Although General Motors is certainly undergoing a significant transformation as it works to become a more competitive company, there are still several things that it could be doing that, well, may not have occurred to the company’s management. So in an effort to help what is still the world’s leading vehicle manufacturer, we decided to ask some of the more insightful people that we know—not the usual suspects, but a range of industry experts who have distinctive points of view—a simple question: What three things should GM management do to make it a stronger, healthier, more-competitive company? And the responses were simple. Not easy, mind you, but rather straightforward and commonsensical.
Given the fees that most consultants charge, we figure that we could retire on what GM ought to owe us for this. And we also figure that the corporate execs can’t afford to overlook some of the insights found herein.
Dan Sturges, trained as an automobile designer, a former designer for GM, the founder of a car company (trans2), and an advocate for a systems approach to mobility, is senior program manager, Integrated Transportation Systems, at WestStart-CALSTART (www.calstart.org). His suggestions:
1. Become a “transportation” (or mobility) company. Sturges elaborates: “On a recent trip to LA, I watched thousands of cars crawl along the freeway at 2 or 3 mph. I chuckled as I remembered how GM had wanted Bob Lutz so badly because he is a ‘car guy.’ That notion doesn’t seem well suited to take GM to the next level. GM’s main product is really personal mobility. When people can’t move well—like on the LA freeways—then the value of the product suffers.” Sturges believes that communications networks can help ameliorate some of the transportation bottlenecks that exist through such things as car sharing and by improved routing. “In the future,” he suggests, “GM has the opportunity to expand upon its OnStar service by offering more flexible and valuable transportation information to its customers.”
2. Facilitate stakeholder collaboration. “As we move into this new era of global mobility,” Sturges says, “GM should involve anyone interested in its network in the process of reinventing its business. By communicating in a two-way manner with any GM worker, dealer, or supplier about the transportation business future, stakeholders can strengthen GM, and themselves, in the process. As a result, GM stakeholders will become stronger and more willing to be flexible as the company struggles as a large company undertaking rapid change.”
3. Power-up design. Given Sturges’ background as a designer, this is not a surprising recommendation. But he’s not alone in his sentiment. According to Sturges, “It was during the Bill Mitchell days when GM beat everyone in design, but those days are long gone.” Mitchell was the second head of GM design, following Harley Earl, who retired in December, 1958. Mitchell retired in 1977. Sturges continues, “While GM has some great in-house designers today, far too many of them come from a Corvette mindset and lack an orientation to expand upon cars and trucks. Could GM someday use its giant steel stamping presses to build a new type of modular dwelling? Perhaps. Americans have an amazing ability to develop all-new concepts, which is a strength that we should play to.”
Jeffrey K. Liker, professor of Industrial and Operations Engineering and director of the Japan Technology Management Program at the University of Michigan (http://www.personal.engin.umich.edu/~liker/) and author of The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer (McGraw-Hill), first sets the stage by pointing out that among the issues that GM presently faces are: (1) the high pension funding that is “something it has to live with adding hundreds of dollars to the cost of each vehicle. This is clearly a competitive disadvantage that is outside GM’s control at the point.” (2) What he describes as “decades of neglect in its product line and quality,” which he thinks has led to a less-than-beneficial customer perception of the corporation’s products. (3) Low employee morale during the 1990s. With those givens, however, Liker goes on to observe, “GM has done a considerable amount to pull itself up by its bootstraps. This includes finally getting serious about learning from the Toyota Production System.” On the subject of the Toyota Production System (TPS), Liker believes there are several factors at play in GM promoting it—though in the version that corporation personnel have tailored so that it is GMS (Global Manufacturing System)—including, the numerous managers who worked with TPS at NUMMI; chairman and CEO Rick Wagoner’s support of lean; the development and distribution of a GM-based lean standards book; the deployment of competitive manufacturing teams throughout GM plants; and successes in places like in Eisenach, Germany, and the GM Lansing Grand River Plant (Michigan). What’s more, the recent successes at Cadillac, with regard to designs and “remarkably good quality—largely due to GMS,” are helpful, too.
