For many years, American automakers have talked about how “flexible” their factories are. But, now that the industry is shifting its gears to produce fuel-efficient cars, why can't the same factories that assembled pickup trucks and sport-utility vehicles in the past be used to produce subcompact sedans?
For many years, I’ve been hearing American automakers talk about how “flexible” their factories are. Six years ago, senior executives from Ford Motor Co. (Dearborn, MI) and General Motors Corp. (GM, Detroit) delivered keynote speeches on the topic at the Assembly Technology Expo in Rosemont, IL.
Both executives boasted about their flexibility and claimed that things would be different next time the industry was rocked by a dramatic market shift. In fact, when I interviewed the Ford vice president afterwards, I was informed that “flexible manufacturing will allow [us] to respond quickly to changes in customer demand and adjust products according to market trends.” At the time, the altruistic goal was to build multiple vehicle configurations –– everything from large pickup trucks to sportscars –– on the same assembly line.
The Motor City executive told me that “manufacturing needs to get flexible. Rapid and radical shifts in technology, market wants and needs, economic and political conditions may find us on roads we never planned or wanted to go on. We all have to be prepared to switch paths, to be ready for whatever direction the circumstances take us. The only way to do that is with a flexible manufacturing system.”
Again, those words were uttered six years ago. During a more recent speech at the annual Management Briefing Seminars in Traverse City, MI, a GM executive defined flexible manufacturing as “the ability to respond to changing customer demand quickly and efficiently.”
No matter what definition is used or how it is interpreted, it’s beginning to look like the flexible factory concept may be just a myth, which is something that I pondered in an article I wrote several years ago.
Of course, there have been some success stories in the auto industry. For instance, GM’s plant in Valencia, Venezuela, assembles 9 different platforms with 19 different body styles.
Most U.S. assembly lines today are much more flexible than they were just a decade ago. But, the flexible fallacy has been exposed in the last few weeks as the auto industry readjusts its marketing and manufacturing compass.
Faced with record prices at the pump, American consumers are shifting away from large gas-guzzling pickups and sport-utility vehicles (SUVs). As a result, automakers are struggling to downshift from trucks to small, fuel-efficient cars.
According to a leading market intelligence firm, year-over-year sales of large SUVs were down 29 percent in April, while large pickups were down 17 percent. At the same time, sales of subcompact sedans rose 33 percent.
Ford has responded to the market by cutting its North American production by 40 percent through the end of this year. GM has responded by announcing that it will shutter its pickup and SUV assembly lines in Janesville, WI; Moraine, OH; and Oshawa, ON.
Ironically, those truck plants that are being closed were lauded not too long ago for their productivity and profitability. If the auto industry is truly “flexible,” why can’t their assembly lines be quickly changed over to build some of the small cars that are suddenly now in such hot demand?
Who failed to meet this flexibility challenge? Perhaps we should point a finger at senior management. But, on second thought, maybe this bizarre scenario has something to do with those funny-looking green aliens that I thought I spotted the last time I was in Detroit.