Walk onto the shop floor at the Delphi Automotive Systems Corp. plant in Oak Creek, Wisconsin, and the first thing that you'll see will be 500,000 square feet of nothing. The $29.2 billion tier-one automotive supplier — a former division of General Motors that went public and spun out in 1999 — has a complex history that goes back almost 100 years. But some of the most dramatic changes at Delphi's Oak Creek plant have occurred over the past two years — and the company has a lot of empty space to show for it.
Peter Wood, 45, manufacturing-systems manager at the Oak Creek plant and "change agent" for Delphi's redesign effort, is very proud of so much nothing. It's the most visible sign, he says, that Delphi has taken an old plant in an old industry that was the engine of the old economy, and converted it into a fast factory — a new-economy speed merchant. "I often take employees out here to remind them of how proud they should be," says Wood. "Most people don't take a hard look at what we've done: Delivery used to take 21 days. But now, if you order on Monday, we can deliver on that precise order by Friday. Go look at other plants. There aren't many out there that have reached that magnitude."
The reconstructed plant employs 2,200 people, all of whom help to create customized products for 40 automobile manufacturers. The product that they make — a catalytic converter — is a stainless-steel can plugged with a substrate that generates a chemical reaction to neutralize carbon monoxide, oxides of nitrogen, and hydrocarbons as exhaust passes through the can. In other words, a catalytic converter is a strainer for pollutants.
The creation of this one product requires a huge facility — a low, unobtrusive building in the heart of Green Bay country. Stroll around the outside of the building, and you will have walked more than a mile. Once inside, standing at the edge of that bright, shining expanse of empty floor — the plant now houses empty space equal to about 10 ice-hockey rinks — you will hear the distant clatter of busy assembly cells. With a good pair of binoculars, you might even be able to make out what each cell is working on. But the sound of all of that work will be preempted by the echo of your footsteps as you walk toward the action. Something big, heavy, and slow has been tossed out of this building: an old-fashioned way of working, and with it, all of its outmoded assumptions, equipment, processes, and worker-management relationships.
Over the past two years, the Oak Creek plant has completely redesigned its converter-production process to reduce cost, to increase productivity, to simplify the process, and, most of all, to speed things up. But to remind itself of its heritage — the way things used to work — Delphi has left a sort of monument to an obsolete world of work: An old, clunky assembly line, spray-painted gold from end to end, stands at the edge of this new vacancy.
Delphi used to build converters on that assembly line. Picture this: huge bins filled with raw materials that feed into the assembly line and a big box filled with finished converters that have emerged from the opposite end. Workers would sit or stand all along the conveyer belt, each person performing one distinct act of assembly or fabrication — bending a tab, welding steel, inserting a filter substrate, injecting pellets of rhodium and platinum. The process was slow and limited.
But it worked — at least until automakers started demanding converters that were customized to their individual needs. Then the classic assembly-line design proved inflexible, unable to integrate variety into the standardized world of mass-produced converters. At the same time, automobile manufacturers began to cut down on suppliers drastically, relying instead on a few large vendors who could handle broad capabilities. Those two pressures together meant that Delphi needed to reinvent itself. It needed to figure out how to produce more of a variety and to be more flexible — much faster and at lower cost.
In 1997, Delphi began laying the groundwork for a total redesign of all of its 200 plants. The result: faster factories. Today, the Oak Creek plant uses only half of its 1 million square feet of floor space; has eliminated 98% of its powered conveyer system; has cut 230 processes from that system; and has increased productivity by more than 25%. Those radical changes — achieved not without pain and sacrifice — have transformed the factory into a top-notch facility that's organized around customer-focused work cells, modular and portable components, people-centered work practices, and, since the company's IPO, employee ownership. Instead of a museum of obsolescence, the plant has become a model for change.
The Secret Life of a Cell
The assembly line was the epitome of work in the old economy. It was both a tool and an expression of the relationship between the worker and the work, the product and the customer. In the old economy, every converter for every customer flowed along the same assembly line and was worked on by the same sets of hands, doing the same tasks, over and over again.
In an economy based on customization, speed, quality, and flexibility, the mechanical assembly line has given way to the biological cell. Today, the Oak Creek factory floor is divided into "work cells," each one requiring between one and four workers to make a converter. Equipment surrounds cell workers in the form of a "U," a circle, or a square. The raw parts arrive on small plastic carts, which are pushed by other workers who load them onto "short gravity conveyors" — plastic-made conveyors that can be quickly and easily disassembled. Those conveyers hold enough parts for only about 30 minutes of assembly; they then need to be replenished. The effect is an elimination of backlog and a move toward a "just-in-time" system. Says Peter Wood of the Oak Creek plant: "Inventory turns have tripled."
