Industry Practice – 'Value Stream' Exploitation – Identifying New Possibilities (Part 5.4)

After the birthday tribute to the British and Commonwealth Monarch, this web-log returns to the previous focus upon the manufacturing element of the automotive corporate dynasty.

As a young woman within wartime Princess Elizabeth played her part by mending and driving ambulances, in a period when those of both genders with curiosity and aptitude could themselves add-value. From the drafting boards of aeroplane producers to the factories of equipment makers to the repair and logistics of the transport corps. People recognised the value of constructing and repairing goods within a very pertenant atmosphere of simultaneous prolific output and a 'make do and mend'.

Today we still sit in the fall-out of the 2008 financial crisis, and many have had to utilise a similar personal philosophy. But with it comes a sense of personal interaction with the technicality of things that surround us, and with it again a returned curiosity as to how things are produced, and with that a sense of self-empowerment and improvement as not just unquestioning consumers but with more knowledge and discernment, and with the ecological impetus, a new era of design and build which requires increasingly engaged, proactive participants.        

Given the role of the car today, it might be unsurprising if the notion and social idiom of the manufacturing process is exemplified by the vehicle factory; with the consecutive build-process seen in their 'mind's eye' as representative of modern manufacturing; even if unfamiliar with the processes that form the component parts.

This thanks to of the decades of news reports regards the closing or opening of car factories so effecting local and national economies, as well as the myriad of documentaries produced. These span from Pathé News items for 1930s cinema through to latter-day efforts such as National Geographic's 'Mega-Factories' series and onto today's era of amateur video uploads.

The very experience of production has now become an increasingly engrained part of the culture industry, best exemplified by the plethora of Visitor's Centres, such as Cadbury's legendary Bourneville site for chocolate and confectionaries, through to replication of this approach by old family regional beer breweries, themselves seeking to re-invent and expand aspects of their own businesses. Within autos, it is now almost standard practice to welcome in the public, from the massive Volkswagen AG in Wolfsburg, to the relatively minuscule Morgan Motors Company in Malvern Link, all providing guided tours of the production process so as to engage owners, potential buyers, the public en mass and tomorrow's engineers. Perhaps the present philosophical pinnacle of this fascination seen at FerrariWorld in Abu Dhabi, with mock replication of portions of its Modena facilities accompanied by real video-screen footage.

Thus even production has become a 'hyper-real' product to sell to ever more inquisitive and voracious consumers of 'experiences'.

Yet just as this public fascination with production has expanded to enter the public sphere, so at the 'back-end' driven by ever mounting PESTEL demands, the very realm of automotive manufacturing has had to adapt, continue on an evolutionary path and even radically revolutionise.

So where as for decades the likes of GM, Ford, Austin or FIAT could create a a near direct like for like new facility anywhere in the world, today the various local demands mean that far more than production capacity must be considered. With the EM factories of today necessarily 'future-proofed' for the ecological requirements of tomorrow, using AM plants as ever more complex guiding templates of sustainability.

Manufacturing:

The word 'manufacturing; originates from the idea of 'manual factoring', whereby the output of a single craftsman was typically simplified and amplified to increase the per item output. Or as likely the task multiplied amongst many to likewise increase output. Typically however, both simplified and multiplied so as to gain maximum efficiencies.

This approach has underpinned the manufacturing mentality the Ancient Egyptians, was evolved as a regimented method during the Anglo-Saxon Crafts-Guilds of the Middle Ages (a multitude of Apprentices' simple works mated to that of the master Craftsmens' complex works) and obviously determined as a yet more thorough discipline after the Industrial Revolution.

Efficiency gains had been achieved from common sense approaches centuries earlier thanks to the influence of militaristic principles, but it was adoption of the 'scientific approach' espoused from the earlier Enlightenment Era that began to question all aspects of “manual-factoring”.

With the arrival of 'Big Industry' and the need to find ever greater productivity gains, as part of management science, came the mid 20^th century 'Time and Motion' man, studying every aspect of a process to reduce wasteful time and effort, both in man and machinery. It was after this period, during the 1970s onward, that the key issues of Layout, Processes and Ergonomics started to be considered in earnest as the man-machine interface was refined ever more.

As with every industrial sector, the prescription of a specific manufacturing approach and the methods used – primarily the type of 'plant' installed and staffing levels/skills required - is typically determined by the overall business case.

