All Eyes on Toluca

TOLUCA, Mexico - DaimlerChrysler Corp.'s PT Cruiser is blessed with more than just a very reasonable sticker price and an urban chic design.

At the factory here that will make the crossover vehicle, a statue of the Madonna is surrounded with flowers near a doorway at the sprawling manufacturing complex. "She's always watching over us," says plant manager Luis Rivas.

So is everyone else. There hasn't been this much hype surrounding a product launch since Volkswagen AG's New Beetle.

But it's also another symbol of mixing authentic Mexican culture with the country's increasingly important role as a world manufacturing base. DCC dumped $250 million into Toluca, located south of Mexico City, to update the facility for PT Cruiser production. It currently is the only factory in the world scheduled to build the quasi-wagon, which will be sold in more than 40 countries. That kind of international demand would test the bounds of flexibility for most plants. But at Toluca, that's only getting started. Opened in 1968, the factory also will make Dodge Stratus and Chrysler Sebrings until this summer, pushing parts numbers to high levels. "We have over 100 fascias and 26 radios to deal with," says Mr. Rivas.

While the number of robots in the plant has jumped from 91 to 146 as part of DCC's investment to help cope with the complexity, Toluca's strength remains its workforce. The 3,400 employees sport one of the lower absenteeism and turnover rates within DCC and spent more than 120,000 hours training for the PT Cruiser launch. Being given the assignment of making DCC's most important new product since the Dodge Durango has created a buzz within the factory walls. Morale is high and workers are young compared with most U.S. plants: average age is 29.

The plant environment also is pleasant, with numerous tropical fish tanks and house plants situated next to the assembly line. Plant employees meet in teams to track safety, quality and production trends and make suggestions to improve output. The team leaders are "taking a lot of things we thought belonged to management," says Gary Henson, DCC executive vice president for manufacturing.

Radios and newspapers are not allowed. Smoking is banned. They're considered distractions. The building is remarkably clean. It's also cool, even without air conditioning, thanks to Toluca's high elevation (some 9,000 ft./2,743 meters) and temperate climate. The plant floor is naturally lit, courtesy of massive skylights.

DCC supplies employees with uniforms. A nice gesture, but probably more of a necessity. Most of the local community is poor by U.S. standards. Giving workers uniforms means they don't have to wear out their own clothes. They typically make $10 to $20 a day by working one 10-hour shift. In contrast, a United Auto Workers union member at one of DCC's U.S. facilities makes more than that in 60 minutes, and enjoys much better benefits.

DCC is sensitive about the wage issue because it is a flashpoint with the UAW. Despite apparently obvious labor savings, the automaker insists it's not any cheaper to make and deliver the PT Cruiser - which has a surprisingly low base price of $16,000 - in Mexico than it would be to make it in the U.S. "We did not put the investment in here because of the wage rate," says Mr. Henson.

The UAW likely would beg to differ. But for all of its talk about extending its membership into Mexico and improving wages here, the UAW has not been in contact with local members of the Confederacion de Trabajadores Mexicanos, CTM union members in Toluca say. CTM, which is Mexico's largest union, represents workers at the PT Cruiser facility.

Besides wages, there are other differences the UAW would find. Unlike U.S. union workers whose jobs are strictly defined by UAW work rules, Toluca employees are trained for three or four duties. Personnel are spread throughout more than 1.5 million-sq.-ft. (139,350 sq. m) of space, including stamping operations, an engine plant, a water treatment facility and transmission assembly. Most workers are assigned to the 1.2 million-sq.-ft. (111,480 sq. m) main assembly area.

It takes a PT Cruiser about 38 hours to be assembled. Within a few months Toluca will be churning out 40 PT Cruisers an hour, or 180,000 units annually. Thirty-six PT Cruiser parts are made on-site. But there is an unusually extensive supplier network - until now, a longstanding weakness of the Mexican automotive industry.

TRW, Oxford, Valeo, Meritor, Lear, JCI and Standard Products are among the suppliers that either built a new facility or added to one because of the PT Cruiser program, says Toluca Production Control Manager Luis Alberto Carranza.

JCI, for example, is located about 20 minutes away and delivers 40 seats every hour. Lear, meanwhile, supplies 36 of PT Cruiser's 1,442 parts numbers. Perhaps the most impressive component is a rear suspension module that is installed in less than two minutes by three workers standing on a lift table.

Numerous parts are delivered in sequence to the assembly line every one to two hours and placed on rolling carts so workers can keep components nearby at all times. "We don't want to waste time walking," says Mr. Rivas.

Not only are a few too many steps unacceptable, a millimeter is too. That's the maximum amount of variation allowed at points measured on eight PT Cruisers each day by the plant's Quality Measurement Room. If any fail, or are dinged up during assembly, a factory "hospital" corrects manufacturing deficiencies and makes vehicle repairs. "We don't like to have too many patients," says Mr. Henson.

But with statues or shrines of the Madonna always nearby, at least their recovery will be blessed.