He may have a new, more prestigious title, butCorp. President Thomas T. Stallkamp plans on continuing and accelerating the cooperative cost-cutting techniques that he pushed as executive vice president of procurement and supply.
"When you look at the entire cost of bringing a new product to market, probably a third of it is waste," says Mr. Stallkamp, meeting with reporters in mid-December.
And how does he plan to eliminate it?
In short, by sticking with the game plan under which an unprecedented degree of engineering and production has been turned over to suppliers. Known as its Supplier Cost Reduction Effort, the initiative, which has been aimed at sharing savings from supplier-initiated cost-savings ideas, has added more than $3.5 billion to's bottom line since 1993 and is a major reason why its profitability per vehicle (about $1,000) exceeds both of its domestic rivals.
"The whole supply chain has got to get more concentrated on and dedicated to our retail customers," he says.
Once again, Chrysler has introduced an innovative sport/utility vehicle, Dodge Durango, and executed the production launch right on schedule. But the ramp-up of its new fullsize Dodge Intrepid and Chrysler Concorde sedans is inching along well behind initial targets. As long as consumers keep migrating from cars to light trucks, such a glitch may not hurt.
Perhaps the more delicate decision Mr. Stallkamp will face is how to apportion future product spending between light trucks and passenger cars.
"We are not getting out of the car business," he says. "We will follow up the '98 Dodge Intrepid and Chrysler Concorde with the Chrysler LHS and 300M.
"Minivans and sport/utilities have been good to us, but the contrarian view is sometimes correct. If the rest of the herd is going one way, maybe you should be prepared to go the opposite way."
And what is his evaluation of Chrysler's current quality?
"It's getting better, but it's not where it could be or should be," he says.
Among the prescriptions he is pushing are deploying more engineers in each assembly plant to simplify the process through which workers build vehicles. He also wants quality issues to be identified earlier in the process so they can be corrected before reaching the end of the line.
Regarding the recently concluded Global Warming Conference in Kyoto, Japan, Mr. Stallkamp says it's impossible to say what the next step will be, but it will not cause an immediate change in the company's product development.
His most controversial response in the informal get-acquainted chat came in response to whether he viewed global warming as a serious threat to the environment.
"Climatic changes have always occurred," Mr. Stallkamp says. "I'm not convinced that global warming is happening because of industrialization or whether it's just a natural variation." Now thatCorp.'s Midsize/Luxury Car Group has decided to shutter its Buick City assembly plant after the '99 model year, the next vulnerable factory is Ste. Therese, Que., where sales of the muscle car tandem of Chevrolet Camaro and Pontiac Firebird fell 13% through November in 1997.
There are new high-performance packages - the SS Camaro and the Firebird Ram Air - that go into production this month. Also available is the same LS1 offered in the Corvette. But the infatuation with 4-wheel drive, high-riding SUVs seems to have seduced many of yesterday's boy and girl racer types.
As the General drives its troops to maximize commonality of parts and processes across platforms and body types, it seems logical that someday the F-car and Corvette will be built under the same roof.
"At this time there are no plans to consolidate them," says David Hill, vehicle line executive for Corvette, Camaro and Firebird. The latter two were added to his job description in October.
Right now the plan is to keep Ste. Therese running through the 2002 model year. But GM has put a new paint shop in the Bowling Green, KY, Corvette plant and the more cars it can build there the faster it can amortize investments.
Spins Off Decoma Unit
International Inc. plans an initial public offering of stock in the exterior plastics operations of its Decoma Div. The issue is expected to go to market on both the Toronto and New York stock exchanges by March and should raise about $71 million to be reinvested in the business. Magna will retain control of the new company.
The businesses to be spun off include injection-molded bumper systems and body panels. Decoma's ornamental components and roofing systems will remain totally under the Magna umbrella.
Among the reasons cited for taking the plastics business public is to create a new range of stock ownership and options with which to attract and motivate new managers and employees.
For its first fiscal quarter, ending Oct. 31, Magna's sales rose 13% to C$2.08 billion (US$1.6 billion), but its net income dropped 9% to C$95.1 million (US$73.2 million), mainly due to a C$3.7 million (US$2.85 million) settlement of a lawsuit against its Tesma unit. The company also says earnings were hurt significantly by the slow launch of Chrysler's redesigned Dodge Intrepid and Chrysler Concorde.
