GLIWICE, Poland - You can't miss General Motors Corp.'s new Opel Polska assembly plant here in Southern Poland. As you bump along the narrow two-lane coming from Krakow, it comes up on your right and nearly takes your breath away. The gleaming white factory stands out in the gritty coal country of Eastern Europe like the Emerald City in the Wizard of Oz.
As well it should. The $590 million plant is one of the biggest foreign industrial projects to date in the country, and it represents some of GM's - and Poland's - greatest ambitions here deep in its rusting industrial heartland.
For GM it ushers in a bold new era of low-cost, highly efficient global assembly plants - and a shot at winning back lost market share in Europe with a hot new product.
For Poland it provides an opportunity to show the world it has shed the last bonds of communism and that it has what it takes to become a part of the European Union, which it hopes to join in 2003.
Currently Fiat SpA, Daewoo Motor Co. Ltd. and others manufacturing in Poland are not yet exporting large numbers of vehicles to Western Europe. GM, on the other hand, plans to export two-thirds of this plant's production - more than 100,000 units annually - to discriminating consumers in Germany, France, Italy and the rest of Western Europe.
With sales last year of 640,000 vehicles, Poland is the largest vehicle market in Eastern Europe and the sixth largest European market overall.
Fiat and Daewoo, Poland's two market leaders (Opel is a distant third), do export some vehicles. Fiat Auto Poland, which has plants in Bielsko-Biala and Tychy, produces the Fiat 126, Uno, Seicento, Siena and Palio, along with several other models, and was, until last year, the sole Polish exporter of cars.
Now Daewoo-FSO Motors Sp. Zo.o, whose factories are in Warsaw and Lublin, exports the Daewoo Lanos to Slovakia and is shipping cars to Hungary, the Czech Republic and Slovenia. It also exports some cars to Western Europe, including Italy and Spain.
But so far these plans pale compared with those of GM.
"This is a sea-change for GM and sea-change for Poland. We want to show that we can build a car that Western Europe will buy," says Warren P. Browne, managing director of General Motors Poland. Mr. Browne, who worked at GM's Brazil operations for nine years, says Poland's battle for recognition as a manufacturer of quality vehicles in Europe likely will be similar to Mexico's struggle for respect in North America.
"The bulk of our output of the new model is intended for the whole of Europe. We think we will become a big contributor to Poland's balance of payments," says Garry Wallace, Opel Polska's chief financial officer, in a recent interview with Reuters.
GM, like Ford Motor Co., currently is struggling to win back market share in Europe that has been sliding since 1995. Analysts say it needs to produce more cars that are small, stylish and affordable to better compete with offerings from Volkswagen AG, Renault SA and Fiat.
It bombed with the Opel Sintra, a U.S.-built version of the Chevy Venture minivan, which Europeans found too big and expensive. But the smaller $18,000 Opel Zafira minivan has been GM of Europe's most successful offering in years.
GM is hoping Gliwice's new product, the Opel Agila, with a base price under $9,000 in Germany, will be another hit, and at least a baby step back in the right direction. It is pretty much just what the doctor seems to have ordered: a stylish, low-priced little people-mover that could grab its share of the fast-growing microvan segment in Europe.
Opel and GM equity partner Suzuki Motor Corp. jointly developed the new vehicle. Opel says its engineering and design teams played an instrumental role throughout the project, but it has been criticized as being merely a rebadged Suzuki.
Suzuki builds its own version of the car in Esztergom, Hungary. The two versions share many common parts but are equipped with engines and other key components from their respective manufacturers.
GM's gleaming new plant here is smaller and less expensive than traditional North American GM assembly facilities, which can cost over $1 billion, produce 240,000 vehicles annually and employ more than 5,000 on two shifts. It promises to be far more efficient, too. Although it won't hit its full annual capacity of 150,000 units until 2001, Opel officials already are bragging Gliwice is one of the most efficient and economical plants in the world.
GM decided to locate in Gliwice, an industrial city of 220,000, because it is strategically placed at an intersection of international rail and road links from East to West and from South to North, offering easy transport to regions ranging from Scandinavia to Southeastern Europe, and from any part of Western Europe to the Ukraine and further on to Russia.
The nearby Gliwice Canal offers a direct waterway link with the Baltic Sea port of Szczecin. The plant also is close to the Czech Republic, Slovakia and eastern Germany. Known as Upper Silesia, the region also is rich in engineers and technical expertise, with many technical and educational institutions located in and around nearby Krakow.
When the plant hits full speed next year, it will employ 3,000 working on three straight shifts. Those numbers won't shatter any records in terms of man-hours-per-car, or workers-per-car ratios, but Plant Director Jose A. Marques Goncalves says the plant is one of the world's best in terms of overall investment and production costs.
It uses the lean production methods initially forged at GM's highly lauded Eisenach factory in eastern Germany, and has the same standardized T-shaped layout - or "footprint" - as the brand new global GM plants in Argentina, China and Thailand. Like the others, it includes integrated stamping, body, paint and final assembly shops and can be easily and quickly expanded to handle more capacity if necessary.
Like most facilities in low-labor-cost countries, there are only a small number of robots - about 35 versus 200 or more in a typical North American plant. Much of the production equipment and robots used to produce the Opel Astra Classic, Gliwice's other product, is second-hand, holding costs down.
Workers are young; most appear to be in their mid-twenties. They earn the equivalent of $450 per month, a good wage in an area where doctors and teachers earn only $300 per month, and unemployment is 13%. Almost 40,000 applied for the initial 2,050 jobs.
Plant officials say this new, young, hand-picked workforce doesn't suffer from the poor work habits often associated with former communist bloc countries, but they are different from traditional Western Europeans. For one, they rejected the idea of having a relaxed half-hour for lunch. Many expressed shock that anyone would want to extend the workday just to eat and socialize.
