THE TRUCK PLANT The Truck Assembly Plant was the exclusive producer of full-size extended cab pickup trucks for Modern Motors Corporation (MM) and the American market. The plant was part of MM of US's Auto Complex, along with two car assembly facilities, and three parts fabrication operations. Combined, these plants employed over 15,000 people, both salaried and hourly rated. The Truck Assembly Centre encompassed over 2.7 million square feet of floor space and had capacity to produce 215,000 units per year. The plant's 3,000 employees operated on two eight-hour shifts, five days a week, with the capacity of producing 441 units per shift. The facility had been utilized to produce for Marvin and MMC trucks since its construction in 1965, but many changes in layout and products had occurred since that time (including the production of buses and heavy-duty trucks). In the most recent changeover (1986), state-of-the- art body and paint shops were constructed in an approximately $600 million project, adding one million square feet of floor space. Shop floor automation was enhanced in both areas through the introduction of robotics. Also, automatic guided vehicles and an electrified monorail system were implemented, making the truck plant one of the most highly automated vehicle assembly plants in the world. THE AUTOMOBILE INDUSTRY Despite a significant slowdown in the sale of cars, truck sales managed to maintain a constant growth at approximately five per cent annually during the 1980s. In December 1990, MM chose to shut down production at both Oshawa car assembly plants for four weeks because of excessive build-up of inventories. The truck plant remained producing at two full shifts. However, because of recent economic conditions, the plant eliminated the production of regular cab trucks. which were produced by two "sister" plants in the United States. As well, the line speed was reduced, bringing the production rate down from 61 to 53 trucks per hour. These combined moves resulted in the reduction of approximately 400 hourly rated employees. The nature of competition in the automobile industry changed dramatically during the 1980s. The increased competition from foreign manufacturers such as Honda and Nissan created the problem of overcapacity, and the North American producers found themselves fighting to maintain market share. Consequently, sales incentives and competitive pricing were being used to attract customers. resulting in a profit squeeze for the automakers. One further reaction of some North American producers was to build high- technology production facilities in newly industrialized countries (i.e., Mexico), to remain internationally competitive. The biggest savings occurred in terms of labor costs. Workers in Mexico received less than $1.50 per hour, compared to the $25 per hour received by North American autoworkers. The presence of foreign competition was by no means of only short-term concern. The Japanese automakers, who had earned a reputation for building high quality automobiles, were continually establishing themselves in the North American market. By 1990, there were more Japanese models being made in the United States than were imported. It was expected that by 1991, Japanese-owned or operated assembly plants in the United States could be producing two million cars and trucks a year. The challenge was clear. If North American automakers wanted to achieve long- term survival, they were not only going to have to be competitive in price, but also meet the consumers' increasing demand for quality. THE SITUATION Mr. Colfer - who responsible for improving efficiency throughout the production process first became aware of an opportunity to improve efficiency when he noticed the large amount of walking being done by the two hood carriers. After observing the operation for some time, he believed that an overhead hoist, similar to that being used by GM's sister plant in Pontiac, could be implemented to improve employee efficiency. The entire hood installation procedure currently involved a total of four workers. For a detailed description of their individual tasks and time budgets (see Exhibit 1). The existing procedure required the two hood carriers to lift the hood from the carrier and carry it over to the truck passing down the main assembly line. The distance carried was approximately eight meters. In addition to this, each had other tasks to perform before returning to retrieve the next hood. Mr. Colfer believed that by introducing an overhead hoist, the hood could be secured and guided to the truck by only one worker. The hoist would use a suction cup device to secure the hood and would run on pullies to carry it over to the trucks. The single worker would have a small hand control to operate the hoist. Once the hood was above the truck, the two hood secure workers would assist in placing it in the proper position. After the hood was secured, the hoist could be released and taken back to retrieve the next hood. Mr. Colfer estimated that it wouldnow take 0.95 minutes for the single operator to perform this task. Mr. Colfer had done some rough drafting and believed the entire system could be installed at a cost of $85,000. The savings would be approximately $55,000 per year the cost of one production worker. He knew, however, that before this worker could be released, each of the tasks that had to be performed would have to be covered by one of the three remaining workers. Remembering the goal of the new plant manager of increasing the employee work hours to an average of 55 minutes per hour, Mr. Colfer wondered what impact any of these changes would have on this goal. Finally, because implementation of this project would result in the elimination of at least one job per shift, he wondered what reaction he would receive from the union. Exhibit 1 CURRENT JOB DESCRIPTIONS AND TIMES (IN MINUTES) PER VEHICLE Job Task Description Time Hood carry (left) obtain hood from carrier-carry hood to truck place rubber bumper inside left fender 0.42 0.14 place plastic clip on front rad support 0.06 secure harness in clip on inside left fender visual inspection of engine wire-front 0.08 0.10 Total Time 0.80 Hood carry (right) obtain hood from carrier, carry hood to truck press release pedal on floor to advance carriers place rubber bumper inside right fender 0.42 0.00 0.14 Total Time 0.56 Hood secure (left) get tool, check hood hinge for proper width - bend if necessary get two bolts and nuts from bench, return to job secure hood to harness 0.16 0.075 secure hood to hinge visual inspection 0.25 0.28 0.10 Total Time 0.865 Hood secure (right) get tool; check hood hinge for proper width - bend if necessary get two bolts and nuts from bench, return to job secure hood to harness secure hood to hinge visual inspection 0.16 0.075 0.25 0.28 0.10 Total Time 0.865