Change Factory

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.