How General Motors Global Manufacturing Systems Are Implemented in Poland and the UK - Essay Example

How General Motors Global Manufacturing Systems are implemented in Poland and the UK: A comparison Introduction: The purpose of this paper s to demonstrate knowledge of strategic issues regarding overseas issues. The company under perusal for this discussion is General Motors. More specifically, GM is global manufacturing systems (GM GMS) and how they have been implemented; Poland as compared to the United Kingdom is the focus. Typically, they are part of one or more commercial sectors competing for supplies, resources, markets and customers in an international context. As a result, it is important that managers are aware of such like based organisations, their activities and outcomes. The objective of this discussion seeks to provide on means of exposing managers to organisational and market developments relevant to their own and their organisations development opportunities. This discussion will analyze and take all of these factors into consideration, provide a comparison and recommendations. This discussion will focus on the international context of strategic issues in business and provide for a means of developing client-consulting skills. An analytical approach will be used to compare the implementation of GM global manufacturing systems in both Poland and the United Kingdom. The international auto industry is significant to economies across the globe. (Aho and Levinson, 1988) The international auto industry is a paramount industry and both Poland and the United Kingdom are significant components of it. The worlds leading vehicle and automotive component companies have long seen the UK as being an important location for manufacturing. Following the setting up of a number of UK-based companies, US-owned Ford first established a plant here in 1911, since joined by other investors including General Motors, BMW, Honda, Nissan, Peugeot and Toyota. (Burrough and Helyar, 1990) According to Burrough and Helyar, “The automotive manufacturing sector contributes around £8.4bn added value to the economy, and accounts for 1.1% of GDP, 5.8% of manufacturing value-added and 9.5% of total UK exports of goods. Some 237,000 people are employed in the design and manufacture of vehicles and components. The West Midlands remains the heart of the industry in the UK with around 30% of the industry being based in the region. The UK is home to the worlds most successful motorsport industry as well as a range of smaller producers serving specialist markets such as sports and luxury cars, and London taxis. 17 of the top tier one suppliers and around 20 leading independent automotive design firms also have a base in the UK.” (1990) Taking this information into consideration, it becomes apparent that the UK is vital to the success of the international auto industry. It is also apparent that General Motors is a key factor. These two factors provide support why an analysis and comparison on operations and implementation of GMS in Poland and the UK is significant. As well as providing valuable business and auto industry information, this discussion will provide valuable information for conducting business on both domestic and international levels. Literature Review The literature suggests that due to GM’s success in the UK with their Global Manufacturing System, the road to GMS implementation in Poland was already cleared. AutoWorld reported in 2001 that GM’s the automaker’s formerly troubled factory operations are running smoother than they have in years. That promises not only better, more desirable products in the future. (Winter) The literature explains about the Global Manufacturing System and its international implementation. AutoWorld also reported after a slow start in the early ‘90s, GM’s Global Manufacturing System also is getting in gear, Mr. Cowger says. Based on five elements: people involvement, built-in-quality, standardization, continuous improvement, and short lead times, they’re all now getting aligned and starting to click in new Greenfield factories in developing markets such as Poland and China. The lessons learned are going to be applied in GM’s next two major manufacturing complexes in Lansing, MI, and Russelsheim, Germany. (Winters, 2001) Other literature examines GM’s endeavors in the international auto industry market. Gliwice in southern Poland is the plant that is the best of the best is always top of the GM league table and is used world widely for Benchmarking. (Dyer, 1997) This piece of literature is relevant to the discussion, especially if the Poland plants are a source for benchmarking future and existing GMS and future plants. Most of the Poland GMS are based upon existing ones in the UK so implementations of future GMS in Poland would be wise to follow suit. The automotive industry is a pivotal part of the UK manufacturing sector. Automotive firms are leaders in global best practice in many areas of manufacturing and provide a key source of improvement for the UK manufacturing sector as a whole. The UK industry as a whole needs to make up ground in terms of productivity but the productivity record of the best firms here show that UK based operations can match