AUTO PLANT LOOKS AHEAD : SUPPLIERS STAFF ASSEMBLY LINE AT SITE IN BRAZIL.

Byline: Diana Jean Schemo The New York Times

At first glance, the work force at Volkswagen's truck and bus factory here seems like any other, clad in unremarkable gray uniforms. But look at the pockets, and you will see the key to what Volkswagen executives call the factory of the future. The names stitched there are Rockwell, Cummins, Remon and MWM. What are conspicuously scarce are Volkswagen workers.

In this new factory some 100 miles northwest of Rio de Janeiro, Volkswagen employs a mere 200 of the 1,000 workers, those responsible only for overall quality control, marketing, and research and design. The assembly work - from counting spark plugs to bolting down engines - is left to suppliers.

This is the ``dream factory'' that Jose Ignacio Lopez de Arriortua has long promised would revolutionize auto manufacturing. Lopez, Volkswagen's charismatic, controversial head of purchasing, quit General Motors in 1993 because that auto maker, he said, would never build it. General Motors, for its part, accused Lopez of stealing its plans for ``Plant X'' and building it here in Resende.

Whatever its origins, the plant, inaugurated this month, transforms Volkswagen from a manufacturer into a contractor, overseeing the work of other companies. Some eight major subcontractors have their own shops along the assembly line, where their workers assemble components, including parts from 400 suppliers, before dropping them onto chassis.

Volkswagen is betting that the system will reduce the number of defective parts, improve efficiency and cut costs. If it does, it could become a manufacturing model for the developing world, where almost all growth in the auto industry is expected to take place. According to Lopez, it could apply to other types of manufacturing as well.

But industry analysts ask whether Volkswagen's factory for the future is lean, or merely mean: whether it achieves true gains in productivity or furthers a trend toward squeezing subcontractors and employees. Volkswagen's subcontractors shoulder more direct costs and risks, and its assembly-line workers are paid roughly a third of auto workers in Sao Paulo.

While Volkswagen calls this new way of putting together trucks and buses a ``modular consortium,'' it can look like a Russian doll of auto making. The subcontractors include Brazilian companies like Delga Automotiva Industria e Comercio Ltda.; local subsidiaries of transnational corporations, like Rockwell International and Cummins Engine of America and Motorenwerk of Mannheim Eisenmann of Germany; as well as consortia like Remon created for the venture.

This blurring of distinctions between suppliers and auto maker, as between electrical components and mechanical ones, is also a sign of change in auto manufacturing, said Sean McAlinden, manager of economic studies at the Office for the Study of Automotive Transportation at the University of Michigan. ``Who's the customer and who's the supplier?'' he said. ``In the future, those boundaries may not make sense.''

While truck makers and Japanese auto makers have long relied heavily on pre-assembled components, ``We haven't heard of a completely supplier-run plant before,'' McAlinden said.

With South America's largest economy and population, and with more than 90 percent of its goods transported by truck, Brazil is an important testing ground for Volkswagen.

``How things work in a country like Brazil matter very much indeed,'' McAlinden said. ``It doesn't even matter if the product isn't meant for outside Brazil. The most important prototype plants today are prototype plants for the Third World.''

For the moment, the factory is producing only one truck a day, because of delays in installing some equipment, such as an electronic overhead monorail. The cab factory and the paint shop are not finished, and so for now, every truck produced here is white. Suppliers are using the time to train workers, who were hired without experience.

Instead of a traditional assembly line, on which a single piece of metal grows part by part into a truck or bus as it moves from worker to worker, Resende runs subassembly lines parallel to the main line. The process begins with a chassis delivered to a loading dock; as the chassis moves along the main line, each supplier simultaneously assembles its components.

At a chassis' first stop, workers from Iochpe-Maxion mount the gas tank, transmission lines and steering box.

At it moves down the line, Rockwell-Braseixos workers mount the axles and brakes. At the next stop, workers from Remon put on wheels and adjust tire pressure.

MWM/Cummins prepares and installs the engine and transmission. The cabs - supplied by Ford Motor Co. now, but eventually to be produced by Delga - are outfitted by VDO do Brasil, a unit of Adolf Schindling AG of Germany. Painting will be done by Eisenmann.

When it reaches capacity next year, the plant's two shifts are expected to produce 100 trucks a day, using only 800 assembly workers, compared with 2,500 in traditionally designed plants in Brazil. And Volkswagen is betting that with suppliers on hand to inspect each component before it becomes part of a vehicle, quality will be high.

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Photo, Photo/Map

Photo/Map: VWS CARMAKING CO-OP

Like Tom Sawyer and his fence-painting project, Jose Ignacio Lopez de Arriortua designed Vokswagen's new truck plant in Resende, Brazil,around work done for Volkwagen's benefit by others. Major suppliers are assigned space in the plant and supply their own workers to add components to trucks rolling down the assembly line. Volkwagen's employees, a minority in the plant, supervise the work and inspect finished trucks only when they pass are the suppliers paid.

The New York Times

Photo: Remon workers attach wheels as other subcontractors craft parts simultaneously in Resende, Brazil.

The New York Times