Inside General Motors Co.’s vehicle assembly plant in this southern China city, many workers wear the red-and-yellow uniforms of DHL, the logistics company.
The DHL employees work side-by-side with GM workers handling the flow of parts within the plant, which builds about 4,00,000 Baojun brand vehicles a year and is owned jointly by GM, Chinese partner SAIC Motor Corp. and Guangxi Automobile Group.
DHL assembles thousands of kits of parts daily in a strategy to avoid assembly errors, and reduce costs. At some GM-run final assembly plants in China, seats are unloaded from delivery trucks, put on a conveyer system that runs underneath an assembly line, and are delivered to the assembly line operator untouched by human hands.
Some parts are delivered by self-guided robots that would be at home on the sets of a ‘Star Wars’ movie. GM is now deploying third-party logistics contractors inside all 17 of its joint-venture general assembly plants in China to transport materials, and manage parts warehousing outside the plant and delivery to the plant, a senior GM executive told Reuters.
Outsourcing in-plant material handling jobs, traditionally done by GM workers, allows the automaker’s workforce to focus on the more critical work of improving quality and efficiency, GM China’s manufacturing chief Paul Buetow said.
Now, GM’s Chinese operations are deploying advanced manufacturing systems ahead of many factories in mature markets, and leading the way in many aspects of factory floor innovation. GM’s increasing use of contractors in China points toward a future where much more of the work involved in producing vehicles, or even all of it, could be handed over to third-party specialists, as Apple Inc. does by outsourcing production of its devices.
But union agreements have limited the use of outside contractors within many plants run by global automakers in Europe and the U.S.. Some electric-car start-ups, including NextEV, are already experimenting with handing over the bulk of production work to third parties.
‘Control critical’
Mr. Buetow said he has “thought about” the possibility of fully outsourcing production, but has concluded the automaker should still control manufacturing.
“The building and assembling of vehicles is still a core competency for General Motors,” he told Reuters in an interview in Liuzhou. “I am not sure we would ever contract that out.” It is critical, he said, to have the “technical control” necessary to build vehicle bodies with precision, to assure crashworthiness.
GM and SAIC, and Guangxi Automobile have about 6,000 employees at the Liuzhou complex. To support them, DHL has deployed 1,500 of its own workers according to DHL.
Cars have 20,000- 30,000 parts, and factories often produce multiple models on the same assembly line. The parts kits, delivered in proper order according to computerised schedules, help reduce errors. Assembly line workers, for example, do not have to decide what colour sun visor to use in a car. That choice is made by the people assembling the kit.
Parts kits put together by DHL are delivered by its workers just-in-time for a given vehicle coming down the assembly line. DHL uses a system for creating kits of parts that was pioneered by Toyota and later shared with GM.
Similar outsourcing arrangements are being carried out on a small scale in GM’s North American manufacturing facilities and elsewhere, but “what we have done in China is more [evolved],” Mr. Buetow told Reuters.
GM China manufacturing facilities have also adopted technologies such as “zero-downtime” welding as well as collaborative robots which work with human operators on the assembly line.
As a result, GM’s Chinese production facilities have enjoyed a big jump in efficiency, he said. Declining to give specific data, Mr. Buetow said the number of vehicles assembled with wrong components has fallen to a quarter of the level seen a decade or two ago.
