Makin’ It Down Under

As the farthest-flung outpost of the General Motors global empire, the Australian Holden subsidiary could well have suffered for lack of attention. But left largely to its own devices Holden has actually thrived. Dominating the small (800,000 unit) but very competitive local market, the Melbourne-based division has become a shining example to the rest of GM of how a lean and tightly focused operation can yield results.

This holds true particularly in Holden’s niche manufacturing operations, whose success hinges on an ultra-flexible multi-model, one platform strategy. Holden’s Elizabeth assembly plant in Adelaide employs 4,300 and currently produces 620 vehicles a day, a number that will increase to 760 in the near future as new models arrive and the company’s export business expands. Already the factory turns out 28 different models, including sedans, coupes, wagons and pick-ups, based on nine variations from a single, large car architecture — itself a development of Opel’s rear-wheel-drive Omega sedan.

By 2008, Holden forecasts it will be building 200,000 vehicles in Adelaide, 70,000 of which will be for export markets, including the Middle East, South Africa, Brazil and the U.S., which receives the Holden Monaro Coupe badged as the Pontiac GTO in late 2003. Add to the locally produced vehicles another 90,000 imported cars and Holden’s total sales five years hence should top 290,000, a comfortable figure which should maintain the company’s unusually profitable status among GM divisions.

To support these goals, over the next four years Holden will invest (AUS) $2 billion in its manufacturing operations, including launching GM’s new ‘high feature’ overhead cam V-6 engine at its plant in Victoria. One fifth of the total investment will bemade at the Elizabeth facility, which will  replace two of its existing A class presses,  re-shape and increase automation on its  blanking line, upgrade tandem press lines  with quick die change facilities and add a third transfer press.

The locally invented ‘flying seat’ gives workers access to the car’s interior without having to crawl in on their hands and knees. Holden’s Elizabeth general assembly shop has a spur line to completely assemble the cockpit module.

“We have the most modern press shop  in the southern hemisphere,” boasts  Albert Lidauer, executive director operations.  “Our manufacturing engineers are  famous for prowling around the world looking  for the best processes.” Lidauer says  his team has developed a ‘consortium  process’, which involves finding the best  production-related practices from leading  companies globally and then contracting  the work to a primary supplier. For  instance, Holden has worked extensively  with Honda on tooling development in the  plant. For some of the new models coming  next year, such as the Pontiac GTO and  Holden Cross8, the body shop relied on  Japanese companies for assistance in  developing tools. These suppliers built 200  bodies in Japan before starting operations  in Adelaide. The body shop itself will see  an increase in automation level from 15 to  50 percent by 2004.

One advantage of the relatively low  volume output at the Elizabeth plant is  that it allows the use of laser cutting  tools to trim the common floor panels  shared by the sedan and wagon models.  “Laser cutting helps keep costs down;  it’s (AUS) $2.6 million for machine versus  (AUS) $20 million for a press,” says Frank  Woolford, director of vehicle operations.  “It also helps the business case for low  volume products.” In the metal stamping shop, the proliferation of models means  that a quick die change capability is critical.  “We have to make 25 parts per  press versus 8-10 in a typical U.S. operation,”  explains Woolford.

With an immature supplier base in  Australia, Holden has had to produce many  components — the rear suspension cross  member for example — that in other major  markets normally would be outsourced  The factory has a major polypropylene  injection molding and painting operation, for  example, which produces 26,000 parts per  day. Primary parts include fascias, rocker  panel skirts, crash pads, instrument panels,  glove boxes and center consoles.

Though the plastics shop represents a  substantial investment, Lidauer argues that  having such close control of quality and  processes, especially on parts that the end  user regularly sees, is a “significant competitive  advantage.”

The crash pad production process was  developed with Honda and has proved  successful in dealing with the unusual  demands of some of Holden’s markets,  especially the Middle East, where  extremely high temperatures can cause  problems with plastic panel surfaces. With  so many different models being produced  by the plant, there are nearly 400 bumper  variations. Consequently the operation  runs on an on-demand basis, using an  unusual robotic flame etching process to  create the different fascia designs. The  general assembly plant is linked to the  plastics shop with a synchronous ordering  system that delivers painted fascias and  other components within 3.5 hours.  “There is no room or time for mistakes,”  says Woolford. “I’m not aware of any other  plant where this is arranged in such a tight  time loop.” Among the special measures  developed for local market bumper fascias  is a paint formula designed to cope  with the unusually acidic fluids contained  in Australian bugs.

A development in the main paint shop is  a new automatic storage facility — ‘a pick  and place store’ — for painted bodies. “This  gives us the opportunity to balance production  schedules in the plant to support batch  painting, which is tremendous advantage in terms of cost and quality,” says Lidauer.

The biggest change to the plant will be seen in the general assembly shop, which will soon be upgraded with a new floor skillet and overhead conveyor system. Plant personnel admit the current ‘60s era line is archaic with its snake-like layout and narrow aisles. The new layout, which will be installed without major disruption to production, claim plant personnel, will follow the T-shaped design established by GM’s recently built factories, such as the one in Gliwice, Poland. “The change will give us a very modern, European-standard assembly line,” says Lidauer. “Wider aisles will improve material flow and the new layout will have a positive impact on quality.”

