GM's downshifts big plans for high-tech wonders in its plants
Worried about the steady erosion of its huge market share, General Motors launched an aggressive modernization program at the beginning of the decade, spending as much as $10 billion to $11 billion a year on capital improvements, much of that in the form of the latest in high-technology assembly methods. Lately, however, it has begun to look as if GM's space-age programs may be grounded. A number of key projects are being delayed, cut back, or canceled altogether.
That includes GM's highly publicized plan to best the Japanese at their own high-quality, low-cost game.
It was January of 1985 when GM chairman Roger Smith unveiled the carmaker's new Saturn Corporation subsidiary. The division would design and build subcompact cars that could, in his words, ``leapfrog'' the best of the imports.
Mr. Smith promised to spend as much as $5 billion on Saturn, and the subsidiary launched a hot and highly publicized national search for an assembly site.
After repeated delays, company officials settled on the small town of Spring Hill, Tenn., where they promised they would build - at a cost of up to $3.5 billion - the most advanced automotive manufacturing complex in the world, employing about 6,000 and producing 500,000 subcompacts a year.
Even as work slowly moves ahead at the Saturn site, a former horse ranch an hour's drive from Nashville, the project's goals are being slashed.
``You can't start it out with a big-bang approach,'' says Richard G. LeFauve, Saturn's president. ``You start it up with a schedule that allows you to solve every problem that pops up.''
Initial employment, Mr. LeFauve says, will be barely half the original target, while production will start at only 200,000 units - less than the output of a typical GM auto assembly plant in the United States. The capital investment in the Spring Hill site will be stretched out, though LeFauve insists it is not being cut.
In an interview in September, the GM chairman noted that some work, such as engine castings, which Saturn hoped to perform in Spring Hill will instead be turned over to existing General Motors plants.
Perhaps most significantly, both Smith and LeFauve concede that the Saturn car will no longer be aimed at the market segment first planned. One key reason the project originally received so much national attention is that GM promised Saturn would be a bottom-end subcompact able to beat the Japanese in both cost and quality.
Now the cars will be larger and more upscale, and General Motors will effectively abandon the bottom end of the economy market in terms of US production, relying instead on so-called ``captive imports'' built by its affiliates in South Korea, Taiwan, Japan, and elsewhere overseas.
What has happened to humble Saturn? There is a variety of problems. For one thing, there is the automaker's current cash crunch. Though General Motors posted a $263.7 million profit during the third quarter, it also recorded a $338.5 million loss on its domestic new car operations. That accelerated GM's announced intention to close 11 GM factories.
Top corporate officials are coming under increasing pressure to cut back on their capital investments, which could top $11 billion this year, $2 billion over budget. Much of that spending has been earmarked for high-tech programs that have been resulting in questionable gains.
Two of GM's newest assembly plants, one in Detroit, another in the Motor City suburbs, use the latest in advanced automation systems, such as robots, yet their employment is substantially higher and productivity lower than many of the older factories run by even GM's domestic competition, never mind the Japanese.
A good example is General Motors' joint venture with Toyota. Based in Fremont, Calif., New United Motors Manufacturing Inc., or NUMMI, is building the Chevrolet Nova, based on the Toyota Corolla, with a relatively ``low tech'' plant that boasts the highest productivity and quality of any in GM's domestic stable.
In fact there have been consistent problems making high technology do what GM had in mind. ``The software has been a problem,'' Smith conceded. This is a key reason GM decided to cut back its ``Buck Rogers'' approach to building its next generation of family cars.
When they have their debut next fall, the GM10s - a code name for their body style - will go up against tough competition, notably the Ford Taurus and Sable models, in the domestic new-car market.
The GM10s were to become the first mass-production automobiles not to be built on the standard, fixed-path, movable assembly line since Henry Ford came up with that technique for his Model-Ts 75 years ago.
Instead, they were to rely on a highly computerized system in which partially assembled car bodies would be shuttled from work station to work station atop individual robot carriers called automated guided vehicles, or AGVs.
Each work station, or ``cell,'' would operate independently, as well. This so-called ``flex,'' or ``cellular,'' approach has a number of practical advantages. For one thing, any changes in factory layout would simply mean some computer reprogramming, rather than having to tear up and rebuild a fixed assembly line.
Cars with problems could either be held at a work station for further work or routed back to repair bays without holding up the assembly line. And a cellular line would allow greater production flexibility, including the building of more models in one plant.
``All this Buck Rogers stuff is nice,'' says a high-level GM source, who asked not to be identified. ``But at the last minute, they copped out.''
The reason for the change in plans, he says, is that work on the flex assembly process has been difficult and slow, with many of the bugs in the computers and AGVs still needing to be worked out.
Relying on flex, it appeared GM10 would be falling behind schedule. That prompted GM executives and engineers to revert to ``the most recent production method that worked,'' the more traditional assembly-line approach in use at the plants building GM's Chevrolet Corsica and Baretta models, both of which have just made their debuts.
Such cutbacks can be found throughout the corporation. A few months back, GM canceled plans to build a technologically advanced replacement for its current Firebird/Camaro sporty cars because of rising costs and questionable reliance on high-tech systems.
The GM10s would have boasted plastic bodies and electronic gadgetry such as ``heads-up displays,'' where important information would be displayed as a three-dimensional reflection on the windshield.
General Motors has in no way given up on its effort to use high technology as a design and manufacturing tool, but it is clear that its goals have been humbled, and as NUMMI has shown, that it can no longer expect all of its problems to be solved simply by throwing in some computers or robots.