From WSJ: GM to run 24 hour production

[CapitalTruck]

This is from the Wall Street Journal-Copyright Dow Jones

KANSAS CITY, Kan.—Starting Jan. 4, General Motors Co. plans to do something unprecedented in the U.S. car industry: It will run its assembly line here around the clock on a permanent basis.

While common in other industries, not even car-efficiency benchmark Toyota Motor Corp. operates its plants routinely with more than two shifts. Car-assembly lines need too much scheduled maintenance and restocking for such intensive production to make sense, many industry experts say.

The Kansas City plant launched the redesigned 2010 Buick Lacrosse, left, which is a candidate for the 2010 North American Car of the Year Award. Fairfax also produced the 2007 North American Car of the Year: the Saturn Aura.

.For a company long bloated with unused capacity, GM's third-shift strategy is a radical—and risky—departure. Unlike other cost-cutting moves made during its trip through bankruptcy court last summer, such as halving its brands to four, the third-shift plan could make GM a model of car-industry efficiency—or end up a failure like its 1980s drive to let robots run its factories.

The move comes as GM is closing other plants around the country. That means the 23-year-old Kansas City factory, which will add more than 900 jobs, as well as two other GM plants scheduled later for a third shift will become boom towns of sorts as other plants go dark.

That's no accident. The Obama administration auto task force that oversaw GM's reorganization last spring was startled to learn that the industry standard for plants to be considered at 100% capacity was two shifts working about 250 days a year. In recommending that the government invest about $50 billion in GM, the task force urged the company to strive toward operating at 120% capacity by traditional standards.

But industry manufacturing experts are skeptical, noting that the federal task force had limited automotive experience. "Do those guys understand the business?" asked Ron Harbour, whose Harbour Report is a widely followed analysis of auto-plant efficiency.

Typically, car makers have added third shifts only as a temporary reaction to market surges. Even then, a more-common tactic is to place two shifts on overtime. "Two shifts gives us the flexibility to perform any necessary maintenance on equipment between shifts," said Mike Goss, a spokesman for Toyota's U.S. manufacturing operations.

A few idle hours between shifts also enables a plant to perform cleaning and restocking. A plant's paint shop alone generally requires about four hours of cleaning a day, said Mr. Harbour, adding that the efficiencies of a third shift can disappear quickly amid slowdowns for such maintenance.

"If running three shifts means you're moving [the line] at only 60% of capacity, then you haven't gained anything," he said.

In all industries, moreover, midnight-shift workers are prone to above-average rates of on-the-job errors, absenteeism and illness. "Economically, the benefits can be worth it, but only if an employer manages the risks," said Martin Moore-Ede, chief executive of Circadian, a Boston-based consultancy specializing in round-the-clock operational challenges.

Many auto-parts makers have long operated three shifts, and GM is convinced it can do likewise. Still, it is moving cautiously, starting with what is arguably its top-performing plant.

The Kansas City operation consistently ranks among the most-efficient auto factories in America. Pride in the plant's performance drives John Melton, the local United Auto Workers chairman, to give his card to anyone he sees driving the new Buick Lacrosse, one of the plant's products. "I tell them to call me if they have any troubles or questions," he said.

In the auto industry, the biggest risk is a sales slowdown. A single plant can make only a very limited number of models, so adding a third shift represents a bet on hits.

GM's Kansas City plant, called Fairfax, has produced two out of the last three winners of the North American Car of the Year Award: the 2007 Saturn Aura and 2008 Malibu. This year, it launched the redesigned 2010 Buick Lacrosse, which is a candidate for the 2010 award.

November sales of the Malibu rose 17% and the Lacrosse jumped 63%. "Right now, we can't make the Malibu or the Lacrosse fast enough," said Cathy Clegg, a GM manufacturing executive whose responsibilities include the Kansas City plant. But "if market demand doesn't meet our forecast, then we'll end up placing a shift on layoff," she conceded.

GM is offering $30,000 to each of the 900 workers it needs to move to Kansas City from plants closed elsewhere. Its union contract requires it to make the positions available first to laid-off GM employees.

Inside the plant is a "war room" where GM managers and union officials are plotting the launch of the third shift. Among challenges, they have figured out how to clean the assembly line without halting all of it. It involves "overspeeding" some parts of the line so it can be slowed down later.

Once the third shift starts, the line will run about 21.6 hours a day, up from 14.5 hours with two shifts, and will make 6,300 vehicles a week, up from 4,500.

In the second quarter, GM plans to add third shifts to its Silverado pickup plant in Fort Wayne, Ind., and its Delta Township plant in Lansing, Mich., which makes crossover vehicles like the Chevrolet Traverse.

For these communities, third shifts are creating boons for real estate agents, parts suppliers and others.

"It's strange," said Kansas City Mayor Joseph Reardon. "A year ago, we were worried about GM leaving Kansas City, Kansas. Now, for the first time ever, it's adding a third shift."

—John Stoll contributed to this article.

Write to Kevin Helliker at [email protected]

[CapitalTruck]

I don't know...seems a little risky!

I thought GM's goal was to reduce capacity (keep product values up).

[PurdueGuy]

I don't see a problem, as long as they're smart about it. I.E do not ignore the need for scheduled maintenance. You cannot operate a system at 100%, it will break. But you can run 3 shifts if you're smart about how you do the scheduled maintenance, and be smart about dealing with downtime. Keep it a pull system and if something happens to stop the line, don't let everything else carry on as if nothing's wrong.

[Camino LS6]

I like the moxie GM is displaying by doing this.

[CSpec]

I posted this in the politics board. There's a chance this will work, but there is obviously a much bigger chance it will fail miserably or other companies would have done it already.