However, Liker believes there are some things that GM needs to do:
1. Avoid patting itself on the back and then sitting pat. “GM needs to avoid the historic tendency of resting on its laurels and deciding it is great.” That is not the way to achieve the momentum that needs to be sustained. “It has a good running start now, but that running start can stall as fast as it got started,” Liker observes, adding, “GM leadership needs to continue to drive change and improvement. Even Toyota in North America and NUMMI have been struggling as their cultures got a bit complacent, and they have been working during the last couple of years to reinvigorate TPS. And they were already way ahead of GM.” Liker provides a cautionary note: “GM seems to think it has GMS licked in its plants and is now on to the offices and product development. It is far from having GMS licked. It just has a good start.”
2. Spread GMS. Beyond the shop floor. Liker acknowledges that GM is proliferating the lean approach. But he points out that implementing it in other parts of the organization is “even more challenging than on the shop floor” but “it is even easier to do superficially, declare victory, and move on.” He believes that it will take 10 years just to lay the foundation of lean.
3. Better products. “GM needs to keep investing in exciting products and differentiating its product lines.”
Liker observes that GM is doing all of these things, but “The issue is execution and constancy of purpose—something that GM has lacked in the past.”
Lindsay Brooke, a long-time industry observer, is senior manager, Market Assessment, at CSM Worldwide (www.csmauto.com), a provider of vehicle powertrain, and component forecasts. Brooke provides what he calls a “prescription” for GM:
1. Speed product cycles. Brooke recommends that GM continues to shorten the time it requires to both plan and approve new programs and launch them. He observes, “GM’s new product cadence has improved, but it’s only just keeping pace in some segments. GM’s aim should be to have the rest of the industry trying to keep pace with it in every major segment.” How might this be accomplished? Brooke suggests, “If more decision making and management need to be decentralized to speed the process, do it.”
2. Seriously consider consolidating at least one more division. On December 12, 2000, GM announced the phase out of Oldsmobile division. Then-GM executive vice president and president-North America Ron Zarrella stated at the time, “While this is a difficult decision, we believe that in the long run, it is the right thing to do to increase GM’s competitiveness, profitability, and growth.” Which is essentially what we are exploring here. Brooke observes, GM’s North American market share continues to fall. CSM projects GM shares to drop below 25% by the end of this decade.” So which divisions should GM consider cutting if the fall continues? Brooke thinks Buick and Saturn ought to be assessed and the company’s leaders should “decide which brand offers a stronger long-term business case.” Brooke points out: “Toyota has only three brands, but its Toyota and Lexus brands have product bandwidth that’s equal to GM’s six North American brands—seven, if you include hummer.”
3. Innovate ahead of regulation, rather than in reaction to it. In Brooke’s opinion, “GM missed the boat in establishing itself as the pioneer in production hybrid vehicles in North America. But the company has the opportunity to re-establish itself as the environmental technology leader when the full-hybrid T900 trucks enter production in 2007.” Brooke notes, “GM is still viewed as being resistant to progress on fuel efficiency and emissions, while Toyota and Honda are solidifying their images as leaders in this area.” He adds, “That’s not totally correct, of course, but image carries great equity in this industry.” He recommends that when GM launches the hybrids that it must do “whatever it takes” to make it a “gotta-have” (favorite adjective of GM brass) product: “It needs to devote sufficient marketing resources to it and it shouldn’t overprice it as has been done with many other GM innovations, such as Night Vision and Quadrasteer.”
An indication of just how “common” (another favorite GM term) some of the suggestions/observations are of the corporation’s conditions and potential improvements can be discerned from the fact that although Brett Smith, senior industry analyst, Center for Automotive Research (www.cargroup.org), wasn’t privy to Sturges’ and Brooke’s comments, there are distinct echoes. Consider Sturges’ third comment and Brooke’s first in light of Smith’s first recommendation:
1. Free the people. Smith states it quite simply: “Let the designers and product developers create great cars fast.” Although there may be some people within GM who might argue that the organization is fast, Smith notes, “Toyota recently said it has gotten product development time down to 11 months from design freeze to start of production. GM must match it.” He says that this is key for two reasons: “GM must be cost competitive, and in this case, time is truly money. Second, GM needs to be able to more quickly respond to the market.” He points out, “The Pontiac Solstice is a great idea that will have taken well over two years to deliver. Yes, I know it is a whole new manufacturing paradigm, but the public doesn’t care about that.”
