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Magna’s Dortec Industries plant in Newmarket, Ont. (Moe Doiron/The Globe and Mail)
Magna’s Dortec Industries plant in Newmarket, Ont. (Moe Doiron/The Globe and Mail)

Built to lead: Magna’s mission to be a world-class manufacturer Add to ...

Dortec is a fairly typical auto parts plant inside, although its bright lights and cleanliness distinguish it from many other factories in Ontario’s manufacturing heartland. That’s one of the more obvious influences of the Toyota production system. During a recent 45-minute tour of the factory, Mr. O’Hara, Mr. Seguin and other Magna Closures executives explained how the rest of it played out.

Assembly lines were shortened. On some lines, several workstations were combined into one to reduce the amount of time it takes to create a latch.

There are no motorized forklift trucks – in part because it permits narrow aisles between assembly cells, which reduces the amount of wasted floor space and enables it to be used for new machinery.

All the employees were empowered to stop assembly lines if they spotted a quality problem.

The plant established standard practices “so that we produce the same product the same way across multiple shifts or multiple lines,” Mr. O’Hara says.

Quality improved by 60 per cent, capital spending on new projects fell by 20 per cent and the changes cut the amount of floor space being used by 15 per cent.

The plant was one of the few Magna operations that remained profitable through what became a perfect storm for the company and the auto industry as a whole, as North American vehicle production plunged to 8.7 million in 2008, less than half the peak hit in 2000. Dortec’s ability to stay profitable “was a sign that we got it before it was too late,” Mr. O’Hara adds.

But the slump also brought lessons, teaching executives that buying flexible equipment is essential so that when orders fall because a customer cuts production, the plant doesn’t have to keep cranking out latches to keep expensive machinery in use. Continuing to produce parts so that equipment isn’t sitting idle creates excess inventory, one of the cardinal sins in Toyota’s manufacturing ethos.

The workers buy in

Magna also adopted another element of the Toyota production system for use in its world-class manufacturing program – employee suggestions. In 2009, employees offered 27 suggestions to streamline production processes, improve ergonomics or eliminate waste.

By last year, that number had grown 17-fold to 473 ideas – more than 98 per cent of the workers on the factory floor had contributed. For example, workers suggested reducing the size of some of the racks next to an assembly line so less material has to be stored there, opening up floor space for other use.

There are monetary rewards for suggestions, a policy that catches the attention of Prof. Wolfe. “When you give [employees] a greater stake in how the organization is working, the results always reflect it,” he says.

After all the changes, Dortec has increased productivity by 25 per cent since 2006, even though auto production is still far from pre-recession levels.

The numbers highlight that the plant has become world class, but when asked how he knows it, Mr. O’Hara points to a change in attitude that can’t be quantified: “When people stop talking about how good they are and how good we are and just look at what needs to be done next. How do we continually improve?”

The world-class manufacturing project is one of three critical priorities at Magna, Mr. Walker says. The others are innovation and a leadership development system that seeks to identify the company’s best people. And while he believes everyone in the company is convinced of the need for continuous improvement, Magna as a whole is about halfway to where he wants it to be.

The Magna Closures executives say the streamlined production system will have a dramatic impact in reducing costs and improving efficiency at other divisions that make much larger parts, such as Cosma International Inc., Magna’s metal-bashing subsidiary that makes frames and chassis components and the division that makes engine and transmission parts.

And Mr. Walker has kicked off a program to examine every action taken at the company’s head office in Aurora, Ont., studying why activities are done, whether they can be done more efficiently and if overhead costs can be cut. “At the end of the day, we’re paid by our customers to make parts,” he says. “We’re not paid to run any office anywhere, so really all value added comes from the shop floor.”

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