Forbes - April 24, 1995
THE LAUNCH OF THE 1995 Chevrolet Cavalier and sister Pontiac Sunfire
http://en.wikipedia.org/wiki/Pontiac_Sunfire at the Lordstown, Ohio
plant has been a disaster, probably the worst car launch in modern
history, yet one more sign that GM's big problems are not yet behind it.
Job 1, the first car off the line, rolled last August. Fast startups
roll without a lost day. Six to 12 weeks is a generous ramp-up time
from Job 1 to full production. By mid-February, six months after Job 1,
the Cavalier and Pontiac Sunfire hadn't reached full production; they
were running around 60% of capacity, an average 50 cars an hour against
a target of 80. By late March the rate was only 70%.
The low-priced Cavalier http://snipurl.com/Cavalier (a reasonably
equipped model costs about $13,000) has been GM's bestselling car, but
'95 model production of Cavalier and Sunfire through February was only
55,000, versus 231,000 the year before. (Cavaliers are also built in
Mexico. Those aren't sent into the U.S. lest GM offend its union, but
they are shipped to Canada.)
If you can't build them, you can't sell them. More than half of GM's
sales decline this year comes from lack of Cavalier and Sunfire sales.
"We have delivered a couple dozen. Normally we'd do 40 a month. It's
our core product," says Greg Sutliff, a Chevrolet dealer in Harrisburg,
Pa. But it could be worse: "There are still dealers who have yet to
receive one," he says. "What bothers me is that we do not have a big
bank of orders from the customers." Customers don't wait. If they can't
get the new Cavalier, maybe they buy a Honda or a Toyota.
The inescapable fact is that GM has blown the '95 model year for its
newest car. Maybe the damage isn't permanent, and all the momentum of a
new model launch will be recovered next year. Maybe, but you never
recover the tens of millions of dollars in slow time at the factory, or
the money spent in advertising cars that aren't available. This slow
launch and the consequent loss of sales complicate matters in meeting
government fuel averages, for the Cavalier is one of the high-mileage
cars GM sells.
What went wrong at Lordstown?
GM's management team bit off more than it could chew. The cars were
redesigned for easier manufacture, and 30% of the assembly plant
workers were sent away (the plant employs 5,500 now, against 7,900 a
year ago). A new Toyota-style quality system was installed, complete
with an "andon," a cord that anyone can pull to stop the line. The line
has been stopping often. The body shop, where metal stampings are
welded together automatically into the car's framework before it goes
down the assembly line, hasn't worked right. All the pieces haven't fit
exactly together in the same way every time. Outside experts believe
that GM didn't run enough tests on its new lines.
GM has its excuses for the mess. James Wiemels, a GM vice president and
general manager of the division that oversees Lordstown, is by all
accounts a good man.
"We're not happy with where we're at. But you tell me any assembly
operations that removed 2,400 people; you tell me anyone that put in a
Toyota quality system, you show me anyone who's accelerated a three-
crew, two-shift operation. Look at the amount of change that we got.
Anyone can second-guess. We saw a window of opportunity and we thought
it was worth the risk."
GM brass figured the risk involved in trying to do so much so quickly
was a worthwhile gamble. The aim is to build its Cavalier with 21 to 22
assembly hours, instead of the 31 to 32 on the old model. It's no
secret that GM's not competitive on the assembly line, and you can't
stay in business that way. The new lines must be more flexible, so they
can quickly shift out of slow-selling models. What's more, GM insists
on not sacrificing quality while trying to ramp up production.
Those are admirable goals, and the explanations ring true. But you
can't get away from this: After 87 years in the car business, GM should
know how to launch a product, on time...
If the lessons of Lordstown allow GM to build its next generation of
cars at competitive cost and quality, then the trauma will be worth it.
But right now GM is paying a stiff price for those lessons.