2. “It’s the product (stupid).” Echoing the statement from Bill Clinton’s first presidential campaign, Smith thinks that there is insufficient attention paid to products and too much paid to, well, “marketing-driven slogans.” “Reposition brands via strong, identifiable products,” Smith says, adding, “GM has done so with Cadillac, and has set a path for success at Saturn, but the rest of the portfolio seems like a rudderless ship.” This product focus dovetails neatly with his first recommendation, and he points out: “Crucial to this are products that meet and exceed customer expectations, and a fast, enabled product development and design team may be the starting point.”
3. Become farmers, not hunters. “Ask any GM supplier,” Smith says, and they’ll say that way the corporation acts toward it is “almost predatory.” Smith says, “GM must work with its partners to cultivate great products. This is especially important, given the increased component, process and development outsourcing GM is pursuing.”
4. Solve the healthcare problem. Smith acknowledges that we were looking for three recommendations, but he says, “This one is a game-changer for more than just GM.” He explains, “Beyond performing internal change, GM must work with all parties to cure the critical health-care challenge.” If this cure isn’t found, Smith suggests, “It could take down the entire traditional industry.”
Just as Brett Smith provides four recommendations, Peter DeLorenzo, founder and publisher of Autoextremist.com (www.autoextremist.com) has one. Of course, being an iconoclast of the first-order, who would expect more? Or less? DeLorenzo puts it this way:
1. “Step 1: GM needs to dramatically reduce the number of nameplates it is trying to support in the market, because it simply can’t afford to prop-up the hoary Sloan model at this point.” He’s referring to Alfred P. Sloan, the man who led General Motors for more than a quarter of the 20th century and who is known for the expansion of brands and products (“A car for every purse and purpose.”). DeLorenzo says, “They’re still trying to badge-engineer their way out of a grim market situation by adding nameplates, which is the exact opposite of what they should be doing. They need fewer models, with a higher level of content and quality, rather than throwing another nameplate on the pile just to ‘cover’ a division and appease their dealers.” An example? “Should Pontiac have a minivan? Absolutely not. Now multiply that by 10 and you begin to grasp the scope of GM’s problem.” DeLorenzo observes, “There are smart people at GM who understand what needs to be done, but there are also other people there who are clinging to the old territorial GM mindset—and it’s killing the company.” DeLorenzo warns, “If GM can’t deal with this first step, then the other steps don’t matter.
When you pull off westbound I-96 at exit 159 on your way to the GM Powertrain Performance Build Center in Wixom, Michigan, the large automotive plant that confronts you has a blue oval out front. Literally—and figuratively—GM has put its $10-million, 100,000-ft2 operation in the backyard of the Ford Wixom Assembly Plant, home of the Lincoln Town Car and LS and Ford Thunderbird. The outlook for the Performance Build Center is brighter, as it is there, explains Tom Stephens, group vice president, GM Powertrain, that the corporation is hand-building some of the most powerful engines that are going into U.S.-manufactured vehicles, including the ‘06 Corvette Z06 (LS7 V8), the Cadillac STS-V (supercharged Northstar V8) and the Chevy SSR (390-hp LS2 V8). Simply put: The Build Center is a key—a small one, all told, 1%, but a key nonetheless—to the powertrain strategy that Stephens outlines: “I need about 1% of my engines to be ‘image’ engines. I need about 30% of my engines to be what I call ‘high-feature’ engines’”—as in dual overhead cams, four valves per cylinder, variable-valve timing, etc.— “I need about 70% of my engines to be what I call ‘high-value’ engines for the masses: They don’t care how many valves. They want to get in, want it to start, want it to be smooth and quiet, get good fuel economy, and to be safe when they pass on a highway. And they want it at a very low cost.” So those 1%-ers are going to be coming out of the Performance Build Center, where there are 80 specially trained craftspeople from UAW Local 653 who will be assembling the distinctive engines, each individual building a single engine from start to finish. The facility has a capacity of 15,000 engines a year, a fraction of what the corporation produces per day.
Why has the company invested in a niche operation like the Build Center? “We wanted to do things like the Cadillac V-Series,” Stephens answers. “In order to do that, we didn’t want to be constrained by all of the criteria for high-volume manufacturing. Secondly, there’s a certain amount of ‘specialness’ of having a facility that’s second to none in the world, where you have people who are true craftsman, taking the time to build an engine from start to finish.
“You can be very special here. But on top of that, if I wanted to make a change tomorrow because it would improve the system, they could make the change like that,” Stephens says, snapping his fingers.
