General Motors Co. , seeking the Holy Grail of auto making, plans to emulate Magna International Inc. and turn a shuttered factory into a flexible plant that will assemble several different models and be nimble enough to react quickly to changes in consumer tastes.
In its new contract with the United Auto Workers, GM said it will reopen its former Saturn factory in Spring Hill, Tenn., and turn part of it into a flexible plant that will assemble small numbers of GM vehicles that are also made at its other plants. That is similar to a Magna operation in Graz, Austria, that assembles five different vehicle lines on a contract basis for four auto makers.
The deal calls for “assembly of a number of different vehicle models at a comparatively small volume which could be produced for a relatively short period of time,” Catherine Clegg, GM’s vice-president of labour relations, said in a letter included in the auto maker’s 561-page tentative agreement with the UAW.
“The build process for this operation will be unique within GM in the United States,” Ms. Clegg said. “The success of this venture will be dependent not only on our ability to build high-quality vehicles using new processes, but also on higher-than-anticipated levels of market demand for vehicles being produced at other GM locations.”
The plant would help solve a problem that has vexed GM and its Detroit rivals for decades: how to squeeze extra profits out of a hot-selling vehicle immediately and without investing hundreds of millions of dollars in a new plant or refurbishing an existing factory.
GM, Chrysler Group LLC and Ford Motor Co. have spent billions to upgrade assembly plants to make them more flexible and capable of producing multiple body styles off one or two platforms, or basic vehicle underbodies. But this would be the first plant dedicated to cranking out extra quantities of popular cars and trucks.
The Chevrolet Equinox and GMC Terrain mid-size crossovers made at GM’s Cami Automotive Inc. factory in Ingersoll, Ont., provide an example. They are among GM’s hottest-selling vehicles but Cami is already running three full shifts and a maximum amount of overtime, so unfinished Equinox bodies are being shipped from Ingersoll to another GM plant in Oshawa, Ont., for final assembly.
A plant with flexible tooling could assemble an extra 20,000 or 30,000 Equinox crossovers annually. It could also assemble additional models of GM’s full-size crossovers to supplement production coming out of an assembly plant in Lansing, Mich., which is also operating on three shifts a day plus weekend overtime.
The idea “makes sense given the way the market continues to fragment that if you can put three, four, five vehicles at 30,000 or 40,000 units a model, you can make a business case,” said one senior industry source familiar with both the Spring Hill factory and Magna’s Austrian assembly plant.
Ms. Clegg’s letter also said “innovative staffing requirements” will be necessary.
That likely means 40 per cent of the workers will be so-called “tier two” employees who start at $14 (U.S.) an hour and receive few benefits, compared with longer-term GM workers who receive more than twice that amount hourly and also get company pensions and other benefits, said Sean McAlinden, executive vice-president of research at the Center for Automotive Research in Ann Arbor, Mich.
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