How We Got to Today
Given the myriad of industry changes over the past decade, what similarity is there between today and the ‘60s? Back then, OEMs thought nothing of building several nameplate/bodystyle combinations at an assembly plant, choosing to bandage the complexity of multiple platforms and build processes via more labor and large facilities, which meant less efficiency. Today, we have many facilities that build multiple nameplate/bodystyle combinations with less labor, assembly space, inventory - all enabling better quality.
Global OEMs completely understand that maintaining flexible production capacity in the right sourcing location (within the regions of highest sales volume) with an equally nimble supplier network is the winning ticket to reaching the customer quickly, with less risk and better downstream profitability. A well-structured global production network impacts the bottom line faster than ever before.
A look back is in order to fully understand changes in how North America has approached production capacity and build complexities. Before 1965 and the onset of the Canada-U.S. Autopact which established a free trade zone for vehicle production, output in Canada was a tale of many platforms and bodystyles with too little volume to enable efficiency. There were times when there could be up to 10 nameplate/bodystyle combinations being built on one assembly line—all sourced for demand in Canada. Thinking about the math of volume per combination is not a pleasant thought: on average, volume could average 15,000 to 20,000 units per year. Low volumes led to quality issues and the inability to learn lessons from other facilities if issues occurred. The industry was ripe for rationalization of the production/supplier network to a regional one and not just national.