Tag: auto plants

OM in the News: GM and Honda Now in Strategic Alliance

In Chapter 5, Design of Goods and Services, we note that as the speed of new products and their technological sophistication increases, so do risks.  One way to mitigate this risk is via alliances (page 175). This is exactly  what GM and Honda are doing as they invest billions in an “automotive alliance” in the North American market, including plans to co-develop a range of vehicles to be individually branded by each partner.

GM and Honda plan to share vehicle platforms, including both electric and internal combustion propulsion systems. Earlier this year they agreed to jointly develop two EVs to be branded by Honda, based on the General Motors’ EV platform and powered by its Ultium battery technology.

The two automakers have been partners in selected projects over more than 20 years, including their recent collaboration fuel cell and battery technologies and production, and the Cruise Origin autonomous vehicle.  Beyond the new vehicle technologies, GM and Honda will work to coordinate materials purchasing, logistics services, and localization activities, to create cost efficiencies by leveraging respective scale, insights, and best practices, reports American Machinist (Sept. 3, 2020). And, the two organizations will explore combining R&D related to advanced technology areas, including electrical architecture, advanced driver assist systems, infotainment, connectivity and vehicle-to-everything communication.

“Combining the strengths of each company, and by carefully determining what we will do on our own and what we will do in collaboration, we will strive to build a win-win relationship to create new value for our customers,” said Honda’s VP.

Classroom discussion questions:

  1. What is the definition of an ‘alliance’?
  2. What are the risks to GM and Honda when they establish such alliances?

OM in the News: GM Hustles to Pump Out Ventilators

Factory workers will assemble ventilators at an idled GM facility in Kokomo, Ind.

On March 19, four GM engineers boarded a late flight from Detroit to Seattle. By daybreak, they were huddled in a conference room at Ventec, a small maker of ventilators whose entire operation is smaller than a GM car dealership. Ventec execs had turned over blueprints for the roughly 700 parts that go into its ventilator to the GM engineers, hoping to get their help scaling up production. The GM contingent, which usually specializes in designing and sourcing parts for building vehicles, used their smartphones to take videos of the toaster-sized machines being built by hand. A box of parts was overnighted to Michigan.

A shortage of the machines for patients with the coronovirus has sent the government and private sectors scrambling, reports The Wall Street Journal (March 30, 2020). Manufacturers from GM, Ford and Tesla to medical-device giants like Medtronic, and even British vacuum-maker Dyson, are gearing up to boost production. GM said it would start producing ventilators at its Kokomo facility and ramp up to 10,000 machines a month. (The auto industry had also been drafted to help during World War II).

There is little overlap between making cars—a highly automated process involving fast-moving assembly lines and robotic welding machines, which plays out in vast factories—and the labor-intensive job of building ventilators, which are largely hand-built at small workstations.

But car companies are being called on to help because they typically work with thousands of parts suppliers—many making components similar to those needed for a ventilator—and are accustomed to manufacturing at a large scale. At the same time, car makers have been in crisis mode themselves from the new coronavirus. GM has shut most of its N. American factories to keep the virus from spreading among workers. Still 100’s of workers volunteered for the job to help the nation.

Classroom discussion questions:

  1. How do the manufacturing processes differ between a GM and a Ventec?
  2.  What strengths does GM bring to the table for this project?