November 1, 2018 / 5:02 AM / a year ago

FOCUS-Japanese carmakers' weapon of choice in Trump trade war: Flexible factories

    By Nick Carey
    SMYRNA, Tenn., Nov 1 (Reuters) - At points along the
assembly line at Nissan Motor Co Ltd's          largest U.S.
factory, workers wheel trolleys past shelves selecting parts
wherever they see a green or blue light.
    Nissan calls the system "pick to the light," and it helps
workers get the right part for whichever of six different
vehicles built at the plant, according to Ryan Fulkerson,
director of new model engineering during a walk along the line. 
    "No matter which model comes down the line, the right parts
are waiting for it," said Fulkerson.
    Designing assembly lines to build more than one type of
vehicle dates back decades. But the ability to shift production
from one type of vehicle to another is now proving vital for an
automotive industry coping with multiple challenges.    
    Consumers around the world are shifting rapidly away from
traditional sedans in favor of sport utility vehicles. The
recent rise in U.S. gasoline prices is a reminder that a more
serious oil price shock could make smaller vehicles popular
again. Trade tensions and tariffs threaten companies that ship
significant numbers of vehicles from one country to another.
    Weakening China sales, market stagnation in America and
fears of a full-blown trade war have only added to uncertainty,
spooking auto investors. 
    For a graphic, click
    Nissan and rival Japanese automakers Honda Motor Co Ltd
         and Toyota Motor Corp          have been the best at
flexible manufacturing, auto experts and industry executives
said. Historically, Japanese automakers focused on
interchangeable processes and platforms out of necessity -
because one model for the Japanese market could not sustain an
entire factory.
    U.S. and European automakers have worked to catch up. For
example, Ford Motor Co's       Kentucky truck plant makes some
of its best-selling pickup trucks and large SUVs on the same
platform, and is expected to hit full capacity this year.
    For a graphic, click
    But General Motors Co        illustrates some of the
pitfalls of relying on single models. While The No. 1
automaker's U.S. plants producing popular pickup trucks are
running around the clock to meet demand, others that make a
single car model are running well below capacity.
    At the GM plant in Lordstown, Ohio, workers make only the
Cruze compact sedan, which has suffered a 26.5 percent sales
decline this year through September. The plant is running a
little over 30 percent capacity, on one shift.
    "We continuously look at our global operations to find ways
to drive greater efficiency and capacity utilization," GM said
in a statement.
    Workers at Lordstown are campaigning for GM to build another
vehicle at the plant to make it viable. The UAW has consolidated
two locals at the facility to simplify the negotiating process.
It also has agreed to allow outsourcing of some non-production
jobs and worked to significantly improve quality.
    Dave Green, UAW Local 1112 president, said his members are
on edge.
    "We're doing all we can to be competitive," Green said. "We
know that if we can't compete, we're out of business."   
    Using one assembly line to build a variety of different body
styles requires careful coordination that starts with the
engineers who design the vehicles, and extends to the
construction of the tools used to weld and assemble them.
    Honda's assembly factory in Greensburg, Indiana started
operation in 2008 building Civic sedans, and later a small sedan
for the Acura brand. Last year, as sedan sales weakened and
demand for SUVs soared, Honda decided to add production of its
compact CR-V utility vehicle at Greensburg.
    Honda had designed the CR-V and Civic so they could be put
together on the same line, but engineers and workers at the
Greensburg plant had to make changes. 
    Before the CR-V was introduced, Civic trunks and hoods were
welded together by one group of machines, or cell, in the body
shop. The metal pieces for the hood and trunk lid were placed in
an industrial-strength Lazy Susan and the same robots welded
them both.
    However, the tailgate of the CR-V is a bigger piece that
requires 37 more welds. The same system would not work for both
the Civic and CR-V. An entirely new welding line to handle the
CR-V work would be too expensive, and the plant had no space,
said Honda engineer Zach McCurdy during a tour of the plant.
    Instead, McCurdy and other engineers separated the hood
welding line from the Civic trunk and CR-V tailgate welding
system, reusing many of the robots. The plant bought 10 more
welding robots – fewer than originally proposed. During a
planned production week-long shutdown, workers reconfigured the
area of the welding shop. 
    Honda has not pushed automation to the limit at Greensburg,
managers at the plant said. Workers load parts by hand into
fixtures that hold them in place so robots can weld them
together. Such repetitive work could be automated, said the
Greensburg plant's new model manager, Tom Hilfinger. But it does
not pay off.
    “People are more flexible,” he said.    
    The Nissan plant in Smyrna has two lines that can each
produce 60 vehicles an hour. The plant's 8,000-plus workers make
six different vehicles on two production lines here - three SUVs
and three cars, including Nissan's best-selling, higher-margin
Rogue SUV crossover. Last year Smyrna made 623,000 vehicles,
more than 97 percent of its capacity, and it is running over 90
percent now.
    Auto plants need to operate at 80 percent of capacity or
above to remain profitable.
    To keep Smyrna running at a high rate, Nissan last year
exported 100,000 vehicles to 70 countries. The automaker still
imports most of the Rogues it sells in the United States, to
avoid idle production lines at plants in Japan and South Korea.
    U.S. President Donald Trump has threatened to impose auto
tariffs of up to 25 percent. That would be a direct hit to
companies such as Nissan, which imported two thirds of the
310,000 Rogues it has sold in America during the first nine
months of this year. 
    Denis Le Vot, who heads Nissan North America, declined to
discuss the possibility of Trump's tariffs on imported vehicles.
    But when asked if Nissan could make those imported Rogues in
the United States if faced with a massive supply chain
disruption, Le Vot said: "Sure, we can."  

 (Reporting By Nick Carey; editing by Joe White and Edward
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