Gm's German Lessons

Wearing uniform gray slacks and a white button-down shirt, Volker Keyser, 29, darts among the Corsa cars gliding down the assembly line. An eastern German who once installed heating systems, Keyser leads the eight-member tire-and-wheel team at the year-old Adam Opel plant in Eisenach, just inside the former East German border. Twelve weeks of training jolted him out of the passivity that plagued communist-era workers. He speaks up with new ideas and won't hesitate to stop the line if he thinks something is wrong. It "was a challenge," Keyser says. "But now, I have confidence."

So does Opel. Tucked in a valley below the Wartburg castle where Martin Luther translated the New Testament into German in 1521, the $600 million Eisenach plant is also revolutionizing the way people think. By adopting and adapting lean manufacturing principles, the General Motors Corp. unit is plotting to beat the Japanese at their own game. Opel is turning to low-inventory, just-in-time parts delivery, flexible teams of workers, and kaizen, or continuous improvement. The plant's achievement isn't concocting new approaches but choosing the best of many proven ones. "They've packaged together the global best practices in the industry," says John Lawson, research director at DRI/McGraw-Hill in London. "The productivity levels will make competitors' mouths water." That's critical as Europe's auto market, with unit sales down 15.2% this year, wallows in a prolonged slump.

The remodeling won't stop with Europe. GM Chief Executive Jack Smith got hooked on lean concepts a decade ago, when he helped set up New United Motor Manufacturing Inc. (NUMMI), GM's California joint venture with Toyota Motor Corp. But headquarters in Detroit failed to build on these early insights. In fact, despite the success of its own Saturn unit, GM has fumbled the transfer of lean manufacturing into the heart of its operations. Many plants are still poorly laid out, carry excess inventories, and have large areas where just assembled cars must be repaired before they are shipped. Not about to miss a second chance, Smith, who headed GM Europe from 1986 to 1988, plans to use Eisenach as a model for revamping GM's auto manufacturing worldwide. "We've got to convert the rest of our plants to that type of operation," he declares.

"LEADERSHIP." That's one reason Thomas W. LaSorda, 39, the head of Opel Eisenach since it was a muddy field in 1990, has just returned to the U.S. as manufacturing manager for the Cadillac/Luxury Car unit. He'll oversee production of Cadillacs and some Buicks, Oldsmobiles, and Pontiacs at threeof GM's most important plants. And Job One for him is to advance lean practices in a division that has made big gains in quality but is struggling to adopt a raft of new manufacturing techniques. "It's the leadership that makes it work," says Arvin F. Mueller, general manager of GM's North American operations technical center. "That's an art."

At Eisenach, it's more like a religion. In the late 1980s, as Opel was recovering from years of losses, Robert J. Eaton, then GM Europe president, assigned four senior managers to rethink its manufacturing philosophy. They set up "model shops" within Opel factories to test teamwork and other methods, a step that quickly cut inventories by 60% to 80% and space requirements by 30% to 50%.

Eisenach provided an ideal way to expand the experiments to plant-size scale. By 1990, Opel had bought assets of the state-run auto maker that had assembled Wartburgs, East Germany's boxy version of an upscale car. Opel staffed its new factory from the defunct plant's pool of workers, hiring only those who, in an intensive interviewing process, seemed to demonstrate an ability to work in teams. Then, it gave them extensive training, using Lego blocks, for example, to illustrate the just-in-time process.

To manage the plant, then Opel President Louis Hughes, another NUMMI alumnus, recruited evangelists from GM's two main joint ventures with the Japanese--NUMMI and CAMI Automotive Inc., the Canadian GM-Suzuki Motor venture. "We're like missionaries, because this is something you have to believe in," says Eric R. Stevens, a former CAMI manager who replaced LaSorda at Eisenach.

TOUGH BENCHMARK. The emigr s set out make their new factory's space, manpower, transport, and warehousing requirements about half those of Opel's other plants. Eisenach's 2,000 employees will build a car in under 20 hours when the plant hits its annual capacity of 150,000 units next year. GM's U.S. plants aren't anywhere near as efficient, and the average European plant took 36.2 hours in the late 1980s. Nissan Motor Co.'s Sunderland (England) assembly line, the region's benchmark, can build a Micra in 10.5 hours and a Primera in 12.5 hours. "Sunderland is a fairly scorching benchmark," says DRI's Lawson. But he adds that the companies include different tasks in their calculation of assembly time. The efficiency of the two plants is "very close," he says. Eisenach "shows GM can do it," declares auto specialist Daniel T. Jones of Cardiff Business School in Wales.

