Changing ways of making cars

the Case study and answer the following question:

Case Study: Changing ways of making cars

Car production has changed dramatically over the years as managers have applied different views or philosophies of management to organize and control work activities. Prior to 1900, workers worked in small groups, cooperating to hand-build cars with parts that often had to be altered and modified to fit together. This system, a type of small-batch production, was very expensive; assembling just one car took considerable time and effort; and workers could produce only a few cars in a day. To reduce costs and sell more cars, managers of early car companies needed better techniques to increase efficiency. Henry Ford revolutionized the car industry. In 1913, Ford opened the Highland Park car plant in Detroit to produce the Model T. Ford and his team of manufacturing managers pioneered the development of mass-production manufacturing, a system that made the small-batch system almost obsolete overnight. In mass production, moving conveyor belts bring the car to the workers. Each individual worker performs a single assigned task along a production line, and the speed of the conveyor belt is the primary means of controlling their activities. Ford experimented to discover the most efficient way for each individual worker to perform an assigned task. The result was that each worker performed one specialized task, such as bolting on the door or attaching the door handle, and jobs in the Ford car plant became very repetitive. Ford’s management approach increased efficiency and reduced costs so much that by 1920 he was able to reduce the price of a car by two-thirds and sell over two million cars a year. Ford Motor Company (www.ford.com) became the leading car company in the world, and many competitors rushed to adopt the new mass-production techniques. Two of these companies, General Motors (GM) (www.gm.com) and Chrysler (www.chryslercorp.com), eventually emerged as Ford’s major competitors. The CEOs of GM and Chrysler—Alfred Sloan and Walter Chrysler—went beyond simple imitation of the Ford approach by adopting a new strategy: offering customers a wide variety of cars to choose from. To keep costs low, Henry Ford had offered customers only one car—the Model T. The new strategy of offering a wide range of models was so popular that Ford was eventually forced to close his factory for seven months in order to reorganize his manufacturing system to widen his product range. Due to his limited vision of the changing car market, his company lost its competitive advantage. During the early 1930s, GM became the market leader. The next revolution in car production took place not in the United States but in Japan. A change in management thinking occurred there when Ohno Taiichi, a Toyota production engineer, pioneered the development of lean manufacturing in the 1960s after touring the US plants of the Big Three car companies. The management philosophy behind lean manufacturing is to continuously find methods to improve the efficiency of the production process in order to reduce costs, increase quality, and reduce car assembly time. In lean manufacturing, workers work on a moving production line, but they are organized into small teams, each of which is responsible for a particular phase of car assembly, such as installing the car’s transmission or electrical wiring system. Each team member is expected to learn all the tasks of all members of his or her team, and each work group is charged with the responsibility not only to assemble cars but also to continuously find ways to increase quality and reduce costs. By 1970, Japanese managers had applied the new lean production system so efficiently that they were producing higher-quality cars at lower prices than their US counterparts, and by 1980 Japanese companies were dominating the global car market. To compete with the Japanese, managers at the Big Three car makers visited Japan to learn lean production methods. In recent years, Chrysler Canada has been the North American model for speed in automobile production. Chrysler’s Windsor, Ontario assembly plant opened in 1928, and over 54 years built its first five million vehicles. Less than 11 years later, in 1994, the plant reached the eight million mark. Chrysler’s Windsor facility has made a reputation for itself as “the biggest single experiment with flexible manufacturing methods at one site.” In the last 20 years, the plant has been so successful that Ken Lewenza, president of Local 444 of the Canadian Auto Workers, describes it as “Chrysler’s high-pressure plant, always expected to meet peak demand for the firm’s most popular products.” On July 24, 2000, the plant reopened its doors after being shut down for just two weeks to retool for the newest generation of DaimlerChrysler AG minivans, due in dealers’ showrooms a month later. That was by far Windsor’s quickest turnover, but flexible manufacturing procedures introduced in 1983 have enabled the plant to display North America’s speediest production turnovers. In 1982–83, the plant shut down for 16 weeks to retool from making sedans to the first models of the Chrysler minivan, and then in 1995, it closed for 12 weeks for retooling to produce the next generation of minivans. While the Windsor facility has been a model for quick turnarounds, Canada’s auto industry in general has fared well with the advancements in lean production methods. One analyst suggested that Canada is “in the golden era of the auto sector in Canada,” with a chance to outpace Michigan as early as 2001.