President and CEO Donald Walker said the company has completed the acquisition of Ymos AG, a German supplier of interior and exterior plastics parts. Separately, Magna is creating a new division called Symatec to train teams of workers to work on larger automotive systems as automakers turn over more component development and production to suppliers.
The company also is hoping to submit a final bid by late January for some or all of about sixInterior & Lighting seat plants that have been for sale since last September. Corp. and other interior suppliers are reportedly interested in the same facilities.
GM to Spend $800 Million in Moraine
OneCorp. plant that will flourish into the 21st Century is the Moraine, OH, factory where GM will invest about $800 million to retool for the next-generation Chevrolet Blazer, GMC Jimmy and Oldsmobile Bravada, to be introduced in the fall of 2000.
GM board approval is a clear vote of confidence in the 8,000 workers at the assembly, powertrain andChassis plants represented by the International Union of Electrical Workers (IUE). IUE Local 801 and GM reached a labor agreement last year that met management's criteria for competitiveness. Among those is a continuation of the IUE's two-tiered wage structure under which newly hired workers are paid 55% of the union scale. They are gradually paid more until they are earning the full IUE scale after 10 years.
GM currently builds the compact sport/utility vehicles in Moraine, just outside Dayton, and in Linden, NJ. A GM Truck Group spokesman says there has been no specific investment authorized for the Linden plant, although that does not indicate such an investment might come later.
The investment includes some physical expansion, but the GM Truck spokesman says he doesn't know whether that would increase the capacity of the Moraine plant or not.
Ecia Acquires Bertrand Faure
In a deal that creates Europe's second largest automotive supplier, Ecia has agreed to buy Bertrand Faure for about $1.2 billion or (FF7.3 billion).
Combined sales will be about $4.3 billion, (FF26 billion), placing the new company just behindSA as Europe's largest parts supplier. Ecia, which was created in 1987 after Peugeot spun off its internal parts operations, produces exhaust systems, frontal exteriors and fascias. Bertrand Faure makes seats, carpets, and other interior components. Peugeot-Citroen, the French automaker that still owns 68% of Ecia and last year bought a 17.3% stake in Bertran Faure will hold 51% of the combined supplier company.
GM Scraps Astra in Thailand, Cuts Volume
General Motors Corp. will not build the Opel Astra at its new Thailand plant and it will cut the planned capacity from 100,000 to 40,000 units of a more affordable vehicle yet to be determined.
Opening of the plant in Rayong, originally scheduled for mid-1999, has been delayed by a few months, say GM sources. Chairman John F. (Jack) Smith has asked Louis Hughes, president of GM International Operations, to come up with a proposal for a vehicle more in line with the deflated purchasing power of consumers throughout Southeast Asia.
GM had planned to export about 80% of its Thailand production to other countries in the region, but most have been hit by similar currency devaluations that have severely constricted consumer spending.
Small cars, red ink. That's conventional wisdom in the auto industry, especially among the U.S. Big Three. You've got to have 'em to meet market demands and fuel economy targets, but making a buck on little cars is tough indeed. Now, WAW learns, General Motors Corp. will launch "Yellowstone," a secret project with the challenge of turning a dollar on cars like Chevy's Cavalier. Call it GM's North American "Blue Macaw," the effort under way in Brazil to build profitable, low-price "popular" cars starting in 1999 at a new plant near Rio Grande do Sol. The Blue Macaw, a member of the parrot family, is Brazil's national bird - a revered symbol. The GM team chose Yellowstone for much the same reason: Its reputation as a national treasure. The key to Blue Macaw is one standard model with a few dozen suppliers located on site. Duplicating that scheme could be much tougher in the States for any number of reasons, including an entrenched UAW workforce, the likely necessity of using existing facilities and the fact Americans demand more variety than envisioned for Blue Macaw. Still, many Blue Macaw suppliers such as GM's Delphi Automotive Systems could become Yellowstone on-site partners as well. Yellowstone is headed by Mark T. Hogan, who hatched Blue Macaw while president of GM do Brasil. Last May. Mr. Hogan took over as vice president of North American Small Car Operations, a perennial money-loser. His Yellowstone team aims to reverse that dismal record, with potentially huge benefits to GM as a whole if it's successful.
SmallSUV in 2000 Ford Motor Co. sources confirm a small sport/utility vehicle (SUV) is under development at its Mazda Motor Corp. affiliate in Japan for introduction in 2000 by both companies to take on 's RAV4 and 's CRV. Which platform will it use? Try the Mazda Protege subcompact as a decent guess. .