1. Human resources
- For automakers, the total cost of paying average workers is around $40000 per year (mean
value); the numbers range from $30000 to $60000 (except for a Central European facility where it
is much lower). On average, direct pay is three times the amount of benefits. In general, worker
qualification does not affect the benefits policy within an automobile engine plant.
- Overall, the average age of workers in engine plants is slightly above 40 years old. There is no
difference by geographic region. In older engine plants, workers do tend to be older. Annual
turnover rates are around 5%. Mean values for unionization levels are 7990 for hourly workers,
45% for salaried workers. It is common for production workers to be assigned different tasks; the engine plants where the union contract restricts the kind of activities are located in North America.
- A majority of engine plants surveyed have work teams, and they are deployed in all departments.
In most cases, work teams were introduced about five years ago. Sometimes, work team leaders
are not elected. The average training received is 41 hours per employee per year. Fluctuations in
the values are large. European facilities tend to have more training. Respondents felt that inspecting one's work, being well trained, designing one?s workplace and having suggestions accepted are factors which can help workers make high quality engines. Workers and management interact via
meetings and surveys. There are usually fewer than 2 suggestions per worker per year. The more
training people get, the more likely they are to make suggestions.
- Delivery of parts to the assembly department of engine plants: the Japanese-owned facilities get a
much higher fraction of these components delivered more than once per shift, compared to other
plants. There are more instances of "just-in-time" practice for castings and parts delivered to the
- Engine and vehicle assembly plants: for half of our sample, the average delivery pace of finished
engines to the car assembly plant is once per shift or more frequently. Engine plants which deliver
engines very frequently no matter how far their customer vehicle assembly plants are located. The
average value of the average delivery size of finished engines is 273 units (the results are very
variable, but in general, the more engines are produced per unit time, the larger the batch size). For
one out of two engine plants, the average transit time to the customer vehicle assembly plant is less
than half a day; however, there are many cases where finished engines are delivered to vehicle
assembly plants located very far away.
3. Maintenance policies
- Total Productive Maintenance (TPM) is in place in all of the plants surveyed, but this is quite
recent (implementation started between 1990 and 1994). In two out of three cases, it is based on a
centralized planning and information system. All of the key maintenance items mentioned in the
questionnaire are taken care of by all engine plants; however, the frequency at which maintenance
is done varies a lot from plant to plant (average: one and a half times per week).
ProceduresinEnginePlants(ABSTRACT) MIT /IMVP --Oct.1997 Page2
- Throughout all departments of engine plants, breakdowns are caused on average mostly by
mechanical problems and then by electrical problems although there is a lot of variation between
plants. For those types of failures, there is no link with any downtime statistics. Hydraulic failures
occur more frequently in those plants which are older.
4. Production technologies
- Several of the engine plants surveyed are currently undergoing major changes. For a new engine
variant, most engine plants can deal with the adaptation by using much more than half of the
existing machines. In engine plants, a ?minor upgrade? can stop lines anywhere between less than
24 hours to more than a week. Currently, assembly lines in engine plants can handle more
flexibility than machining lines. When different engines are built in sequence, the pattern used most
often is 1-1- 1-2-2-2 (batch sizes range from 6 to 100?s of engines).
- Current and future design and acquisition processes for equipment do not differ. There is one
policy for the whole plant. For a majority of engine plants, the methodology is as follows: the
automobile company takes care of defining the requirements, it has a large influence (along with an affiliate or sister company sometimes) for the planning process, but the design and building of
equipment is done by an outside equipment or system supplier. Two areas where answers differ a
lot concern the system integration and the actual installation of equipment in engine plants: in some
cases, the automobile company is in charge, while in other cases, an outside firm does the job.
- Engines made in European plants have more complaints per 1000 than the North American or
Japanese ones (caution: we have rather few of these data points from non-European plants).
Engine quality as measured by complaints per 1000 units after engines are delivered: 3-month
quality data are quite good predictors of 12-month data.
- In almost all engine plants, Statistical Process Control (SPC) data are collected and displayed at
the line or work station. Engine plants also get back some engine performance and warranty data.
- In most instances, communication of engine design information is done via fax or hardcopy.
Sometimes, CAD systems (mostly 2-D) are used to exchange design dat~ however, whether CAD
systems are used or not, is not a function of the age of the engine plant or of the lines. In a majority of cases, the exchange of information between the plant and the engine design department take place weekly, with actual design changes happening monthly. On average, half of the design
changes are due to the engine engineering department, in order to improve the engine and to fix design or performance problems. Other causes for design changes are the meeting market needs,
fixing production problems, and responding to the evolution of regulations.
- All plants conduct hot testing of engines; in two facilities, only some of the engines are hottested.
The test can last from 45 seconds to 18 minutes. The (few) all-aluminum engines of our
survey are among those which undergo longer periods of hot testing. Less than 7% of the engines
fail the hot test the first time. By looking simultaneously at the engine quality data and at the hot
testing results, we did not find any correlation: hot test duration does not uncover problems which
cause quality complaints 3 or 12 months after the engines are delivered to customers.
Proceduresin EnginePlants(ABSTRACT) MIT /IMVP --Oct.1997 Page 3
- According toourrespondents, production technologies thatcan becritical formanufacturing high
quality automotive engines concern machining operations more than the sub-assembly and final
dressing ofengines; interestingly, these technologies are most often supplied by outside vendors.
In addition, organizational factors are seen as much more effective than automatization, in order to
produce high-quality engines.
6. Information systems
- Information systems are in place in engine plants, and they are used quite extensively.
- While centralized systems tend to be used mainly for planning purposes, non-centralized
computer systems can help compile some statistical data and tell about equipment problems. Rarely
are information systems actually used to give work assignments to employees.
7. Accounting procedures and investment decisions
- For a series of recent major installations of equipment in engine plants, it took around two years
between the approval of the plan and the moment when the first part was produced, and from there
on, an extra three to six months for full production levels to be reached.
- The top financial indicator used by car firms for measuring the "performance" of engine plants is
clearly variance from budget. Some financial ratios like return on equity or return on assets are not
used at all. For non-financial indicators, the quality of engines is most important, followed by
safety and environment concerns, logistical issues, and labor productivity.
- Product quality and internal rate of return are the two most important factors involved in engine
plant investment decisions.
- Most common practice is that indirect cost allocation uses standard or actual labor hours.
- Activity-based costing systems were in place in 30% of the engine plants surveyed ( 1995 data).
8. Plant improvement efforts
- The persons surveyed do not think that more automation will be the key for progress in engine
manufacturing. For the future, a strong desire is the ability to improve the flexibility of the factory,
of the machines, and of the material flow. Interestingly, the respondents most interested by
flexibility improvements are based in engine plants which currently deal with rather low levels of
- On the list of factors which can help improve operations in engine plants, is the need to establish better contacts with people in the engine design department and with the suppliers of machinery.
Also, being able to build more engines in less space is an important goal for several respondents;
actually, those most interested by this issue are from engine plants where the utilization of space is already more efficient than on average.||en