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Originally posted by Ned
Now, why has GM failed to automate?
Now, why has GM failed to automate?
GM spent $75 billion on automation, factories, and process improvements from 1980-1989 alone. In an April 1986 conference of GM's top-500 operations people, CFO Alan Smith (no relation to then-chairman Roger Smith) said (in regards to the Saturn program and others): "For the same amount of money, we could buy both Toyota and Nissan. This would almost double our worldwide market share. Can we expect to double our worldwide share with this spending program?"
Of course not. One of the early automation programs put into place by Roger Smith was a fully automated, "no man on the floor" axle factory in Saginaw Michigan. The fact that the axles would cost 50% more than those made at the already-existent UAW plant was ignored, and the factory was built... lauded, even, as the "Factory of the Future."
But that was small potatos compared with Hamtramck. Here, GM would be able to show the world its control and mastery of a fully automated manufacturing process, with every day at Hamtramck being a robotic ballet as machines built, whirled, and danced as they pumped out custom-ordered car after custom-ordered car.
It didn't work out that way. When the plant went online in the fall of 1985, it was supposed to showcase Roger Smiths dream of a 21st century car company, however it became the factory that marked the beginning of the end of Roger Smiths fascination with automation. The factory was supposed to eliminate Toyota's $2,000/vehicle cost advantage over GM, but instead turned into a horrible parody of what happens if you put GM executives in charge of a "Toyota style" system (which is what they thought they had.) GM spent over a billion dollars on robotics alone, but nobody thought to rearrange the production system, so when the factory opened it had over 5,000 UAW employees on the payroll! And, as is common with new technology, GM had many bugs and problems to work out - usually this isn't too much of a problem, but with the hundreds of brand-new systems it meant that something was breaking down every day. In addition, not one of the people on the plant were trained in the care of robots or software - GM had to call that specific robots manufacturer to send out a representative so they could repair the robot. Even worse was the operational design that had the entire line shut down if just a single robot broke.
The financial effects were felt immediately. 3Q 1985 results showed that GM suffered the first operating loss in 60 years, $20.9 million, and total cash reserves fell by 40% in 1985. Two years after it opened, the newly automated, "let's 'bury' those ***holes" factory in downtown Detroit was putting in a stunning 100 hours of labor for each car, five times as much as GM's Japanese competitors. Car design didn't help either: the front and rear bumpers of a Cadillac Seville had more than 460 separate parts and took over 33 minutes of labor to assemble and affix to the car. Each.
Regardless, GM spent an additional $35 billion on automation and "factories of the future" after it became evident that Hamtramck and others like it were colossal failures.
The fact is, seeing what has happened to this company since 1980 makes you realize that Michael Moore was right... but for the wrong reasons. Roger Smith was a horrible CEO, possibly the best example of the wrong person in the wrong place at the wrong time in the history of corporate governance. When this is all said and done, with GM's name writ in water, people will look back at his reign and say "Yup. That's where it went irreversibly wrong - somewhere between 1982 and 1989."
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