Even without a modern general assembly shop, Holden claims its quality figures are excellent, with 2001 being the best year ever in terms of direct run, warranty costs and consumer survey feedback. To ensure further quality improvements, automation will be increased to 78 percent and existing key assembly line tactics will be pursued in the new shop, including in-line sequencing of supplier components, minimizing walk time for line workers and providing operator aids. A locally invented worker aid that has generated a lot of interest among plant visitors  is known as the ‘flying seat.”  Essentially a seat mounted on a Cshaped  arm, the device allows workers to  access a car’s interior without having to  crawl inside on their hands and knees.  “Getting inside the cabin and engine bay  are two big challenges of assembly line  operations,” says Woolford.

A robotic flame-etching process creates different fascias on the Holden vehicles.	Holden’s ‘pick and place store’ for painted bodies helps the company batch paint.
	Holden laser cuts common floor panels on its sedan and wagon. This helps keep costs down vs. traditional pressing.

Another unusual feature of the  Elizabeth general assembly shop is a spur  line that completely assembles the cockpit  module including the pedals.  Conveniently the whole module is inserted  as one piece and the process makes it relatively  easy to switch between right- and  left-hand-drive cockpits.  Woolford acknowledges the need for  more parts buffering areas and says there  will be increased involvement from certain  key suppliers. For example, the plant used to  do its own rear axle assembly, but Dana has  taken over that job using a facility close to  the plant. “Dana will be a lot more involved in  future models.”

Though Holden will never become a  high volume producer on the scale of  some of GM’s U.S. and European operations,  it has developed a unique position  as a ‘multi-niche’ manufacturer. And while  the Australian company’s geographic  remoteness and small local market creates  certain challenges, such as the presence  of few top rank suppliers, the upside  is a resourceful, go-it-alone approach,  which has resulted in novel solutions to  traditional problems.

The key attributes of Holden’s game  plan — producing innovative new vehicles  with low investment, short lead times and  with leading edge manufacturing practices  — should serve the company well over the  next decade. And from parent GM’s perspective,  Holden fulfills a useful role by  meeting the demand in world markets for  niche products that are difficult or unprofitable  for larger manufacturing operations  to produce.

“We are a dwarf by world standards,”  says Peter Hanenberger, chairman and managing  director of Holden. “But we are lean  and we can develop strengths that you cannot  as a giant.”

Holden’s export-based production plans hinge on Pontiac GTO project American engineer Jeff Jennings remembers well the e-mail he sent to General Motors’ then newly arrived product czar, Bob Lutz, more than a year ago. Jennings, now an Australian citizen, had worked at Holden for 10 years and suggested to Lutz the Monaro coupe would make a perfect Pontiac GTO. It wasn’t the first time Holden had been in the running to produce a vehicle for North American consumption — Jennings had been involved in a previous unfulfilled plan to export Commodores as Buicks – but this time Detroit reacted fast and the deal went through. “Bob Lutz responded right away and asked what it would take to do it,” recalls Jennings, engineering program manager for the GTO. The answer to Lutz’s question was that it would take some important modifications to make the Monaro suitable for the U.S. market. But the task was achievable and production could start just 18 months from February 2002 — the time when Lutz and a group of top GM executives visited Holden. Compared to an all-new vehicle program, that’s fast and suits Lutz’s goal of revitalizing Pontiac with a halo performance car. Anticipating that the Pontiac project would be blessed, Jennings had already started GTO feasibility studies including requirements for U.S. federal certification. As a new model to the Australia market, the Commodore-based Monaro has a number of features that make it attractive to US tastes. Among them is size; it is the largest coupe in the world. The Monaro has also been developed as an enthusiast’s car, with a thoroughly-engineered independent rear suspension, sporting handling characteristics and plenty of performance from its North American-sourced LS1 300bhp-plus V-8 engine. In short it is perfect for Pontiac. Jennings’ engineering team are focusing their efforts on changes to the Monaro’s interior, bumpers, fuel, electrical, lighting, safety and emissions systems as well as improving cold weather operation and corrosion protection. Assuming all goes well and US consumers buy the GTO in the numbers anticipated — around 20,000 per year — then the project could be the precursor to a succession of Holden developed vehicles crossing the Pacific. One obvious candidate is the Ute, an El Camino-like car-based pick-up that has proven very popular in Australia. Standing in its way, however, is the 25 percent tariff imposed by the U.S. government on imported trucks and possible objections from the UAW. However the latter issue might be resolved were Holden to import a U.S.-made product, such as the Trailblazer, as a counterbalance to the Ute. Lutz and company were also struck by the potential of forthcoming new Holden models, including the Cross8, essentially a four-door sedan with a pick-up bed, and the SSX, a large high performance hatchback sedan. Both models have four-wheel-drivetrains. In the meantime the GTO program alone will mean adding a third shift to the line at the Elizabeth plant and go a long way to fulfilling Holden’s export-based expansion strategy.

Peter Hanenberger, Holden chairman, says his company is lean but can develop more strengths than a giant.

New Holden models — and possible U.S. exports — include the SSX (left), a high performance hatchback sedan  and the Cross8 (right),  a 4-door sedan with a pick-up bed.