and exceed the best of their rivals. Auto Industry provided a profile of the auto industry in the UK. This profile included information on all of the players in the industry including GM. The literature details some of the global concepts of the UK industry and the international industry in general. These are important aspects for several reasons. These reasons include the fact that this knowledge is imperative in order to provide an analysis and comparison on an international level. The information provided includes the fact that The UK also has a globally unique quality improvement initiative run by the Society of Motor Manufacturers and Traders Industry Forum. Benefits come from programmes, which have been designed to increase companies competitiveness and profitability. Typical improvements have been in the region of 30% reduction in costs and corresponding improvements in quality and delivery. (Auto Industry 2001) Dyer has pointed out “here are, in addition, over a thousand automotive component suppliers manufacturing in the UK, including such leading global players as Delphi, Bosch, Visteon, Federal-Mogul, and TRW. UK-owned component manufacturers like GKN, Unipart and Pilkington are among the most renowned in the world. Top Japanese suppliers, including Ikeda, Yutaka Giken, Denso and Calsonic have been attracted to the country, mainly following in the wake of the Japanese-owned Vehicle Makers.” (1998) this is relevant information to use for comparison when evaluating the GMS and its implementation in both Poland and the UK. John McCormick provided an article that is very helpful to this study. It appeared in the June 2000, issue of Automotive Industry Magazine and highlights General Motor’s Poland plant. McCormick writes General Motors new $590 million plant in Poland is a jewel that still needs polish. History has not been kind to Poland. Over the years, the country has been a stomping ground for warring nations from all sides. In addition, some 40 years of communist rule since World War II has left a legacy of outdated industry, growing unemployment, widespread environmental problems and a sub-standard transportation system. Even though democracy was restored in 1989, the government remains inefficient and laden with bureaucracy. (McCormick, 2000) This discussion regarding Poland is significant to this discussion because it illustrates some of the obstacles that must be considered when implementing production in Poland. As well, there are obstacles and factors that need to be taken into consideration when considering operations in Poland that do not necessarily apply to the UK and operations there. The article describes how despite these disadvantages and negative aspects, Poland has become a cornerstone of General Motors central European manufacturing strategy. McCormick 2000) Located in Gliwice, in the southern section of the country known as Silesia, is a shining new $590 million assembly plant that ranks as one of the crown jewels of GMs worldwide operations. It is also one of the biggest industrial investments ever in Poland. (McCormick, 2000) This is significant to this study because the implantation of operations in Poland have been successful and this is somewhat due to the past successes of plants in the UK. (Dyer, 1997) The literature also illustrates that such an implementation in Poland has not only been successful in the recent past it holds promise for future endeavors, Garry Wallace, CFO of GM Poland, explains why the nation holds promise. "This is a country of 39 million people whose prosperity is growing rapidly. The GNP is at 4.1 percent, a high level that has been held for four years. (International Organizational Behavior, 2000)Inflation is 8.6 percent, which is high by U.S. standards, but well down from the 20 percent level it used to be at. We expect it to go down to seven percent and then lower as Poland aligns with the European Union, which it hopes to join in 2003." Other literature illustrates that In terms of a domestic auto market, Poland ranks sixth among European countries, with 640,000 new vehicles sold last year. "Only 50 percent of families have cars and only 500,000 have more than one car," observes Wallace. He adds that half the cars are over 10 years old and rapidly falling apart. With 22 percent annual market growth since 1995, GM sees a big opportunity for sales, especially with fleets. (DeStefani, 2003) Even though the Gliwice plant is on a Greenfield site near the grim rustbelt town of Katowice, the region is a labor goldmine for GM. (Industrial Organizational Behavior, 2000)That is not just because of low wage rates. An excellent education system coupled with a tradition of expertise in technical industries, including mining, steel and chemicals, meant GM could draw on a highly qualified, stable labor pool. It is not a coincidence that Delphi chose to establish a 4,500-employee technical center in Kracow, some two hours north of Gliwice. For the 3,000 positions at the GM plant, there were more than 50,000 applicants. (DeStefani, 2003) "An added advantage is that employees under 30 have grown up outside the communist era, so they are free thinking," says Wallace. DeStefani’ s article provides some history of Poland and