Variants Matter. But by and large, the goal at GM Powertrain seems to be, well, large, as in producing plenty of engines by creating variants. On a global basis, GM manufactures 43,000 engines per day. Which means that there are distinctive advantages—as regards cost, quality, time to market, and tailored performance—by focusing on variants of engine architectures. So, during the next several years, Stephens says, they will be bringing out more than 40 new engine variants (in addition to 10 new six-speed automatic transmission variants).
For example, there is a new take on the company’s global V6 engine family, a 2.8-liter turbocharged engine that will be introduced on the ‘06 Saab 9-3. This engine also points to the global footprint of the company, as it will be produced in the 32,000-m2 Holden Port Melbourne, Australia, plant that GM opened in November 2003 for the production of V6 engines. The all-aluminum global V6 family includes 2.8- 3.2- and 3.6-liter variants. (The first application for engines built at the plant were in the ‘04 Buick Rendezvous. Holden, incidentally, is the source of the Pontiac GTO, which is itself a variant of the Holden Monaro.)
Another variant is based on the “small block” that has been found under the hoods of GM vehicles for more than 50 years. This is a 5.3-liter Gen IV V8 that is the first of the V8 small blocks that will be deployed in a front-wheel-drive, transverse-mounted configuration.
The same approach is being taken for automatic transmissions. The company produces 40,000 transmissions—automatics and manuals—on a daily basis. A great deal of attention is on six-speeds going forward because, Stephens explains, they can provide the power, fuel economy and refinement requirements for various applications by minimizing the overall number of architectures, and then increasing the number of variants to match varying demand. As he puts it, “It is consistent with our philosophy of fewer architectures and more variants.” He says that flexible manufacturing allows them to build “different” transmissions down the same line.
The six-speed transmissions also allow GM to eliminate the continuously variable transmission (CVT) from its lineup without losing much of anything in terms of performance and fuel economy. “General Motors is not going to be making CVTs because I can make a family of transmissions at very high volume coming down the same line that coveralls all different kinds of engine power and torque requirements. With CVTs I was relegated to just a very small portion of my volume”—CVTs generally being limited with regard to the amount of torque—”so it didn’t make sense to me to put that much effort into something that didn’t have the design flexibility I was looking for.” Stephens explains that the reason behind initially offering a CVT in the 2002 Saturn VUE was one based on fuel economy and reasonable performance. That’s because the CVT, which uses an arrangement of metal belts and pulleys, provides a wide ratio spread. “When you go to a six-speed,” Stephens says, “you go to a 6:1 overall ration spread. All of a sudden you’ve got wide ratio spreads in a planetary step-gear automatic. Now it is a lot harder for a CVT to have any performance or fuel economy advantages.”
“I’m looking for fewer, more capable architectures. That’s the bottom line. We can do them in high volume. And get the costs down for my customers,” Stephens states.
Of course, if you’re looking at a Z06 Corvette. . . .
The only thing that will remain familiar at Saturn is the dealership experience. Everything else regarding the brand is about to change. Nothing more drastically than the look of Saturn vehicles. The 2006 Saturn Sky roadster is based on the Kappa architecture also used for the Pontiac Solstice and introduces the design cues that will be common to all new Saturn vehicles. They are:
The overall look is that of cool precision more European than Asian in its execution. You can expect the interior treatments to be similarly technical in terms of finishes and details. It’s a far cry from Saturn’s days as GM’s bulwark against the Asian onslaught, and reminiscent of what was attempted in the last days of Oldsmobile, though for a younger, trendier audience.
GM’s global engineering strategy isn’t centered on 24/7 operation, sending work to low-cost countries, or producing so-called “world cars.” Rather, according to Jim Queen, vp GM North America Engineering, the actual goal is to use a standardized process, follow best practices, eliminate redundancies, increase throughput, and leverage the scale that arises from producing many variants off a common architecture around the globe. To do all this, however, required a realignment of GM’s engineering resources. “We started down the road to a standardized global engineering structure in 1997,” says Queen. “In North America alone this has allowed us to reduce the cost of doing engineering work here 40% and increased our throughput 33%.”
Central to this realignment the establishment of a global vehicle development process and the creation of a robust IT data pipe that gives GM’s engineering staff a common set of tools that are shared in real time. Though the realignment still falls short in some areas–GMDAT (GM-Daewoo Auto & Technology) is only 50% synchronized and Fuji (Subaru) and Suzuki have yet to fully coordinate with the GM system–Queen says the change has been “fundamental to how vehicles are done, when things happen, how they happen, and even how we communicate about the process.”
