Fiat Chrysler's World Class Manufacturing: Stark contrasts between US, Italy
Melfi, Italy — The blue and white shop floors shimmer. Machinery is spotless. Line workers in matching white and gray jackets and pants appear ready to enter operating rooms.
It's nearly incomprehensible that this factory in rural southern Italy produces the Jeep Renegade and Fiat 500X for Fiat Chrysler Automobiles NV. There are few sparks and no T-shirts and torn jeans. Natural light floods workspaces. Safety is at a premium; there have been no accidents in more than four years. Production appears to run seamlessly while producing about 1,500 vehicles per day.
It's no wonder those within the company — including United Auto Workers leaders— who have been to the FCA Melfi Plant or the 11 other silver-rated facilities under Fiat Chrysler's World Class Manufacturing methodology want to implement its practices in North American facilities.
World Class Manufacturing — known as WCM throughout the company — is about cutting waste: wasted time, energy and materials. It is meant to empower workers to provide and implement suggestions on how to improve their jobs and factories, and act in real time to resolve problems.
"This is standard," said Gianfranco Cinquefiori, Melfi Plant press shop manager, during a tour of the plant on Monday. "We have to respect the organization. With WCM, we focus on standardization … they must respect the methodology."
In 2014, plant employees submitted about 2 million suggestions worldwide, helping the company save roughly $4.4 million, enabled by a training cost of $1.7 million. Since the program was implemented in North America in 2009, more than 2.4 million suggestions have submitted and approved. The company's target is to save about $400 million in North America in 2015.
WCM's goals are simple: reduce waste and improve quality, efficiency and safety by focusing on 20 areas, known as pillars. Pillars range from plant safety and quality control to worker motivation.
Changes can be as simple as using a cart to move parts instead of carrying them to an assembly line. One idea implemented at Melfi is a wooden assembly-line floor; it's easier on workers over the course of a long shift.
In Melfi, the system is the way thousands of employees operate without even thinking about it. Part of it is because many started working at the plant after the program was implemented. "We start with WCM," Cinquefiori said. "For us, now is not a different time from one or two years ago, because we start with WCM."
In one room at the plant's body shop, employees can use a computer to find tools, nuts, bolts and dozens, if not hundreds, of other parts with the stroke of a keyboard. It has cut down time searching for parts or tools by 80 percent, Cinquefiori said.
In the U.S., it can be more complicated. Workers, even though the initiative is supported by their leadership, have varying opinions on the process that most haven't used in the past. Implementation has been slower.
"I personally don't know much about it," said Cathy Smith, a legacy worker at the automaker's Trenton Engine Plant in Michigan. "What I do understand of it is if they properly implemented it and involved us, it's a good thing."
Many at the UAW Special Bargaining Convention this year in Detroit were skeptical about the program's longevity and benefits. They see changes in their plants, but it's hard to support something wholeheartedly when they've worked for three owners in 10 years — each with their own ways of doing things — and have a CEO like Sergio Marchionne who touts mergers and industry consolidation.
Strenuous audit process
Italian automaker Fiat SpA (now Fiat Chrysler) adopted the World Class Manufacturing program in 2005, under Marchionne's leadership.
WCM has 10 technical pillars and 10 managerial pillars that company officials use to systematically rate each production facility. Technical pillars relate directly to a facility's operation and production. Managerial pillars are more about oversight and implementation. During a strenuous audit process that can take days, plants are rated one to five for each pillar. A score of 85-100 is world class; 70-85 is gold; 60-70 is silver; 50-60 is bronze.
The Melfi plant hopes to achieve a gold rating by year's end, according to plant manager Nicola Intrevado
It's not an easy process. By the end of 2014, a total of 122 Fiat Chrysler plants (97 percent) worldwide had implemented the program: 38 achieved bronze level, 12 were silver and four were gold. Gold-rated facilities included an engine and transmission plant in Poland, and assembly and stamping plants in Poland, Turkey and Italy.
"This is an ongoing evolution of criteria," said Brian Harlow, FCA US head of North America manufacturing and global head of powertrain manufacturing engineering, at his Auburn Hills office. "The criteria of achievement is much more rigorous than it once was."
In North America, no plants are gold-certified. Only two of 36 North American plants — Dundee Engine in Michigan and Windsor Assembly Plant in Ontario — have achieved silver. Seven other plants in North America, including two in Michigan — Trenton Engine Complex and Warren Stamping in Michigan — have bronze ratings.
The number of plants with ratings is far below a 2009 goal of having all plants achieve at least bronze by 2014. Fiat Chrysler Head of Group Purchasing Scott Garberding, who headed WCM for then-Chrysler from 2009-13, said the stricter criteria for the audits as well as the company utilizing third-party data instead of just internal metrics have made it harder for facilities to achieve ratings.
Garberding said while the structure of the program has changed, so have the plants — even if many of them haven't achieved a rating. "The level of improvement, by any measure in safety and quality and productivity has been huge," he said.
At its Warren Truck Plant, which has not scored a rating, the automaker increased production by 100 vehicles a day, or more than 28,585 a year, through thousands of suggestions from hourly employees.
The new processes — from automation changes in the body shop to improvements to its paint shop — streamlined jobs by improving workplace ergonomics. One example was creating "kits" of related parts that allow operators to focus on assembly instead of grabbing them from different areas.
WCM was one of the first things Harlow and other managers were introduced to as Marchionne bargained with President Barack Obama to take control of Chrysler.
Harlow said that production under the initiative is much different than what plants were like when he started at an Indiana plant in 1978. "It's like we were in kindergarten, almost," he said. "At the best we ever got, we were ready to graduate from high school. And (now) we're in the Ph.D. world."
Workers and executives who have bought into World Class Manufacturing want it to expand. The company is in discussions to open new training facilities in North America; create a "Global WCM Academy" to oversee regional facilities; and launch a new engineering program called "World Class Technology" that is based off the program's principles.
Unions, including the UAW and Canada's Unifor, not only support the processes but are asking for more. Fiat Chrysler, at the request of the unions, is in discussions to build training centers in Canada and Kokomo, Indiana.
"What (Marchionne) brought with Fiat and WCM was a structure that was sorely needed," said UAW vice president Norwood Jewell during an interview in his Detroit office. "We've got to get the people to understand that taking ownership in the different pillars of WCM is what will help them be better.
"And the better Chrysler is, the better they ought to do as a corporation, the better they'll do as individuals (through profit-sharing). One hand washes the other."
Fiat Chrysler currently has training centers in Warren and in Saltillo, Mexico. The Metro Detroit facility opened in 2011. It resembles a high-tech science center and uses 3-D simulators and computerized motion sensors to enhance the way plants and employees operate. More than 21,000 employees have been trained, including nearly 7,000 who received training on a bus that travels to plants.
"We've had programs in the past to try and capture the essence of what WCM is methodically. But they had holes," said UAW Local 1264 member Greg Varney, a facilitator at the academy in Warren. "The great thing about WCM methodology is that it leaves nothing to guesswork."
Varney and Jewell have visited Italy to see witness the program in action. They support it because workers are at the heart of everything.
"It's remarkable," Jewell said. "You can eat off the floor, just about. I've never seen anything like it."