GM. GMs involvement in Poland actually started in the late 1920s, when Chevrolet established a plant in Warsaw. However, GM was absent from the country from 1939 to 1991, when it set up a network of 92 dealers and became the first automaker to offer cars with catalysts and concepts such as roadside assistance and dealer test drives. (International Organizational Behavior, 2000) A Special Report for Automotive manufacturing details that In 1994 SKD assembly of the Opel Astra began in Warsaw (capacity 24,000) and two years later construction began at Gliwice. The plant is one of four similar new facilities GM has established around the world -- the others being in China, Thailand and Argentina -- and its design allows for easy future expansion. (2003) Tennessees Governor Lamar Alexander illustrates the process well. Like Margaret Thatcher in the UK, he realized the importance of the personal approach in attracting investors. Visits to Japan and sessions with the Japanese prime minister became routine. His States development officials and state legislators have been equally assiduous, with the result that Tennessee had, by the late 1980s, picked up plants from Nissan, Sharp, Bridgestone and Toshiba - representing in total some 12% of all Japanese investment in the United States. (Tolchin & Tolchin p 68-70). The literature revealed some pertinent information regarding the study. The most useful information the literature revealed gave detailed information on the specifics of the Poland plant and how it has been successful despite the obstacles that were detailed in the literature. Methodology: The question the study aims to investigate is should there be two separate measures one for a passenger vehicle and one for the builders van? General Motors implemented “one” manufacturing tool system some five years ago now and it keeps evolving. GMM Luton has met full compliant targets set down by GM within the last two year, however there is still has plenty of room for improvement throughout the plant. Gliwice in southern Poland is the plant that is the best of the best, is always top of the GM league table and is used world widely for Benchmarking. An investigation will be carried out by the authors into how the measurement performances differ or in fact if they differ. This will be done by various interviewing in regards to their procedures and also shadowing various roles and responsibilities of personnel throughout the plant. Therefore the questions lie; • What are they doing different? • Are they fully GM GMS compliance? • How do their systems differ from ours within the GM GMS? • What and how do they measure their key performance indicators? • How do Team leaders act upon Business Deployment Plans (BPD) within their own section? • How does this contribute to the plant BPD? One of the main objectives of the study is to conduct an investigation and analysis of how their implementation of performance measurements compare in Europe to us in the UK under the GM GMS. When conducting the study it is important to keep in mind that the audit criteria standards are the same. The GMM Poland plant will be the plant that the comparison is based upon The GMN plant produce s the Astra Agila and the Zafira all passenger vehicles and are categorized as builders of vans and the mini bus (passenger). The aspects that will be compared include: Poland’s Press Body Paint General assembly Scheduling Receiving stores Suppliers Luton’s Body/Press GA Paint Data Presentation: The Poland plant differs from the UK plants in several ways. The Poland plant also has some problems that the UK GMS plants have not experienced. There are several aspects that need to be taken into consideration when considering the question should there be two separate measures one for a passenger vehicle and one for the builders van? The comparison of the UK implementation and their measures provide an important comparison. According to DeStefani the plant in Poland is adopting lean manufacturing processes based on Opels Eisenach production system in Germany, Gliwice is fully integrated and includes on-site stamping. Annual capacity, on three shifts, is 150,000 units. Last year the plant produced 42,000 units of the Astra Classic, a model designed for the Polish market and for export to neighboring countries such as Hungary. This year the Opel Agila, a new microvan based on the Suzuki Wagon R (which Suzuki builds in Hungary), joins the line in Gliwice. Once the plant is up to speed, the Agila will account for 75 percent of production. About 90 percent of Agila output will be exported. (2003) The workforce has undergone extensive training at plants worldwide including Eisenach and NUMMI in California. Among the unusual features of the Gliwice plant are its `fishbone body shop layout, which has two sub-assembly lines feeding into the main line, and the T-shaped general assembly building (see Goncalves interview). The plant is also the first in GM to have 100 percent in-line water leak testing. (DeStefani, 2003) A scissor conveyor system replaces the traditional power-and-free conveyor. "It is uniquely flexible, is very quiet and can easily alter the work height for different models, which is a big advantage," says Julian Blisset, the