General Motors Kills Its Golden Goose

by Neunelf

For a second consecutive year, GM’s Oshawa production facilities have received J.D. Power and Associates’ “Gold Plant Quality Award.” The award is given to the production facility with the fewest number of defects per vehicle, as measured by J.D.’s famous “Initial Quality Study.” Oshawa created cars with just 43 defects per 100 vehicles. The industry average was 124. So what do you do if you have the second most productive assembly plant on the continent? If you’re GM, you do the only logical thing possible: you close it.

There’s no question that GM has too much of everything: brands, models, dealers, workers, factories and suits. Although the media hails GM CEO Rick Wagoner for cutting (a.k.a. buying off) production workers and eliminating plant capacity, they’re forgetting that the same stupidity that lead to the cuts could well mean stupid cuts. As GM downsizes its vast empire to match its diminished role in the US automotive market, it runs the risk of making too many cuts in the wrong places. Like Oshawa.

It may be a piercing glimpse into the obvious, but a plant that produces the fewest defects per vehicle is also building your highest quality cars. GM needs higher quality products like a losing football team needs touchdowns. The days when close enough was good enough are long gone. If GM is going to claw their way back against the likes of Toyota, Honda and Nissan, they can only do it with virtually defect-free products. They know this. In fact, they already claim success; continually citing a supposed “perception gap” between old (i.e. crap) and new (i.e. high quality) GM vehicles.

Again, it all seems pretty simple: produce better vehicles at your award-winning plants and reap the rewards, right? Well here's the thing. The vehicles produced at GM’s Oshawa plants are some of GM’s best sellers. Oshawa’s Number 2 Plant produces the Pontiac Grand Prix and Buick LaCrosse. The LaCrosse is the best selling vehicle under the Buick marque, accounting for some 93k units in 2005. The Grand Prix has only just been eclipsed by the G6 at around 120k units. But here’s the rub: GM (literally) has no business making “best-selling” products that drop as low 93,000 units. Their huge dealer network and corporate infrastructure require gigantic hits, regardless of their quality. And yet…

By killing Oshawa, GM is revealing two important defects in its “right sizing” game plan. First, the General’s generals are demonstrating their lack of focus on product quality. Why kill your best plant before your worst, even if that plant’s products aren’t best sellers? If a hockey team doesn’t make the playoffs, you don’t trade your best player, you rebuild around him (unless you’re from Boston). Oshawa builds some of the best-built products in GM’s lineup. Throwing that skill overboard in favor of less capable factories is insane. Which brings us to the second problem: flexibility.

Honda’s American facilities can change the platform-sharing vehicles that a factory produces in a matter of hours, tailoring production to meet changing demand (e.g. Ridgeline pickup to Odyssey minivan). The new, smaller GM will need to follow Japan’s lead, establishing factories that can create more than one product. This trend increases the importance of any given factory’s workers and processes; product changeover is nowhere near as easy as building the same thing day in, day out. Again, it makes sense to use your A-team, not the accidentally successful B, C and D teams.

A recent GM internal report supported the philosophy. It recommended that GM invest $400m in Oshawa to transform and amalgamate the two plants into a single class-leading, platform-sharing production facility. The plan: let the men and women of CAW local 222 produce the upcoming (and day late) rear-wheel drive, mid-size Zeta platform. If implemented, the end result would be a Canadian produced Cadillac DTS, Buick Lucerne and GM’s latest halo, the Chevrolet Camaro. When asked about this report to save the golden egg laying goose, GM Car Czar Bob Lutz scoffed and dismissed its conclusions as “merely speculative’. Speculative because transferring production northwards would require closing the DTS’ and Lucerne’s current Detroit/Hamtramck home. In the UAW-appeasing, YIMBY (Yes In My Back Yard) world of GM, that ain’t gonna happen.

It’s not right. GM should use its Oshawa facilities to their utmost capabilities. The factory has proven that they can produce over 500,000 vehicles annually that rank among the best for fit and finish. The Detroit/Hamtramck plant only cranks out 170,000 vehicles with the same number of employees. GM should consider Darwin’s theory and let the back of the herd die. Right size the right plants, kill the stragglers that keep dragging the brands down and invest in what will ultimately make you a better carmaker. After all, it’s one thing to talk about quality. It’s another to actually build it.


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  • Camp6ell Camp6ell on Jun 28, 2006

    One question about this article: Now we believe JD Power? Key comment: "Should those seeking trouble-free wheels be sure to buy one of J.D.???s winners? Hardly." Kind of makes this article worthless...

  • Camp6ell Camp6ell on Jun 28, 2006

    Bobby/Redwing: if you haven't noticed, there appears to be some HTML problem with the posts... at least for me viewing this page with WXP/Firefox some apostrophes are displayed as triple question marks.

  • Rust-MyEnemy Whoa, what the hell is wrong with Jalop1991 and his condescension? It's as if he's employed by Big Plug-In or something."I've seen plenty of your types on the forums....."Dunno what that means, but I'm not dead keen on being regarded as "A type" by a complete stranger"" I'm guessing you've never actually calculated by hand the miles you've driven against the quantity of gas used--which is your actual miles per gallon."Guess again. Why the hell would you even say that? Yes, I worked it out. Fill-to-fill, based on gas station receipts. And it showed me that a Vauxhall Astra PHEV, starting out with a fully charged PHEV battery, in Hybrid mode, on my long (234-mile) daily motorway daily commute, never, over several months, ever matched or beat the economy of the regular hybrid Honda Civic that I ran for a similar amount of time (circa 5000 miles)."You don't use gasoline at all for 30-40 miles as you use exclusively battery power, then your vehicle is a pure hybrid. Over 234 miles, you will have used whatever gas the engine used for 200 of those miles."At least you're right on that. In hybrid mode, though, the Astra was using battery power when it wasn't at all appropriate. The petrol engine very rarely chimed in when battery power was on tap, and as a result, the EV-mode range quickly disappeared. The regular hybrid Civic, though, deployed its very small electric reserves (which are used up quickly but restore themselves promptly), much more wisely. Such as when on a trailing throttle or on a downward grade, or when in stop-start traffic. As a result, at the end of my 234 miles, the Civic had used less gas than the Astra. Moreover, I hadn't had to pay for the electricity in its battery.I look forward to you arguing that what actually happened isn't what actually happened, but I was there and you were not."Regardless, that you don't understand it appears not to have stopped you from pontificating on it. Please, do us all a favor--don't vote."You really are quite unpleasant, aren't you. But thanks for the advice.
  • Tassos Jong-iL Electric vehicles are mandated by 2020 in One Korea. We are ahead of the time.
  • 1995_SC Can you still get some of the tax credits under the new program?
  • Analoggrotto HyundaiGenesisKia saw this coming a long time ago and are poised for hybrid and plug-in hybrid segment leadership:[list=1][*] The most extensive range of hybrids[/*][*]Highest hybrid sales proportion over any other model [/*][*]Best YouTube reviews [/*][*]Highest number of consumer reports best picks [/*][*]Class leading ATPs among all hybrid vehicles and PHEVs enjoy segment bearing eATPs[/*][/list=1]While some brands like Toyota have invested and wasted untold fortunes into full range electric lineups HyundaiKiaGenesis has taken the right approach here.
  • EBFlex The answer is yes. Anyone that says no is just….. wrong.But the government doesn’t want people to have that much freedom and the politicians aren’t making money off PHEVs or HEVs. So they will be stifled.