It also gives Opel, one of Europe's few profitable carmakers, a headstart for 1999, when import restraints on the Japanese will be lifted in Europe. Peter Enderle, Opel's manufacturing chief, expects to boost overall productivity 7% to 8% annually for the next few years by bringing the division's other plants, which take about 25 hours to assemble a car, "close to Eisenach's level of leanness by 1996 or 1997." Two-thirds of Opel's 20,000 line workers now operate in teams. The carmaker's Bochum stamping plant near Bonn has cut steel-coil inventory, once up to 20,000 tons, to 600--enough for one shift's production.

A walk through the Eisenach plant reveals the same crisp efficiency that characterizes a Japanese factory. Lighted signboards indicate at a glance where parts are running low. The assembly line boasts clean, spacious aisles, with only two hours' worth of inventory on hand in small, blue boxes, their locations marked in bright yellow tape. With each worker empowered to stop the line in the name of quality, there's no costly expanse of space at the end to repair mistakes.

Eisenach also has close links with key suppliers. Just 600 yards down the road, Lear Seating General Manager Horst Dieter Moritz, the eastern German who used to keep 90 days' worth of metal parts on hand when he was purchasing chief at the old Wartburg plant, is linked to Eisenach by a computer that signals its final assembly schedule 13 hours ahead of time. Four hours before a car is built, Lear makes the seats for it and trucks them to the line. "I couldn't have imagined this before," says Moritz.

Despite the similarities, Opel didn't copy the Japanese system wholesale. That's just as well: Much of what it rejected, the Japanese are rethinking. To keep down costs, Opel uses less technology, installing radiators and windshields by hand, for example, instead of with robots. In their overseas plants, the Japanese also use less automation. At Nissan's Sunderland factory, seats are positioned hydraulically but fastened by hand. By contrast, in its newest plant in Japan, conceived in the late 1980s (when manufacturers panicked over a looming labor shortage), robots install seats.

OVERLOAD? Another departure: Eisenach has just begun a five-day, 24-hour production to squeeze the maximum from costly new equipment. Toyota runs just two shifts to leave more time for maintenance. "It's a difference in philosophy," says Toyota's Mikio Kitano, the managing director overseeing production. "There are different ways to have lean production."

One other dissimilarity involves logistics. Toyota City, near Nagoya, Japan--the world model for lean manufacturing--assembles nearly 2 million cars a year in a sprawling area that includes many supplier plants. Opel built Eisenach to gain a foothold in eastern Germany, but the facility is too small for most of its 400 suppliers to afford to build nearby. With parts coming from as far as Zaragoza, Spain, Eisenach needs intermediate warehouses to ensure just-in-time deliveries. But then, at their new plants in southern Japan, even Toyota and Nissan do, too.

It won't be easy to retrofit Eisenach's lessons into existing European plants. At Opel's Bochum factory, built against a hill, the trim line has only one entrance, preventing steady parts delivery in small lots. "It's a kind of nightmare," says logistics manager Wolfgang Vogel. And retraining people who have built cars one way for 30 years, he says, is one of the most difficult challenges.

GM faces the same hurdles back home. After a decade of exposure to lean manufacturing techniques through its ventures with Japanese companies in North America, "GM shouldn't have to learn the lesson again" at Eisenach, says Cardiff's Jones. The difference this time is that as LaSorda and others try to bring lean manufacturing into GM proper, they'll have support from the top. "We've got a long way to go," concedes CEO Smith. But at least now, GM seems headed in the right direction.

OPEL'S KEYS TO SUCCESS AT EISENACH:
      THE RIGHT PEOPLE AND PROCESSES
        -- Selectively chosen workers get 12 weeks of intensive training. The plant's 
      2,000 employees are organized into five-to-eight-member teams. Without 
      restrictive work rules, each member can perform each of the team's tasks.
        -- Just-in-time parts delivery keeps just four to six hours' worth of parts 
      in the plant and only two hours' worth of inventory along an uncluttered 
      assembly line.
        -- Kaizen, the Japanese term for continuous improvement, is the rallying cry. 
      Workers have designed parts boxes to tip forward as they empty, for example, to 
      avoid unnecessary reaching.
        -- A bottom-up focus on quality aims for zero defects. Anyone who detects a 
      problem can pull a yellow cord for help or a red cord to stop the line. Teams 
      routinely audit their own performance, avoiding costly inspections at the end 
      of the line.
      DATA: BUSINESS WEEK