Instead, the day is a half-hour shorter, and they eat during two 15-minute breaks. Union membership is voluntary, and only 15% of the workers at Gliwice belong to Poland's famous Solidarity union.
Manufacturing officials say the plant likely will produce 110,000 or 112,000 units on two shifts this year. The Agila people-mover will account for 75% of production. The other 25% is the Opel Astra Classic, an old Opel design that the Gliwice plant has been producing since August 1998.
In late March the plant was building 18 units an hour, aiming for 30 units an hour (24 Agilas and 6 Astra Classics) by September. GM says 90% of Agila production will be exported to Western Europe, with the remaining 10% sold in Poland or exported to the Czech Republic, Slovenia, Turkey and Southeast Europe. In 2001 Agila production is expected to rise to well over 100,000 units.
Where it will go from there is anyone's guess, but GM's Mr. Browne is very ambitious, and his company's new alliance with Fiat and its continuing efforts to buy Daewoo make for some very interesting possibilities for GM and Poland in the future.
Everyone has a skeleton in their closet. Warren P. Browne's dark secret is the fact he once worked for Ward's Communications, publisher of Ward's Auto World. For several years in the mid-1980s the new managing director of General Motors Poland even wrote a column for WAW analyzing market trends. Of course Mr. Browne, age 48, was never officially an ink-stained wretch. He actually ran the statistics and database operations of Ward's, crunching numbers, making forecasts, doing things journalists aren't good at. But for a couple of years, Mr. Browne also wrote a column every month, met deadlines (sort of) and had his copy edited by David C. Smith, then WAW's editor-in-chief. Like everyone else who has gone through that experience, Mr. Brown remembers Mr. Smith's gentle touch: "Dave asked me how I was going towrite a column when I couldn't even spell," Mr. Browne says dryly.
Despite the rocky start, Mr. Browne successfully collaborated with Mr. Smith and James W. Bush, now Publisher of the Information Group, on almost two dozen columns. Now that more than 15 years have passed, he remembers it all fondly.
Old timers here at Ward's remember Warren Browne mostly as a ball of energy who was always working. He would take a day off in the summer , stop by for a "minute" wearing cutoff shorts and then stay six hours.
He left Ward's in the mid '80's to go back to General Motors Corp., where others clearly noticed his drive and energy, and he eventually moved to Brazil. Richard Nerod, retiring president of GM Latin America, worked with Mr. Browne when he was the director of aftersales at GM do Brasil in Sao Caetano do Sul near Sao Paulo.
Mr. Nerod is one of the reasons Mr. Browne is in Poland. He had Mr. Browne on a list to go somewhere else but found himself flying to Brazil last June with GM Europe President Mike Burns. During their conversations, Mr. Burns said he was looking for a guy to send to Poland to run the operation there.
Mr. Nerod suggested Mr. Browne, saying, "I've got a guy who I think has the characteristics you want for those operations - a bit of a streetfighter."
So Mr. Burns interviewed him in Brazil, and a couple of months later Mr. Browne was heading to Poland. "His name wasn't even on the list," says Mr. Nerod.
Now Mr. Browne is energetic and optimistic as ever. He says Poland's car market is destined to soar over 1 million units annually (from 640,000 units last year), and he sees synergies in platforms and components between GM and Fiat in Poland. And he smiles when you mention the possibility of GM buying Daewoo and sewing up 60% of the market. Mr. Browne was a darn good forecaster when he was at Ward's. It doesn't look like he's lost his touch.
SARDINIA, Italy - You could fit the Opel Agila inside the cargo area of many of the vehicles I test drive in the U.S. nowadays, so it's a tough assignment to determine if this new little microvan will be a hit or a miss with European consumers who pay three to five times as much for fuel as we do in the U.S.
However, it seems like it will be hard to fail. Demand for these types of vehicles has skyrocketed in Europe during the past four years. And Opel plans to spread annual production of 110,000 units out over about 20 countries in Western, Eastern and Central Europe. Doesn't sound like a tough order.
When it debuts in showrooms across Europe this month, it will be priced aggressively. In Germany, prices will start at the equivalent of under $9,000 for one with the base 1L 3-cyl. 58-hp engine, up to about $13,000 for one lavishly equipped with air conditioning, a good stereo and a 75-hp engine.
Reports from Germany also suggest the Agila will be priced substantially less than its Suzuki sibling.
Fuel economy will be good, ranging from 47 mpg (5L/100km) for the smaller engine to 42 mpg (5.6L/100km) for the larger one. Surprisingly, a diesel option is not available. Ironically, GM partner Isuzu Motors Ltd. has a diesel engine plant near Opel's in Poland, but GM of Poland officials say there are no plans to buy diesel engines from that facility.
The most striking aspect of the tiny people-mover is that it feels extremely roomy inside, with good visibility and lots and lots of headroom. The car can indeed fit four adults comfortably and the 50/50 split rear seats can be folded down quickly to create a completely flat load surface. This versatility is a very strong selling point whether you are considering a microvan, minivan or Lincoln Navigator.
Basic fit and finish and assembly quality is good, and engine noise is kept under reasonable control at highway speeds.
Another major plus almost lost on a spoiled American used to taking power steering for granted: The car has an innovative electrically assisted power steering system rather than usual hydraulics, or no assist at all. Instead of whining and just about stalling out the tiny engine during vigorous, low-speed turns, the electric system gives the car a smooth effortless feel - definitely a plus when negotiating the narrow streets of the Old World.
The little Agila also has something that would even make Lexus balk: a 12-year anti-perforation warranty. Bottom line: The Poland-built Agila should be able to hold its own against competitors built in Western Europe.
