Mercedes Prolific in Alabama

VANCE, AL — A $7 million childcare and wellness center opened last May at the Mercedes-Benz U.S. International Inc. (MBUSI) M-Class SUV production site near this tiny hamlet 12 miles (19 km) east of Tuscaloosa and 32 miles (51 km) west of Birmingham on I-59 in central Alabama.

“We found that over a 2 to 2-1/2-year period our team members (the facility's 2,000 employees) had 250 babies,” observes an MBUSI spokesman, “so we had a need for this facility.”

Depending on how prolific they are, the childcare center may face a challenge as Mercedes gears up to double its workforce to 4,000 to produce the next generation M-Class and the all-new Grand Sports Tourer (GST) cross/utility vehicle starting late next year. MBUSI officials are reluctant to divulge forecasts, other than to say the plant will have the capacity to produce 160,000 units on two lines and two shifts when full production is reached.

However, first-year combined output is expected to rise from a record 88,271 in 2002, to about 100,000 units in 2004, hitting full output in 2005 — if all goes well.

The $600-million expansion — $3 billion if product development and research are included — is double that of the initial investment announced in 1993. It calls for an additional 1.5 million sq.- ft. (139,000 sq.-m) of space, boosting the total to 2.7 million sq.- ft. (251,000 sq.-m) on 600 acres (243 ha), or more than two-thirds of the available acreage at the site. The first M-Class came off the line in February 1997 and last October total cumulative output hit 400,000 at the Alabama facility.

Two expansions in 1998 and 1999, costing $80 million, raised annual capacity from 65,000 to 80,000. Supplemental M-Class production in Graz, Austria, was halted last July after 12,279 were built. MBUSI needed more output to meet worldwide demand and tried a novel approach called a “takt down.” (The German word “takt” refers to assembly time.) Each station was asked to find ways to achieve a 6-second reduction in time between assembly stations — from 3.3 minutes to 2.7 minutes. The result was a 10.4% gain in capacity, or more than 8,000 additional units.

Mercedes was the first auto maker to choose Alabama for production. Since then Toyota Motor Corp. (V-8s in Huntsville), Honda Motor Co. Ltd. (Odyssey minivans in Lincoln) and Hyundai Motor Co. Ltd. (Sonata and Santa Fe in Montgomery, starting in 2006) have joined in. The 250-member Alabama Automotive Manufacturers Assn., formed in 2002, says the state's current and committed vehicle capacity stands at 750,000, representing a $3 billion annual payroll.

Like Mercedes, the newcomers were attracted by the state's mid-U.S. location, a young, non-union labor force, and attractive incentives covering training, real estate and infrastructure. MBUSI received $253 million in state, local and private incentives for the first plant, including a 20-year tax abatement (except for education). The tally for the expansion is $119 million, including site preparation, roads and — most importantly — state-sponsored training.

So far MBUSI has received 26,000 job applications related to the expansion, compared to 46,000 when the original plant was getting under way. Hiring began in September 2001 and several hundred people in “pilot teams” already are being trained here and in Germany.

To save time and meet the challenge of greater complexity, plant engineering and worker training are moving ahead simultaneously with developing the production system and the vehicles. Some 50 U.S. engineers are working in Germany, while more than 100 German engineers are working here.

Land-clearing for the new line began in February 2001, and construction of the new body shop started in August, with the first structural steel beam erected in October. Work began on the new paint and assembly shops the following month.

Like its German parent, MBUSI emphasizes extensive apprentice training: Two years for technicians in courses such as welding, electronics and engine repairs, and a 4-year course in industrial maintenance that includes program logic and control, computer technology and other skills required to keep the plant running efficiently and at high quality.

Linda Sewell, MBUSI communications director, says employees typically make between $50,000 and $60,000 annually, excluding overtime and perks. In a rural region where wages average less than half that much, jobs at MBUSI are highly prized. Some 26% of the current work force is female and 30% are from minority groups.

The existing plant is being revamped even as work moves ahead on the expansion. When it's completed, the combined facility will have 500 robots, primarily in the body shops, compared to only 50 now, reflecting the economics of higher production levels. “The lines will be flexible, unlike the current line; we couldn't put in another model,” says Sewell.

Five versions of the M-Class presently are produced here for sale in 135 countries, including three versions sold in the U.S. Both of the next-generation models, to be built on the same platform, are expected to be offered in 5- and 7-seat versions. Sewell says no other vehicles are being considered for the plant, and specifically rules out the Hummer-like Mercedes G-Class currently built in Austria.

She also won't confirm that the new vehicles will feature car-like unibody architecture — as opposed to the more truck-like body-on-frame construction of the current M-Class. However, Mercedes officials in Germany say this is the strategy.

Transmissions and engines for both vehicles will be imported from DaimlerChrysler AG plants in Germany, as they are now.

The launch of two all-new vehicles adds considerable complexity to the operation, putting a premium on training that extends, for the first time, to key suppliers. MBUSI has 65 Tier 1 suppliers, including 17 with Alabama production facilities. It hasn't revealed suppliers for the expanded output but most of the existing group is expected to participate, along with a handful of additional Tier 1s.

Ogihara America Corp. for example, will supply Class A stampings for the new M-Class and GST. Other familiar names such as Delphi Corp., PPG Industries Inc., Johnson Controls Inc., ZF Friedrichshafen AG, ThyssenKrupp Budd Canada and Robert Bosch Corp. are among the current suppliers.

The Mercedes Production System (MPS) in place at MBUSI will carry over to the expanded operations. An amalgamation of German, American and Japanese practices, MPS includes modular construction, just-in-time components delivery, in-sequence inventory delivery and continuous improvement teams. In a bow to the Japanese, the plant features signal cords that blare music and halt the assembly line when a team member needs assistance. On one recent day, the line stopped twice in about an hour.

To handle the logistics of feeding components and modules, the new facilities will have 18 reception bays. MBUSI “broadcasts” what's needed for a specific vehicle to all suppliers. Modules and components arrive for assembly in 90 to 120 minutes and in some cases less.

Communication is enhanced by informal attire, an open design and the lack of administrative offices. Visitors arriving at the reception center atrium can see vehicles moving along the line up above.

Innovations made to the original line, many of which likely will apply on the second, include moving pallets, nicknamed “limos,” on which team members ride as 23 sub-assemblies are fed to them in sequence. Doors are removed after the vehicle is painted and re-attached after the interior modules are fitted. A new door-sealing system to reduce wind noise or leakage recently was added and will become an integral part of the new paint shop.

Currently, the entire chassis, including frame, engine, transmission and suspension is pre-assembled and mated at the “marriage station” as bodies arrive from above. Every two hours jobs are rotated for safety and ergonomic reasons — and also to alleviate boredom.

MBUSI takes pride in the diverse backgrounds of its workforce. Sewell says today's 2,000 employees represent U.S. and foreign-based auto makers, and bring together Northerners and Southerners as well. President and CEO William C. Taylor is a Canadian who previously worked for Ford Motor Co. and Toyota Motor Mfg. Canada. Four members of the management team are Americans and six are German.

Sewell likes to describe MBUSI as a “melting pot.” Soon the pot will thicken as the new hires come aboard.