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2004 Traverse City Coverage


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New Jeep Plant Risky but Promising

There are plenty of risks — along with a potentially huge payoff — to the $2.1 billion Jeep plant DaimlerChrysler plans to build in Toledo, Ohio, says Laurie Felax, vice president of Harbour & Associates. On Tuesday, the automaker revealed that suppliers will kick in about $300 million towards the cost of the experimental operation, and assume control of specific portions of the plant, including the paint shop and body line. “It will truly be a test for them to learn how to better work with suppliers,” said Felax, during an interview at the Management Briefing Seminars. The potential payoff is huge, and could yield significant reductions in cost and big gains in productivity, but the risks also are sizable. For one thing, Felax cautioned, DCX “won’t have complete control over quality anymore.” On the other hand, with suppliers “sharing the risk,” they’ll be even more likely to ensure that everything meets customer expectations.

Chrysler Builds New Jeeps with Suppliers by Joseph Szczesny (8/3/2004)
New Toledo plant subs out more work than ever for Jeep.

Aluminum on the Offensive, but Steel Is King

Obesity is a big problem — and not just for the average, fast food-chomping American. “Cars, in general, have put on 10 kilos (22 pounds) of weight every year, and have for the last 20 years,” noted Mark White, senior body structure manager for the British Jaguar brand. Ford’s high-line marque has attempted to address the issue with its all-aluminum XJ sedan. The big four-door weighs less than the smaller Jaguar S-Type. But the decision to adopt aluminum was costly and required significant changes in manufacturing methods, White acknowledged during an appearance in Traverse City.

There are many who see aluminum as the material of the future for the auto industry. But it appears to be catching on at a far slower rate than advocates anticipated, cautioned several of the speakers at this year’s Management Briefing Seminars. Few things underscore that lag better than Audi’s decision to move away from aluminum for the next-generation of its A2, a minicar that tested the low-cost limits of the metal.

There’s no question the auto industry has to cut weight in order to deal with government regulations, consumer demand and competitive pressures, concurred Dr. Jody Hall, an engineering group manager with General Motors. And aluminum is clearly a part of the solution, she said, noting that GM has nine vehicles with aluminum hoods and a number of others use the metal for their liftgates. But with “the cost of aluminum expected to remain significantly higher than steel,” GM is looking for other solutions, focusing its attention on an assortment of new, high-strength steels. As much as three times stronger than so-called “mild” steel, manufacturers can use less of these materials, Hall explained, achieving at least some of the weight reduction without the added cost of aluminum.

The 1992 Grand Am, Hall said, used 95 percent mild steel, but by late this decade, high-strength steel will account for well over half the weight of similar GM products. Across the line-up, she added, the use of various high-strength steels “will increase tenfold over the next six years.”

That’s good news for the U.S. steel industry, which has suffered through several years of severe losses under the pincer assault of recession and low-cost foreign competition. Major manufacturers, including U.S. Steel and NuCor, have recently reported sizable profits as demand begins to recover, and more are expected to follow suit. The steel recovery has ridden in on the back of rising metal prices, and “We don’t see the price going down between now and the end of the year,” cautioned Ron Krupitzer, a senior director at the American Iron and Steel Institute. If anything, he told TheCarConnection, “You may see pressure on the (automakers) for further increases as they negotiate new contracts.” Ironically, steel’s recovery could lessen its advantage against aluminum and other lightweight alternatives, Kruptizer conceded.


 
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