The multi-various templates of today spanning:

1. “Mass” (250k units to 1,000k units: ie Toyota, VW, Ford, GM, FCA, et al)

2. “Mid” (7k units to 250k units: Rolls-Royce, Aston-Martin, Ferrari at the lower end, Bentley and AMG in the middle and Jaguar at the upper end)

3. “Niche” (up to 7k units: Morgan Motors at the lower end, McLaren Cars in the middle).

[NB It must be noted that whereas once these three general categories were because of specific manufacturing templates very separate, over the last 20 years there has been a concerted effort to necessarily blur the boundaries of niche, mid and mass; these now ever looser terms.

This done to service ever greater demand for specialist vehicles, as seen by Ferrari's growth from below 5k units a decade ago to new ambition of 12k for near future. And Jaguar's growth path from about 50k units at its low point to expectation of well over 250k into the future.

The need to create new product types to fulfil new segments at higher volumes using lightweight materials, notably aluminium prompted a wholesale transformation of Mid capacity production whereby the yesteryear very separate techniques related to Niche and Mass have been entwined and re-invented].

From initially the labour intensive, somewhat haphazard and quality variable “niche-built” operation (depending upon funding, staff capabilities and build-time), thereafter to a “scaled-up” version providing marginal to large cost savings (the bulk-buying of materials and labour costs savings dependent upon a balance of input costs and output numbers) and by the “mass-manufactured”, whereby the potential of much enlarged scale and the introduction of advanced new methods allowed per unit costs to be reduced significantly, dimensional tolerances to be maintained and so quality to be improved.

'Manufacturing Engineering' relates to the design and build of those separate yet well co-ordinated items of 'plant'; ranging in complexity, size and cost; the manufacturing route determined by the nature of the product, the business's innate capabilities, budget and volume capacity sought.

However, since auto-manufacturing has typically been scale driven since the 1920s to this day for major VMs. With standardised American methods instilled relatively early on, there was little need for major advancements within the mass arena.

That watershed contribution was Edward G Budd's pressed-steel process creating the weldable all-steel body (initially for the Dodge Brothers) has long been overshadowed by the story of Henry Ford's compartmentalised production process. The former gave a massive contribution of cost savings efficiencies to the latter.

Indeed the massive costs of associated capital expenditure and entrenchment of the pressed steel systems meant that general advancement in manufacturing engineering was within its own sphere and with little transformative pressures somewhat limited for decades; simply refinement of the standard.

However, competitive and regulatory demands of the present and future has over the last 20 years added far greater impetus for paradigm evolution.

One example of such innovation being that of “hydro-forming”, an evolution of the omnipresent press-type process using water and lubricant within the 'male' and 'female' parts of the tool to provide better finish to the panel, greater curvature subtlety and better specific panel or part strength. This seen with the chassis frame-rails of the Ford F-Series and elements of the new Chevrolet Corvette.

Manufacturing Engineering has then evolved to research, discover and offer an increasing broad mixed-bag of solutions relative to the 3 capacity templates: 'Niche', 'Mid' and 'Mass'. Each solution very much dependent upon the right balance for the business case, as per product performance, quality expectations, speed to market and overall project cost.

As seen, given its importance to many nation's economic agendas, for much of the 20^th century the external PESTEL influences on the Budd mass manufacturing system were effectively benign. Post WW1 globalisation consisted of exporting the idea of the American Dream via its consumer durables, cars the most potent symbol of success.

During temporarily changed circumstances adaptions could be made; material shortages during wartime which could be substituted by other 'stand-in' materials, and any short lived politically emerged oil crisis could be overcome by making available and building smaller, lighter vehicles, as seen in the mid 1970s. Thereafter, with strong peacetime economies and the availability of plentiful, affordable oil re-generating consumer and business demand for larger, heavier vehicles (albeit with more efficient drive-trains and so maintained / improved fuel consumption), it seemed that the Budd pressed-steel system was destined to be all pervasive forever. And given its irrefutable scale and global dominance that still appears the case today.

However, as seen, since The Kyoto Summit of 1992 there has been increasing recognition of the need for a fundamental shift in attitude regards the vehicles of today and tomorrow. That philosophical re-orientation has required major manufacturers to re-think product specifications, use of hybrid power-plants and critically the use of advanced materials and thus the manufacturing methods by which tomorrow's new generation vehicles should be built.

Audi's initial marriage of the Budd system with pressed aluminium in the original A2 was a major leap forward presaging the aluminium bodies of others from Jaguar to Aston-Martin to Rolls-Royce.