It's a Modular, Modular World
Every work station is built from modular components — from the Tinker-toy-like plastic conveyor systems to the machine tools and robotic components used to assemble converters. Nothing is bolted to the floor permanently, and everything can be broken down and reassembled in the event of a sudden surprise order or an unanticipated problem.
"The old system required huge machines that were held up by piers and pieces of structural steel in the cellar," says Steve Gaut, 39, Delphi's director of media relations. "If you wanted to move a machine, you had to move the entire building and more or less build a whole new building around it. Now our machines have feet on them. You just unbolt the machines from the floor and move them wherever you want."
This modularity and portability is a key factor in the plant's new manufacturing system. It's also a fundamental element in getting workers to take total responsibility for quality: By making the entire process easy to modify, the system itself encourages constant brainstorming about how to make incremental improvements. The new process has a flexibility and an adaptability that, in the past, were unthinkable. Now the people who build the product can also contribute ideas for changes that could both lower cost and improve quality — and be held responsible for implementing them.
The Human-Conversion Factor
The biggest, most radical change in the Delphi factory: People — not machines — are now at the center of the assembly process. Operators check for quality, help establish assembly speeds, and discover work-flow innovations that increase productivity and lower assembly times. And as compensation for this new sense of responsibility for customer satisfaction, operators can take ownership in the company through stock options.
Initially, says Wood, the Delphi workers were frightened, angry, and resistant to the changes. But the company had no choice — and everyone knew that. Organized labor supported the transformation, even though, individually, workers felt threatened and unsettled by it. "We were quite arrogant," says Rick Woydt, 44, a union representative at the Oak Creek plant. "We used to own the market. But with competition, customers would be able to dictate what they paid for our product. Since many companies build catalytic converters now, the threat of a strike wasn't a reality. We either had to work together or bury our heads in the sand."
But getting everyone to buy into the new system wasn't easy. "We went through at least six months making little progress," Wood recalls. "It was tough to get operators to participate. They would attend workshops, but in their minds, change wasn't going to happen. They didn't want it. But suddenly, people started to come up with genuine ideas on how to change. They started putting masking tape on the floor to outline the shapes of machines. They would walk around the tape to see what it would feel like to work in a new way."
Today, cell workers determine their own schedules, inspect products for quality and productivity, and communicate directly with customers. As they work, they adjust tooling, keep tabs on the supply of materials, and time every motion right down to the second — all in a footprint of floor space and with a swiftness that's roughly equivalent to that of a fast-food worker putting together a Happy Meal.
Because workers now take responsibility for an individual part, instead of just working on a passing product, they constantly tinker with ways to improve that part, based on intelligent observations of their own work. Mike Kahle, 48, a former full-time press operator (he still works the press sometimes), attests to the positive changes in the factory. Now coadministrator of the company's Quality Network Suggestion Program, which encourages all employees to submit at least one idea for improving the company each year, Kahle says: "I've been here 26 years. This place used to be nothing but conveyors — 8,000 feet of conveyors. Now it's down to about 200 feet. We've become lean. I run the suggestion program during the week, and I work overtime and weekends as a press operator. That used to mean just running the press. But now press operators have control over the whole operation: oil changes, die changes, parts inspections, and scheduling. I have a great sense of ownership and of accomplishment. And that's just the press room."
By making people, rather than machines, the central and most important component of the entire manufacturing system, the process itself becomes as agile as the people who operate it. The entire system has become poised, athletic, improvisational, and responsive to unpredictable demands and to new product orders.
Two years into the redesign effort, workers say that the pain is still there, but they've begun to see themselves as harbingers of change, constantly looking for ways to improve things. While the company has always asked employees to contribute ideas for improvement, participation in the suggestion program has grown — from 33% in 1996 to 99% in 1999. Recognition and rewards have helped. For example, at the end of each year, the names of all employees who have contributed ideas for improvement are entered in a drawing for such prizes as lawn mowers, big-screen televisions, and microwaves.
Not only do workers act like owners; they have literally become owners. When Delphi's IPO hit the market last February, employees were offered a stake in the company, at market price, before trading opened. Monitors around the plant — which are updated in real time — show the Delphi stock price as it fluctuates throughout the day.
The ultimate results: greater productivity, lower cost, and a level of adaptability that makes the entire company competitive. "At this stage, we've cleared space for the new work that we're bringing in," says Wood, indicating the expanse of empty floor space. "We're starting to fill back up with new orders and new business."
David Dorsey (email@example.com) is a frequent contributor to Fast Company. Visit Delphi Automotive Systems on the Web (www.delphiauto.com).