Ready for Y2K?--Less than 600 days left to fix Millenium bug

Crunch time is here in the race to eradicate the Millenium bug.

Deadlines are closer. Pressure is rising. The extent of what remains to be done can be overwhelming.

"We are responsible for not only what we do, but what we leave undone," says Massimo Cardelli of Siemens Automotive's air induction division in Windsor, Ont.

Less than 600 days remain until the software systems that pump the lifeblood of global commerce face their biggest functional challenge since the invention of the semiconductor.

Tim Morton, a vice president at Elaec-tronic Data Systems Corp., is on the front lines of the digital dilemma known as the Year 2000 (Y2K, for short) problem. He is neither a headline-seeking alarmist, nor an oblivious optimist.

"I was at one of the Big Three recently. This organization was nearing completion of its Y2K conversion. They still had testing to do, but they were close to their objective and starting to feel pretty good about it," Mr. Morton says. "Then one of their senior information systems people tells me, almost as an afterthought, 'But now I'm not so sure about my suppliers.' Well, if you don't know now how far along your suppliers are, you're in serious trouble."

Most automakers and Tier 1 suppliers have begun conducting random audits of vendors throughout their supply chains. The results aren't pretty.

"We have gone into very simple locations and when you change the date to 00 from 1999, security gates don't open," says Harold Kutner, General Motors Corp. vice president of worldwide purchasing. "We've seen robots that don't function. It is scary."

Ralph Szygenda, GM's chief information officer, tells Fortune magazine that "machines on factory floors are far more sensitive to incorrect dates than we ever anticipated."

Indeed, GM has more than 2 billion lines of software code to check. In a recent filing with the Securities and Exchange Commission, the world's largest automaker estimated that it will spend between $360 million and $500 million this year alone dealing with the Y2K challenge.

COBOL programmers are commanding signing bonuses of $100,000 or more. ne company is offering Year-2000 programmers and their families long weekend, all-expenses-paid vacations every eight weeks to keep them from jumping ship.

"My folks are getting called weekly, if not daily, by competitors," says Mr. Morton. EDS is hiring about 500 programmers this year to help meet Y2K demands.

Automakers and larger Tier 1 suppliers are ratcheting up the pressure. Deadlines are being set. Detailed documentation is being demanded.

If suppliers thought ISO 9000 certification was rigorous, debugging the Y2K puzzle is in many ways more grueling. You will not know until Jan. 1, 2000, whether you pass the test.

"Everybody is putting their suppliers on notice and all that's doing is antagonizing people," says EDS's Mr. Morton. "There's got to be a functional level of collaboration."

He advocates a triage approach: focus on the 20% of your suppliers that influence 80% of your business.

That does not mean limiting your attention to the largest Tier 1 suppliers.

"Let's say you have someone at the third or fourth tier who is providing you with fasteners. They could shut you down just as easily as your largest first-tier supplier," says Susan Unger, Chrysler Corp.'s executive director of information services.

But getting information about suppliers' own Y2K efforts is no mean feat. Harold Hoffman, manager of management information systems for the Budd Co., says no more than 20% of Budd's 500 primary suppliers responded to a survey compiled last year by the Big Three and the Auto Industry Action Group.

Both Mr. Hoffman and Chrysler's Ms. Unger contend the more formidable challenge is reprogramming the embedded microchips driving robots, computer numerically controlled (CNC) equipment and programmable logic controllers (PLCs), which issue the digital commands that make the manufacturing process run.

This requires extremely vigilant communication with suppliers of machine tools, conveyor systems and the like.

For example, Ford Motor Co. recently ran a test at its Windsor powertrain plant where engines are built up as they move down a line on heavy metal pallets. The pallets have a microchip through which they record data about the engine's content and the current date. When the system was put on fast forward as part of a Year-2000 simulation, a funny thing happened as it turned over from 12/31/99 to 1/1/00. The microchip signaled that every pallet in the plant needed repair.

"The words catastrophe and meltdown are not in our vocabulary, but we are seeing evidence of minor instances popping up," says Steve Turner, manager of Ford's Year-2000 supply office.

Don't be surprised if some automakers and suppliers start building up inventories in the second half of next year as a hedge against minor disruptions.

There's also concern that the farther one gets from North America, the lower the sense of urgency about Y2K. The sky isn't falling, but there will be disruptions.

So where on a scale of 1 to 10 (the former being something like the Comet Kohoutek and 10 being the 1906 San Francisco earthquake) will the ultimate impact be?

"About 5," says Chrysler's Ms. Unger. "There's going to be a little bit of pain, but we'll be able to adjust. Any way you look at it, that first quarter (of 2000) will be pretty difficult."