Dean of Lean

Much like he did at General Motors Corp., Thomas LaSorda is preparing to leave his mark on how vehicles are made — this time for Chrysler Group.

It's been more than a year since LaSorda was named Chrysler executive vice president-manufacturing, and less than three years since he left GM for Auburn Hills, to oversee powertrain assembly for the auto maker deemed the least flexible of the Big Three in terms of manufacturing.

LaSorda made a name for himself at GM as father of the Eisenach experiment, a modern assembly plant in eastern Germany that came to embody manufacturing efficiency. His Eisenach vision was exported to GM facilities in Argentina, Brazil, China, Poland and Thailand and debuted in North America at the Lansing, MI, Grand River complex that assembles Cadillacs.

Dubbed the “Dean of Lean,” LaSorda arrived at Chrysler with a mission: to run manufacturing as a business unit — garnering a better return on capital; reducing the cost base to be more competitive; and improving quality and productivity.

The native of Windsor, Ont., Canada, and son of a Canadian union leader, LaSorda spent his first three months studying the state of Chrysler's facilities.

And while he is addressing traditional means for improvement, he also is attempting to break new ground.

The next frontier of flexible manufacturing is what LaSorda terms “business model flex” to address the fact that manufacturing is a “drain on new models.”

You must go in “with that mindset that says you're a burden, you're this chain and ball to the product design guys because you eat up a lot of the money,” he explains. From there, the question becomes: “How do we create flex?”

The answer became public in negotiations last fall with the Canadian Auto Workers union and a new, 3-year agreement with DaimlerChrysler Canada Inc. It made provision for a unique vehicle assembly plant in Windsor (expected to make the Dodge M80 compact pickup) in which the auto maker is a minority shareholder.

The CAW agreed to contribute $50 million to the project's viability in reduced initial wages for the roughly 1,000 workers who would man the final assembly line.

The majority of workers — about 1,500 — would be employed by suppliers that would build and operate the body and paint shops — expensive core pieces of any assembly operation. “If I can do that flex without the constraints of hard tooling, then the money comes out, big time,” says LaSorda.

“So you can say, ‘How are you using your business model to create flexibility with your suppliers and yourself in a non-traditional way?’ And that's what Windsor is,” he says. “That is the future vision of where we are going to go.”

Final approval of the greenfield plant now hinges on the need for government assistance.

Meanwhile, there is plenty of other work to handle.

When LaSorda began his maiden tour of Chrysler facilities last year, he says he correctly assumed there was a need to focus on productivity: reducing the number of hours per vehicle — designed-in hours as well as production's ability to efficiently convert that.

“That was a big area,” says LaSorda, “and we've made good progress there (in 2002) because to get after engineering hours per vehicle is a longer journey than productivity.” He is expecting improvements of about 8% to be evident in this year's Harbour Report, which measures raw productivity.

Reduced engineering hours will become evident as new models debut.

The second area of attention is quality: in manufacturing, at the supplier level, dealerships and in engineering.

“My focus was on looking at the quality systems in the plant and how common were they in every site.” LaSorda says he quickly discovered, “it wasn't as bad as I thought it was. It was in pretty good shape and we're there now,” referring to a 21% improvement in the '02 model year over '01.

Some improvement was needed, specifically more discipline and faster problem identification and solving. LaSorda turned to a manufacturing and business efficiency model known as “Shainin” (for creator Dorian Shainin). In particular, he taps Shainin's “Red X” method of solving problems at the root level with structured, statistics-based methodology.

The move saved Chrysler between $40 million and $50 million in manufacturing costs in 2002 alone, says LaSorda.

For example, a traditional team investigating a complaint of axle noise could spend months identifying the problem. The Shainin approach is to address the same problem with statistics, logic, physics and math. Good and bad parts are identified and swapped, to see if the problem goes with the vehicle or stays with the part. If it stays with the part, the data of the component is analyzed through statistics, math and engineering techniques.

LaSorda introduced Shainin training and tools to the powertrain division two years ago. “Now it's across all engineering groups and all our manufacturing plants,” he says. And the $50 million in annual savings represent costs that, once removed, are gone forever.

DC's third area of focus is an assessment of flexibility and capacity utilization.

“So that's our journey going now: How do we create flexibility within a plant?” asks LaSorda. “How do we strategically implement flexibility within a plant and between plants without the constraints of hard tooling?”

It's a pursuit on more than one level: within a platform, in model mix and, finally, “chaining flexibility,” which is the ability to produce a vehicle in more than one plant, allowing Chrysler to spend strategically for widespread manufacturing flexibility.

For example, the Dodge Ram pickup (light and heavy-duty) is produced at Warren, MI, St. Louis North and Saltillo, Mexico. By chaining the three, Chrysler gains the flexibility to move production with market demand.

“If heavy-duties are hot, I just move light-duties from St. Louis North over to Dodge City (Warren). But I also have the flex to put light duties into Saltillo. That's how I get that flex,” says LaSorda. “That's why I can do the SRT-10 (performance version of the pickup to debut later this year) there.”

Another example is the link between the Windsor and St. Louis South minivan plants. Chrysler invested in Windsor to give it the flexibility to add the Pacifica cross/utility vehicle, while St. Louis, with hard tooling, remains a dedicated minivan plant. But the ability to move minivan volume between the two to increase Pacifica production if necessary makes St. Louis a flexible plant by extension.

The concept will be applied to plants producing the new products coming in the C (Neon) and D (Sebring/Stratus) segment — cars being developed jointly with alliance partner Mitsubishi Motors Corp. There will be multiple models in different plants, LaSorda says.

The new manufacturing chief says one of the few plants he's worried about over the next five years is the Dodge Durango SUV plant in Newark, DE.

Despite its geographic isolation from most automotive hubs, LaSorda says it still makes sense to keep Newark open.

A new Durango — the concept was shown in Detroit in January — is coming. But the plant needs other products for when sales fall off, usually three years after the launch of a new model.

“We could put other products in there,” LaSorda says. What they would be, he says, has not been decided.

The Newark plant is a single-platform facility — but it is a body-on-frame — so the main investment is the paint shop, not changes to the body shop.

Newark's body shop will not be gutted for the next-generation Durango, which is larger than the current model. But it has a lot of white space to make changes without having to invest in brick and mortar.

Going forward, Chrysler is working to be able to load plants with four or more vehicles in one plant — not 8-10 as some competitors boast — as it works towards its goal of increasing sales by a million units in the next decade. That includes the ability to assemble body-on-frame and unibody architectures in the same plant.

He eschews the idea of 8-10 models, 3-4 architectures in a single plant. It only makes sense, in his opinion, for a plant dedicated to niche products.

The Chrysler idea of flex is on fewer platforms or architectures and more derivatives from each. LaSorda says the auto maker will migrate from seven or eight different platforms to three or four, while increasing the number of models from each. “These derivatives will take the place of platforms,” he says.