An example of what the new engineering program is working to overcome is evident on the current Epsilon program (Chevy Malibu, Pontiac G6, Saab 93, Opel Vectra). Even though it is a “global architecture,” there were still squabbles amongst the regional chief engineers that adversely affected the underlying architecture. “As we got into the lifecycle changes for the current Epsilon architecture,” Queen says, “it walked further and further away until there was a couple of millimeters difference between the vehicles. Just enough,” he says, “so that a lot of parts can’t be reused.” So GM can’t, as it had hoped, produce any variant of that architecture in any plant that builds an Epsilon vehicle, or realize the savings that were expected from sharing common components.
The answer to this problem was not to create what Queen terms “one big Design and Engineering place in the sky,” but to assign each global architecture to a single engineering “homeroom” overseen by one chief engineer, one global VLE (vehicle line executive), and 25 to 30 technical staff members, each representing a skill set (chassis, electrical, etc.). The next-generation Epsilon follows this template, and is being coordinated from Rüsselsheim, Germany. That is where the Opel Vectra replacement will be built, and it is the first Epsilon vehicle out of the starting gate. “The regions express their needs for this vehicle early on in the process, and the team iterates its way to a vehicle,” he says. “The regions don’t always get everything they want, but it’s up to the chief engineer and his team to work that architecture to accommodate the variants and their needs.”
GM is so confident of the revised engineering and development process that four other global architectures are in the process of adapting this structure. Those already underway will not be as pure as the next-generation Epsilon, Queen concedes, but waiting until these architectures are replaced would have wasted time and money. “We’re going back and catching those programs now and bringing them as close to the Epsilon ideal as we can,” he says.
As you might expect, styling and final tuning are carried out in the regions, and the homeroom is not the only place where engineering takes place on a platform. “Work in any region ebbs and flows,” says Queen, “and the peaks and valleys don’t sit on top of each other around the world.” It is up to the chief engineer and his homeroom staff to draw from the other regions to smooth out the flow as resource problems arise. “The preference is that most of the work occurs in the homeroom location.”
Suppliers must be willing to become part of the homeroom concept (“working as part of the GM team”), possess the tools necessary to interface with GM’s information stream, and have global supply capabilities so parts aren’t shipped all over the globe to supply a world architecture. “We are sending very clear signals to the ‘significant Tier Ones’ in our global supply base that they better have a global presence, or they probably won’t be working with us in the future,” says Queen, bluntly. It’s the matter-of-fact response you’d expect from someone ready to leverage a lot of volume through the use of common components. And he is ready.
If it wasn’t inside GM’s Vehicle Engineering Center (VEC) in Warren, MI, the Global Visualization Center (GVC) would rank as the location of the coolest home theater/gaming system on the planet. One of seven current GM virtual reality centers–including two more at the GM Tech Center in Warren, one each in Germany, Australia, Sweden, and Brazil (two more are yet to open in Canada and Korea)–the GVC relies on a variety of software, including the Maya suite from Alias that is used by the film industry to produce high-end visual effects and animation. High-fidelity images are used for more than design reviews, as engineers utilize these tools to produce 3D build files that highlight interactions between components and systems, and share them with suppliers in a collaborative review process.
The bottom line, however, is whether or not this technology helps the engineers do their job faster, better, and cheaper. About this, Terry Woychowski, vehicle chief engineer, Full Size Truck is adamant: “This is the best technology GM has embraced in allowing us to develop the vehicle in the way that we want, and to the best of our ability during my time at GM.” The technology found in the GVC has been used to: conduct a virtual build of a vehicle, rethink the build sequence, check part interference, re-route wiring and hoses, check the bill of materials against test procedures to make sure the right parts are ordered, run aerodynamic tests on the vehicle exterior and HVAC ductwork, conduct virtual crash tests, and eliminate the need for four full-size prototypes from the GMT900 full-size truck program. Woychowski not only claims the GMT900 test vehicles that have been built are “better than current production vehicles in many areas,” he says this technology would have allowed him to shave half the time off the development process for the current GMT800 trucks and use half the prototypes had it been available when that program was begun. The GVC’s hardware includes: