Michigan Factory Makeover
Recently on NPR’s Marketplace there was an encouraging story about struggling automotive part manufacturers and there quest to fing new markets for their idled machines. They are going green. Listen or read about it at the Marketplace website.
http://marketplace.publicradio.org/display/web/2009/07/09/pm_michigan/
The piece comes off somewhat as a commercial for Michigan companies. Not to take anything away from them, Michigan has fallen on hard times, harder than most. The network of supply chains to the struggling automotive industry has a cascading effect of bad news. The suppliers a few links away are looking to fill up idled capacity.
How are they going to get there?
The tough business of auto parts manufacturing has been a good proving ground for cost containment and productivity increases. There are however new hurdles to overcome.
Flexibility is the key.
Many machine owners are taking one of two tacks. Ether they are engineering custom machines for custom applications or building in more flexibility required to create many different kinds of parts for many different applications.
The issue that automotive parts manufacture’s face is the cost of retooling. Here can be an immense capital expense with owning machine tools. That capital expense is analyzed against the expected life of the tool and the expected contract for the part. The big unknown is the forecast demand and the longevity of the part. These productive assets are required to make profits. If the tool is “too custom” and over engineered, the payback can be slim to none, or even a loss. Adding another facet dramatically lowers the cost. If the tool is FLEXIBLE in its application, the cost becomes far more palatable.
The cost to tool for a part can be very expensive. In order to compete on the global manufacturing field the automotive supply chain has invested a tremendous amount of capital to stay in the game. The leg up that Michigan may have, is that it has plenty of the machine tool infrastructure there hungry for new work.
Michigan’s factory in the NPR piece is more efficient than most by a long shot. The ultimate way to measure, is in the price quoted. Can a company make the same part as another thereby making more money? The longevity and volume of automotive parts is historically long. As these plants retool out of their niche in the automotive sector, they’ll find that, because of shorter production runs, making their machines and processes more flexible will help them be more successful in this new manufacturing environment.
