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The auto industry is back on the road after a tumultuous year, but obstacles still lie ahead.

Carmakers face the end of taxpayer-funded incentive schemes to stimulate consumer demand, such as the US “cash for clunkers” plan. In Germany, this is expected to lead to a sharp drop in demand this year from the artificially inflated level of 2009.

As the cautiously optimistic mood at the Detroit auto show indicated, however, the companies that remain from last year’s shake-out are looking forward to recovery. Both Ford and General Motors unveiled ambitious plans for global passenger cars.

One result of bail-outs is that global over-capacity remains a big problem, making many companies marginally profitable at best. Yet the crisis has instilled a sense of urgency among carmakers to become more international, often with cross-border alliances.

Fiat has linked up with Chrysler and Volkswagen has formed an alliance with Suzuki. The prediction of Sergio Marchionne, chief executive of Fiat/Chrysler, that six global carmakers will emerge from this consolidation looks as if it may soon be proved true.

Governments have a role to play in promoting innovation and efficiency in an industry that badly needs both. Having propped up entire companies that perhaps ought to have been allowed to fail, they need to permit piecemeal consolidation to proceed.

The first priority is to allow car companies to reduce capacity by shutting down plants. It will be impossible to reduce European over-capacity if each national government blocks factory closures in its own country. Fiat faces a test case over its plan to close a manufacturing plant in Sicily.

A second priority is to provide incentives for the industry’s switch towards smaller, more fuel-efficient vehicles. One reason for the global weakness of US companies is their over-dependence on domestic demand for trucks and sports utility vehicles.

The axis of the industry is already shifting towards emerging markets, particularly in Asia and Latin America. If US and European companies are to maintain their competitive position – as their governments hope – they need to keep up with these changes.

Governments have intervened heavily in the industry in the past year and will continue to pull strings through regulations and taxes. The best thing they can do now is to adopt a lighter touch, and not to stand in the way of necessary rationalisation

aotomotive | Comments (0)

As a manufacturer, Toyota is at the forefront of developing modern manufacturing methodologies. The Toyota Production System (TPS) has, for many years, been viewed as a beacon of manufacturing excellence.

It gave rise to several production philosophies such as Kaizen and 5S, and became the basis of efficient and best practice methodologies that are now used by many manufacturers. And quite rightly so: The dawn of lean manufacturing lead to a real epiphany in the production world and resulted in slick, simple and cost-efficient processes that standardised the world of work. Certainly, in the automotive industry, it facilitated a consolidated approach between different suppliers and simplified processes whilst delivering superior cost, response and quality benefits.

One of the overall themes of TPS is the reduction of waste in the process. But as in all things human, philosophies tend to become protracted and the flip side of waste reduction, unfortunately, turned into a hated buzzword for any Tier 1 or 2 Supplier: “Cost down”.

Together with the principles of lean manufacturing comes the inevitable need for driving cost out of production process. In a tiered manufacturing supply chain, the brunt of cost downs impact on every single supplier, whether the product is a component, system or service. Eventually, so much cost is taken out and the process so slimmed down that the only way to further improve efficiency is to take drastic measures.

Like moving manufacturing to low cost countries, which over the past years has caused many redundancies in the UK due to the high cost of manufacturing here. Of course, it benefited those areas in the EU and Asia where labour and materials are cheaper, although it complicated logistics and delivering the anticipated quality became a real issue.

The final area open to cost down is component design and material. When there is no further cost to be taken out of the process, the actual component is re-engineered to reduce cost and simplify processes.

Now I am not an engineer, and certainly I have no insight into the engineering or manufacturing procedures employed by Toyota in producing the pedal or associated components that caused the problem. But for many years now, I supported companies in the tiered automotive manufacturing supply chain in entering and exiting senior commercial staff. This gave me a lot of insight into the impact of cost down, and how subjective decisions made to reduce cost potentially impacts on the lives of people and organisations.

Friction and wear parts are safety critical (Like brakes and clutches) and quality control of components are of the ultimate importance to ensure the safety of the vehicle into which these assemblies are installed.

Toyota describes the problem as follows: “The issue involves a friction device in the pedal designed to provide the proper “feel” by adding resistance and making the pedal steady and stable. This friction device includes a “shoe” that rubs against an adjoining surface during normal pedal operation. Due to the materials used, wear and environmental conditions, these surfaces may, over time, begin to stick and release instead of operating smoothly. In some cases, friction could increase to a point that the pedal is slow to return to the idle position or, in rare cases, the pedal sticks, leaving the throttle partially open.”

And this is their suggested solution:

“The steel reinforcement bar will reduce the surface tension between the friction shoe and the adjoining surface. With this reinforcement in place, the excess friction that can cause the pedal to stick is eliminated.”

This is my question: If the simple solution to the whole issue is a small manufactured widget, why was it excluded from the design in the first place?

Was the reduction in waste / cost for excluding this tiny little bit of modified metal really worth the impact and ultimate cost to Toyota’s credibility as a manufacturer and the associated loss of brand equity? Not to talk of the number of road accidents due to the sticking accelerator.

No doubt, it will take a very long time and an enormous amount of money for Toyota to overcome this PR disaster, if they are ever able to do so fully. But certainly, there are no winners here.

The automotive industry has taken a severe battering since 2008 – Not just the vehicle manufacturers (Consider all the bad news about the troubles e.g. GM have encountered) but by default also the manufacturers, materials suppliers and service providers in the supply chain. In turn, this has had a massive impact on people’s lives through all the redundancies, factory closures and volume reductions.

With this clear failure of TPS to anticipate and avoid a severe component failure across so many different models, does it signal a time for profitability in production to make way for methodologies that nurture user safety and component reliability

aotomotive | Comments (0)