Lexus facility to produce ES 350’s in Georgetown, Kentucky.
Toyota Motor Company is all over the news recently. It has reunited the cast from Back to the Future to promote a new hydrogen fuel cell vehicle and has announced a recall of 6.5 million vehicles for defective power window switches.
One story that the mainstream media won’t cover, though, is more important that either of those headlines. And it involves manufacturing.
According to popular opinion, manufacturing is dying in America. It’s become a popular meme, driven by the combination of a gadget-obsessed and software-crazy society and its total ignorance of the reality of modern manufacturing.
Take Georgetown, Kentucky, for example.
Georgetown was the site of Toyota’s first US manufacturing plant in 1988, built to make the popular Camry midsize sedan. Today, after a $360 million investment and 1.5 million training hours, the plant is building the Lexus ES350. The new assembly line will build 50,000 vehicles a year and created 750 new jobs. The total plant capacity now exceeds 550,000 vehicles per year and total employment now exceeds 7500.
Toyota is essentially betting a third of $1 billion that the Kentucky facility can produce high-quality vehicles that will be sold into a highly competitive market, chasing a highly demanding consumer. Half a million training hours is one way the company intends to achieve that quality, but there are some other interesting approaches to the issue of quality.
The Kentucky team bought 22 brand-new ES 350s from a local dealer, brought them to the factory and then tore them apart. They broke the vehicles down to 2000 assemblies and then rebuilt them, piece by piece, to see exactly how it was done. While this is a routine strategy to analyze competitors’ vehicles, it’s an interesting approach for a firm intending to build at its own new facility.
It isn’t widely understood that in most assembly operations, line workers rarely see how their part of the assembly operation produces a whole, finished automobile. Real-world driving and the disassembly of completed units gives quality assembly teams a 360° picture and, more importantly, a holistic understanding of why every component and subassembly matters in the process of producing adequate levels of fit and finish with the lowest possible levels of noise vibration and harshness.
The whole approach reminds me of the innovative Saturn operation in Tennessee, where line workers would telephone owners of the vehicles to ask how they liked the car. In general, Saturn owners reported very high levels of satisfaction and world-class reliability.
Fortunately, the failure of the Saturn brand didn’t cause domestic manufacturers to reject Saturn’s quality ethic and the result is fit and finish and a durability built into modern, American-made cars and light trucks that would have been unimaginable 30 years ago.
In the 70s and 80s, 100,000 miles was a reasonable life expectancy for a new car or truck. Smaller, four-cylinder vehicles rarely reached that milestone. Today, though, the engine rebuilding industry has to rely on industrial power plants for construction equipment, generators and forklifts. This is because most vehicles go to the scrapyard without ever replacing a head gasket or a valve.
Modern cars are cheaper, too. When you compare inflation-adjusted dollars, apples to apples, new cars are a bargain. In 1960, a Volkswagen Beetle cost approximately $1,600 – and was basically a tin can on wheels. If we track wages, which today would be about ten times more than they were then, a typical non-union assembly line job might pay, dollar for dollar, about $50 an hour and that worker would buy an entry-level vehicle for approximately $16,000.
Small cars can even be found for $11,000 to $12,000 and they will still be far superior to that tin-can Beetle. They will be safer, faster, more economical, more comfortable and far more nicely finished and longer-lasting than anything that rolled off the lines in the 60s.
In other words, the automotive industry has done what most other industries couldn’t. It has found a way to make a significantly better product that lowers in cost over generational timescales. We’ll see if the cell phone manufacturers can make the same claim in 30 or 40 years, but I doubt it.
