Three Revolutions - How M-B's Smart is changing European automaking

I've seen the future, and it's smart. Smart is a car, a tiny car going into production in France late this year (after Mercedes sent it back to the shop for more engineering).

And despite the need for more work, Smart is a revolution. In fact, it's three revolutions: How it's built, where it's built, and what it is.

The what, the car itself, may be the least successful of these revolutions. In fact, I don't expect the Smart (to be cute, they don't capitalize the S, but we do) to be a success.

First, it's a Mercedes, but a new division without the three-pointed star. Swatch, the Swiss watch maker came up with the idea, but has been pushed into a minority position.

The car is a midget, a plastic-bodied two seater, incredibly cute and only 8 ft. (2.4 m) long. To put that in perspective, a Ford Taurus is nearly 17 ft. (5.2 m) long. Price: $10,000 to $12,000.

The idea is a city car, a flivver, for Europe where fuel prices run up to $5 a gallon and parking is tougher than in Manhattan. Projected volume: 200,000 a year.

Personally, I don't think so. It's not that Mercedes has put it back into the shop, as it did with the A Class, to build in more stability.

They can fix the problems. It's that two- seaters just don't make much sense. You can't carry two friends or wife and child. Why pay $12,000 for a car that goes 80 mph (130

km/h), and is a slug on superhighways? Even as a second car, it lacks utility.

Mercedes could solve the utility problem by adding about 2 ft. (0.61 m), a back seat, a third door/hatch (as our pickups have) and more power. Even with 2 ft. (0.6m) added, it wouldn't be any bigger than the old British Mini.

But the car is the smallest of these revolutions.

Next is where it is being built: France, in Lorraine, just this side of the German border. The French didn't want foreigners building cars on their sacred soil. GM and Ford used to build cars in France, and Chrysler owned a big French carmaker, now gone, called Simca. That was long ago. But today the French are as eager to lure foreign factories as any Southern governor.

Mercedes people at smartville (that's what they call the factory complex) say that labor costs in France are 25% less than Germany, and the absenteeism rate is decidedly better. The French are throwing subsides in, too, just like those Southern governors.

Toyota just picked France for the site of its next European factory. A few Japanese car partsmakers are already setting up shop in France, and more will come with Toyota. It's a serious contender.

The third revolution is the production system at smartville, possibly as important in the auto world as the mini-mills became in steel.

Remember? The great integrated mills, huge furnaces to convert ore into iron, and then more furnaces to make the iron into steel and then rolling mills to shape it. Along came the mini-mills using scrap as the raw material, which skipped the iron-making process, cutting costs enormously.

Efficient non-union labor was another factor.

The Smart car plant is tiny by car factory standards. There will be only 800 employees to build 200,000 cars a year. Supplier plants adjacent to the Smart assembly operation will employ another 1,200, feeding completed modules to the assembly operation.

The car is plastic: That means no huge stamping presses to punch out sheet metal panels. The color is embedded in the plastic body panels, which means no huge paint shops. The line speed will be only 30 cars per hour, but three shifts a day. Traditional plants work at about 60 an hour.

Lower line speed reduces the need for costly automated machinery.

The investment is probably one-third that of the traditional auto/stamping plant complex, and the attached parts suppliers build their own plants.

Mercedes figured the plant can start making money after 70,000 units, although my guess is that it will never make money, or at least until they make the car itself more useful.

While the system is still is to be proven, it could be the way of the future. General Motors is building a similar project in Brazil. This is for a traditional steel-bodied small car, but incorporating the ideas of heavy supplier capital contribution and smaller numbers of car company employees.

The giant car plants of today won't disappear, just as the giant integrated steel mills haven't disappeared. But when new car plants are built, smartville, or Blue Macaw, as the GM project is called, could be the pattern.

The learning curve may be painful; it often is. Mercedes says the cost of delaying production and re-engineering is $170 million. That willtake care of any profit in the short term, and maybe the long term. The suppliers will take a hit, too. Like I said, the learning curve will be costly. But it is something Mercedes must do to save its reputation. The test of a car company isn't that it makes mistakes. They all do. It's how quickly they correct them.

Despite the problems, Smart is still a revolution, three revolutions.