This need to plan ahead has then led to greater manufacturing engineering advancement by certain quarters of the auto-sector within the last 20 years, and specifically last 10 years, than seen in the previous six decades; BMW's i3 the most advanced.

As with the product itself, to assist with speed, quality, and cost, Engineering Manufacturing has since the mid 1970s increasingly relied upon CAE (Computuer Aided Engineering) via CAD-CAM to ensure improved product exactitude, speedier development times and critically a closer dialogue and parallel between product and manufacturing engineering functions.

Whether that be for exacting zero-defect quality control of a million-series run of a stock component item, or regards a singularly CAE designed but hand-assembled supercar, through to today's ability to create a bespoke 3-D printed component. perhaps for the mechanical refit of a long defunct vehicle sitting within a car museum.

'Manufacturing Facilities' simplistically typically refers to location and activity of a manufacturing 'plant' or 'plants', by which the finished article – whether that be small trim clip or complete vehicle - is produced.

As explained, for whole vehicles this ranges across a wide arena – referred to as: 'niche', 'mid' and 'mass' production; though (as shown) 'mid' has become a very loose definition.

This then spans everything from a simple table-top jig at Morgan Motors for the hand-bending of laminated ash (plywood) for the part known as the 'wheel-house inner', to an armature in Lamborghini's 'trim shop' upon which a dashboard sits for hand 'dressing', to a major producer's heavy panel presses and their inter-changeable dies for forming sheet steel / sheet aluminium, to programmable, semi-intelligent, multi-tasking robots that streamline the overall process, to today's notion of batch-specific 3-D printed parts.

A massively wide spectrum. all of which depending upon need and affordability, configure and so comprise the various archetypes of production line.

Furthermore, as the petrol/diesel engine becomes increasingly accompanied by Hybrids, PHEVs and EVs, so the complexities of mid to long-term power solutions raises important questions about the type of technology-aligned production facilities will be needed.

In turn, this raises questions regards the very industrial base and structure of the industry.

Given the very scale and level of global inter-connectivity of processes and indeed corporate interests, a wholesale restructure of sector and associated facilities is still a low probability outcome over the next two decades, especially so in what could be an era of protracted 'cheap oil'.

The rational evolutionary step is not toward all electric EVs (except in specific circumstances) , but the broader adoption of Hybrid solutions, with adapted ICE as part of that mass appeal journey. This the best fit answer to match consumer expectations of flexibility and range as set by the internal combustion engine for over 100 years.

This common-sense answer was understood by Toyota engineers and executives by the early 1990s, with the Japanese launch of Toyota's Prius in 1997 paving the way for worldwide understanding of Hybrid's multi-fold advantages. Prius thereafter re-set the landscape regards mass -manufacturer's recognition of needing to serve the ecological agenda beyond America's increasingly outdated CAFE regulations, the Euro5/6/7 efforts pushing intermediary targets, but each recognising it needed various technical strategy routes to emissions reduction; to both stay ahead of regulators and to deploy that strength as a market advantage.

This need has been the prime driving force in re-shaping manufacturing processes.

Whether the previously seen reactive focus on the conventional combustion engine, typically that of a smaller capacities and turbo-charging to maintain power and torque and increased use of aluminium, plastics and even exotic ceramics in families of proprietary engines....to the now widespread inclusion of 'start-stop' flywheel ancilleries (incorrectly marketed as 'mild hybrids'), to the integration of true series and parallel hybrid systems to likewise that of 'plug-in' PHEV charging sub-systems...to body structure 'lightweighting' through use of lighter steels, aluminium, other alloys and composites...to expansion of hybrid solution with the 'plug-in' PHEV...through to ongoing experimentation with all-electric EVs as circumstances allow.

However, most are still effectively testing the waters with EVs, so whilst the likes of sector disruptor Tesla continues to plan and build its own battery 'Gigafactory', the established players will continue to prefer to refine the ICE and for hybrid vehicles buy-in of battery systems from the likes of Samsung and LG for what are in comparison to ICE lower volume hybrid numbers and the very small number of EVs. Taking partnership stakes as volume and business case circumstances dictate.

This because quite obviously most prescient for the discipline of Manufacturing Facilities, is a primary interest in the balancing of investment and operational costs over a given time-scale, to make the venture profitable.

