SCDigest editorial staff

Chrysler announced last week plans to further revamp its North America manufacturing strategy based creating “flexible” factories capable of making several models of cars under one roof. The plan also calls for increased use of automation (robots) to enable the strategy, and comes on top of earlier moves by the company to shift more manufacturing responsibilities back on to suppliers.

Traditionally, U.S. car manufacturers have only produced only one or sometimes two models in a given plant. Chrysler’s strategy calls for it to be able to build three or four different models per factory. The results could be higher plant utilization, and a significant lowering of the number of vehicles per model that must be built for a car line to be profitable.

The strategy will be implemented first at Chrysler’s small car factory in Belvidere, Ill., after experiments in company factories in Canada and Toledo, Oh. Company plans call for the program to move next to a Chrysler factory near Detroit, and then on to the Chrysler’s 12 other North American plants.

The Wall Street Journal reports that “with the U.S. vehicle market becoming more fragmented, it is increasingly difficult for car makers to sell out a typical plant -- which can produce roughly 200,000 to 240,000 vehicles a year -- when it is dedicated to making just one model. Chrysler's new approach would cut to 75,000 to 100,000 the volume of sales that would define success for a vehicle.”

Though new for North American automakers, Japanese producers have been deploying flexible manufacturing strategies for years – outside of North America. In plants in Japan, some Honda and Toyota plants can sometimes produce as many as six models. But even Japanese companies have had a hard time fully introducing the concept in North America.

To enable the strategy, Chrysler will invest hundreds of millions in new robots, which can be programmed to support multiple models. The company estimates it will reduce by 50% or more the time it takes currently to switch over lines for different models. The strategy will also allow designers more flexibility because they will be less hampered by very rigid line processes and set-ups.

Outside experts are estimating the total savings to Chrysler could be in the billions of dollars.

This strategy comes along with other steps the company is taking to improve operational efficiency and flexibility. Recently, Chrysler implemented a strategy that put much more responsibility for manufacturing major assemblies on to suppliers feeding Chrysler’s Jeep plant in Toledo, which only performs final assembly of the vehicles – a major shift in operations (see SCDigest Oct. 14, 2004).