that built the innovative Vega sedan.
“The system allows individual operators enough time to do a job correctly, which minimizes line disruptions and out-of-station repairs,” reported an article in the October 1970 issue of ASSEMBLY. “When options or model mixes change, the computer can immediately rebalance the line for the new conditions.”
During the late 1970s, GM engineers developed a standardized computer language called Manufacturing Automation Protocol (MAP) to communicate with PLCs, robots, conveyors and other plant-floor equipment. By the mid-1980s, computers were used in GM plants to monitor and control production. An article in the August 1986 issue of ASSEMBLY explained how the Fisher Guide Div. (Anderson, IN) used computer-integrated assembly to produce a wide variety of headlights and taillights. The plant had recently established a “factory-within-a-factory” to assemble high-level stoplights, which were required on all 1986 model year automobiles.
At predetermined time intervals, an Allen-Bradley industrial computer connected to smaller PCs polled numerous programmable controllers for fresh information about inventory levels, rejects, fault conditions and the production status of parts produced. A pair of PLCs monitored and controlled the interaction of assembly robots. After processing the information, the computer updated a centrally located color graphic display screen to reflect the new conditions every 30 seconds.
In 1995, GM launched a synchronous math-based process to digitally design vehicles, components and production processes. By the late 1990s, digital tools allowed engineers to routinely optimize workflow and address ergonomic issues by simulating assembly line conditions.
Potential problems, such as tool-to-part interface, could be identified and resolved prior to actual production ramp up. That was a far cry from the days before computers, when GM engineers often used large 2D and 3D boards to manually configure assembly lines.