general assembly area manager who was hired from Nissans highly efficient Sunderland plant in Britain. "Bochem has the system, but were the only one of the greenfields to have it. (Dyer, 2000) With his experience at a top ranked Nissan plant, Blisset has a good perspective on the Gliwice operation. (Dyer, 2000) "Lean production methods take time -- you cant just switch them on to make it pay off. But considering the experience base here, our rate of progress from a Greenfield site is outstanding." GMs Gliwice, Poland Plant Plant completed: 1999 Floor space (sq ft): 1.1 million Products: Opel Astra Classic Opel Agila Total capacity: 150,000 1999 production: 42,000 Total employees: 3,000 Jobs per hour: 27 Working week: 42 hrs. Body shop Automation rate: 16% In-house inventory (line side): 2 hrs. Average monthly gross wage: $420 (Global Engineering Strategy, 2003) When detailing this information it is important to take the measures and results of these measures into consideration. Poland has expanded ability to handle the manufacturing of theGMS. Poland has body, paint, general assembly, scheduling, receiving stores and suppliers, whereas Luton has only body/press. GA and paint as was included in the methodology section of this discussion. This means is down to the individual department to contact the suppliers, scheduling and receiving stores so although the defect from the GCA ma be booked to Body it could be a supplier part problem but Body will have that put on their score which means that they are over target when in fact the problem is out of their control) It has been found that this does not occur in Poland. In Poland there is more accountability and it is very obvious and everyone gets involved. The two measures system could work in this respect due to the fact the two vehicles are so different yet they are involved in all of these departments. It is feasible that teams be made up for builder vans as easily as the micro passenger vans. Reflections: Between the UK and Poland defects are recorded the same way but they have more accountability at GMM Poland. In an interview with Automotive Industry the manager reflects some thoughts and the perspectives he has may very well be why there is more accountability in the Poland operations. Gliwice plant director, Jose A. Maques (Mark) Goncalves, comments on the many challenges of automaking in Poland. “In 22 years with General Motors, Mark Goncalvess manufacturing experience has spanned the globe -- from ultra-low volume at Lotus to large scale at Gliwice. One year after we bought Lotus," recalls Goncalves, "I went there to increase production of the Elan. Small volume, complex cars and not very profitable, as we all know. But it was a great experience, with a tremendous workforce. I enjoyed it." (Automotive Industry, 2004) From Lotus, Goncalves, a Portuguese citizen, became vice-president of manufacturing for GMs IBC in the U.K. He then went to the Harvard Business School and has spent the last four years working on the Gliwice project. This leader and this attitude have helped the Poland plant succeed and the fact that there is more accountability is significant. The Poland’s plant outstanding features include its flexibility. There is a smart combination between automation and manual operations that generates flexibility. If they want to make a change in models they can do it in a very short period of time. This is why two measures is a feasible option. To implement the two measures is an endeavor that will not require major recourses on behalf of the plant. in conclusion using the data collected this recommendation is a feasible option and will benefit the plants in a number of ways that have been discussed in the paper by the authors. Prior to the study in discussion other research was factored into the present study The prior research collected was done in order to seek ways to enhance the effectiveness of this project. This research will include a study of roles and responsibilities of team leaders at GMM Luton and also the key performance measures motioned above and how they are implemented via GM GMS here at GMM Luton. The results of this prior study will be combined with the results of the present study for the most effective recommendation. References Aho, Michael and Levinson, Marc. After Reagan: Confronting The Changed World Economy. (1988: New York: Council on Foreign Relations Auto Industry. “UK Profile” (2005) Burrough, Bryan and Helyar, John. Barbarians at the Gate. (1990, London, Jonathan Cape) Business Week: "The Future of Banking" (22 April 1991, pp 36-45) DeStefani, Jim. GM’s newest vehicle assembly plant is “shrink-wrapped” around the process. Quality Systems Special Report: Automotive Manufacturing—Part 2. 2003. Dyer, Davis, Salter, Malcolm and Webber, Alan. Changing Allainces: The Harvard Business School Project on the Auto Industry and the American Economy. (1997) Global Engineering Strategy. GMs Global Manufacturing Strategies Come Together.Press Release. January 9, 2002. International Organizational Behavior. Poland Turns West. 2004, McCormick, John.Diamond In The Rough. Automotive Industries, June, 2000. Winter, Drew. GM Manufacturing Starting to Fire on All Cylinders. AutoWorld. 2001 Read More