Ah, Buzzwords An alternative spin on modularity

I propose that Ward's Auto World sponsor a Buzzword of the Year contest. Readers could submit their nominations. Ward's staffers would have some input. Then we could pick one or two words and give them a good-natured roasting.

We'd take a light-hearted jab at how great minds of the industry have bought into the latest craze of industry jargon like Ponce de Leon splashing in the fountain of youth.

Recently we've basked in such bon mots as "brand management," "program management," and "systems integration."

But in 1998 the word to beat would have to be "modularity;" as in the sentence: "There will be so much modularity in the design of our 2002 Road Hog sport/utility vehicle that we won't need any of our own employees to build it." Of course not. It will all be left to suppliers who will use prison labor to assemble their respective chunks in some state-of-the-art greenfield plant outside Juarez.

Don't get me wrong. There's much in this concept that makes sense. Consolidation among the automotive supply base has vested highly competent companies with the resources to stretch far beyond the seats or headliners or disk brakes on which they built their reputations.

Why not take advantage of their abilities, lower costs and desire to grow?

Two years ago Volkswagen AG opened a new plant in Resende, Brazil, where suppliers brought their components right to the assembly line and plugged them onto the trucks and buses it is assembling there.

It may be too early to judge, but so far the results aren't quite what VW expected.

One-third of the 74 vehicles VW builds each day in Resende need repairs before they pass final inspection, compared with 10% or less at a world-class assembly operation.

"It's taking three times longer to put the truck together than in a regular assembly plant," says P. Louis Bump, chairman of the Berkt Group, a Farmington Hills, MI, consultant specializing in modular assembly techniques.

Mr. Bump traces the history of modular assembly back to the late 1970s when Fiat SpA applied the principles to the design of its small city car, the Tipo. At the time, Fiat sales were getting hurt quite badly by the Volkswagen Golf. By turning more than half the engineering over to suppliers Fiat slashed its manufacturing costs by $500 per car, and suddenly VW had some serious competition.

But you haven't seen Harvard or MIT-types writing books about the Fiat production system. And just why has it taken nearly two decades for the idea to catch fire in the Western Hemisphere?

"For one, it was easier for Fiat because it owned all or part of most of its supply base," says Mr. Bump. You can't just pick a couple dozen low-cost suppliers and turn them loose with no supervision from the customer.

Of course, there is the inevitable resistance from organized labor, which sees modularity as a direct threat to employment. But there is another source of skepticism that could throw up a more formidable obstacle to modular assembly: the people who buy the parts.

"The other barrier is bureaucracy," Mr. Bump says. "You've got huge organizations with tremendous numbers of people involved with purchasing. If suddenly there are fewer parts to buy because they've been combined into a few huge modules, how many purchasing agents do you need?"

It is also worth noting that while German automakers have embraced modularity, especially in their new U.S. assembly plants, Japanese automakers have been m ore cautious.

Yes, Dana Corp. is supplying frames for Toyota's new Tundra pickup truck. Tundra's wheels and tires are pre-assembled and balanced at a factory just down the road from the Princeton, IN, assembly plant. But key components such as instrument panels, front and rear bumpers and front axles are all done in house.

"From long-range thinking Toyota is always afraid of losing core engineering knowledge," says Seizo Okamoto, president and chief executive officer of Toyota Motor Manufacturing Indiana Inc. "In the short range sourcing in modules is very effective in cutting costs. But each supplier does not think about the total picture of the vehicle. They also will work to preserve their job. For example, if someone comes up with an instrument panel mounted in the headliner, you might not need a traditional instrument panel anymore. "

So there is a little alternative buzz on modularity.