Many issues are included in this business equation, from government incentives to domestic market demand to foreign export costs, the factory formula typically governed by the two over-riding operational and cost considerations of location logistics and labour rates. Getting the mix right is crucial.

Simplistically those geographies with high labour costs or operating as true mass-manufacturing centres producing many thousands of units will obviously encourage greater use of automation (ie 'robotic' machinery) with fewer better paid skilled operators.

Whilst conversely, low-labour cost locations will encourage use of a flexible low-skill human workforce for the undertaking of manually intensive processes.

Thus mid-cost locations typically require a mix of partially automated machinery and semi-skilled people, even here the undertaking of CapEx to toward robotisation seen as positive to drive down workforce numbers, the general overhead and so per unit costs.

However, other factors must be considered.

Such as the complexity of the product and so need to be in close proximity to the design-engineers, to the mass of the product and so its shipping costs, to the overall corporate attitude toward the social care toward its employees.

Often the more technically advanced the product and its manufacturing process, and the more socially conscientious the firm, the greater the likelihood to be manufacture 'at home', those high costs absorbed by the strong margin to be had from selling a world-class product, whether a BMW i3 or McLaren 675LT.

Whereas, any simply constructed and assembled product may be produced in a relatively rudimentary factory space, with little capital expenditure given what may be second-hand tooling bought cheaply, and very short-term or even day-rate labour force to match what may be a variable order book. The fringe firms of the very niche sportscar and 'replica classics' realm known to necessarily undertake this approach; as with TVR's migration to Russia and AC Cars build relocation to Malta in 2007. Yet given the instability of demand, the fragility of the business case, poor local infrastructure etc, this seemingly logical production route can be fraught with problems.

Between these two extremes is the mixed model, whereby stable demand for a product allows for a new factory to be set-up using proven tooling and quality processes. This may be achieved at relatively low cost often thanks to the 'lift and shift' of part-used equipment from its previous homeland base. This often a next step from previous CKD local builds. (eg South Africa: Volkswagen 1950s on, Land Rover Defender 1980s on, BMW 3-series 1990s on). Importantly, with positive governmental policies, this initial arrangement can flourish to create strong regional automotive sectors attracting more entrants, as with S.Africa's 'MIDP' scheme.

Thus getting the business balance right regards manufacturing facilities, given its impact on product, people and corporate reputation is vital, once invested, typically ordained for the long-haul; as exemplified by Japan's FDI approach for its international satellite factories.

And as of today, from a facilities perspective, it is somewhat ironic that whilst Toyota in the 1930s moved up rapidly up the added-value curve by shifting from the textile loom to the pressed-steel truck and car, so in the 2010s, BMW has monumentally moved up further up the added-value curve by defining eco-solutions through the loom weaving of carbon-fibre for i3, i8 and expectant i5.

Thus all in all, it is increasingly understood that the ever growing complexity of the global auto-industry – as seen through the various lenses of: product type and associated brand values, producer ambitions, producer numbers, competitive actions, regulatory demands etc – has inevitably meant a proliferation in manufacturing templates because of increasingly apt technical needs and so dedicated production process.

That said, whilst the Advanced Triad regions continually modify and revolutionise their product offerings and so manufacturing bases in the 21^st century – so as to lead the world - Emerging Nations across Asia, Latin America and Africa will inevitably continue to base their economies on the internal adoption of the proven lower cost 'old-tech' automotive technologies of the 20^th century. This means being oil propelled with much improved emissions, steel-bodied, made in local factories (sub-systems likewise), launched at publicly exciting auto-shows, viewed at local dealerships, increased professionalism of Sales and Service, ever growing used-vehicle markets and the need to adopt the progressive materials separation recycling techniques at end-of-life. Indeed, by thinking ahead, various EM countries may seek to demonstrate themselves additionally as the consummate re-cyclers in their 'auto-age', taking the previous skills of basic necessity and redeploying them as a new re-manufacturing capability.

Thus the industry entrenched press-metal process (as created by Budd and demonised as the heart of 'Fordism') is here to stay, and rightly so to mobilise the global masses. Yet, because of the available advantages, it can only be assumed that decades into the future it too will be mass conjoined in volume terms to the carbon-fibre loom process.

At that distant point, with most automobiles based upon a truly recognisable carbon structure, it possibly means that auto mass manufacture could create true global “carbon neutrality”. Instead of being viewed as the problem, as is the seemingly the case today, the automobile and its manufacturing systems, could be seen as a major contributor to the ecological solution.