Nissan: the extraordinary happens every day; From the direction of the now-legendary Carlos Ghosn to the engineering of new powertrains and vehicles to the way that people work with people ...

It is certainly one of the most stunning reversals in global corporate history. Nissan, from heavily indebted (nearly $20-billion) and arguably on its way out of business in 1999 to an enviable status whereby Carlos Ghosn, then only president and CEO of Nissan Motor Co., Ltd. (on April 29 he was named president and CEO of Renault S.A., as well), was able to state on April 25, 2005, "Today, Nissan is reporting a record year--a record in terms of revenues, operating profit, net income, sales volume, and production." A seemingly unimaginable feat. Ghosn is widely credited with driving the transformation, as he initiated demanding programs that have led to the improvement in operations. On March 27, 1999, Nissan entered into an alliance with Renault. On October 18, 1999, the first program, the "Nissan Revival Plan" was announced, a plan that gives substance to the word "aggressive." Among the elements that were diagnosed by the cross-functional teams that had been empowered to review the company's status to that point, were the following:

1. Lack of profit orientation

2. Not enough focus on customers

3. Lack of cross-functional, cross-border, intra-hierarchical lines of work

4. Lack of a sense of urgency

5. No shared vision or common long-term plan

All of that was to give way and profit orientation, customer focus, cross-functional teaming, urgency, and common vision were to become a way of life and work at Nissan around the globe. Some of the demanding efforts included a 20% front-loaded cost reduction over three years, which included the reduction by half of the number of suppliers. There was to be improved capacity utilization, which led, in large part, to the closing of three assembly plants and two powertrain facilities. The number of Japanese plants and platforms were seven and 24 in '99; that was to be reduced to four and 12. The overall organization was to go from one that was multi-regional based to one that was truly global, with centralization in Japan, which would lead to the wherewithal to truly leverage resources, be it as regards purchasing or in coordinating best manufacturing practices around the world. Anything not deemed to be core or essential--land or even companies--were sold. Yes, this led to a headcount reduction within the organization of about 21,000 people, or 14%. But the plan was to return of profitability by 2000, to have an operating profit by 2002 that would be equal to or greater than 4.5% of sales, and to cut the debt in half by FY 2002. Despite the demanding goals, they were achieved in two years rather than three. But the success of the Nissan Revival Plan didn't lead to a sense of accomplishment, because there was far more to accomplish. This led to the next three-year plan in April 2002 called "Nissan 180." Once again, there were stretch goals. The 180 signifies:

* Additional sales of 1 million cars

* Operating margins of 8%

* Operating debt of 0.

As Ghosn said on April 25, 2005, "Fiscal year 2004 marked the end of our Nissan 180 business plan. Obviously, Nissan 180 cannot be closed completely until the end of September 2005. But we know that we have already delivered two of the plan's three critical commitments. We committed to an 8% operating profit margin, and our margin has been at or above 10% for every year of Nissan 180. We committed to zero debt, and today we have more than 200 billion yen in net cash under the new and more demanding accounting standards. Our only remaining commitment is the 1 million additional sales." Which the company delivered. Nissan 180 is giving way to a new plan, this one called "Nissan Value-Up," a program that is to take the plan through FY 2007. Once again, three objectives:

1. Profitability. As Chosn stated, "To maintain the top level of operating profit margin among global automakers for each of the three years of the plan."

2. Volume. Global sales of 4.2 million units by FY '08 (up 812,000 over FY '04).

3. Return on investment. The return on invested capital is to be an average of 20% during the three years. (This is predicated on things including a worldwide industry volume of 63 million units in FY '07 and exchange rate assumptions.)

If past is prologue, the Nissan people will accomplish this plan.

All of this is remarkable. But no less remarkable are the people who are charged with getting the job done. And so we talked with some of them from Nissan North America, and we've looked at what they are doing. They are doing what seems to many to be impossible. But they are, you get the sense, just doing their jobs. Which is in and of itself extraordinary.

NOTHING SPECIAL

One thing that has to be kept in mind is the fact that fundamentally, they're doing nothing special at Nissan. Or stated otherwise: They are doing nothing that other vehicle manufacturers aren't doing. A big difference, however, is that they are more methodically on point than other manufacturers seem to be. For example, reducing the number of suppliers is something that competitive manufacturers have done, but some manufacturers are still talking more than doing, and that would not be acceptable when the initial Nissan Revival Plan called for halving the number.

There is nothing magical or even unusual about using platforms for a number of vehicles, yet at Nissan, the vehicles that are put on top of those platforms tend to be far more different and distinctive from one to the other than is the case at other builders (e.g., the full-size Titan pickup and the Xterra SUV share a frame). And plans call for more variations on platforms going forward, not only Nissan-to-Nissan vehicles, or Nissan-to-Infiniti vehicles, but Nissan-to-Renault vehicles, as well. Combined, Nissan and Renault have global sales of approximately 5.7-million vehicles per year, so there is a good opportunity to share (the B-platform underlying the Versa is also the basis of the Renault Clio III, Renault/Dacia Logan, Renault Modus ... and the Nissan March, Micra, Cube, Note, Tiida, Tiida Latio....) to an extent greater than has already been accomplished, although a stated objective of the alliance between Renault and Nissan is to retain distinct differences between the two organizations.

So what's the difference between what Nissan is accomplishing and all of the rest? Perhaps it is in the doing.

R-E-S-P-E-C-T

One of the ways that Carlos Ghosn is evidently an executive of a different sort is manifest in something that is perhaps trivial but telling. While execs of varying levels at companies may refer to "Rick," "Dieter," or "Bill," invariably Nissan people refer to "Mr. Ghosn" in public and private statements. Clearly the man is held in sufficient esteem such that the title precedes his surname. It is almost analogous to the way that people refer to a physician as "doctor" even if that person is younger or familiar. It is an acknowledgement of respect. Those who use the given names aren't disrespecting Wagoner, Zetsche or Ford, but it seems as though the Nissan culture is one wherein Ghosn--Mr. Ghosn--is a man apart.

EXECUTION IS (ALMOST) EVERYTHING. (COMPETITIVE PRODUCT COUNTS, TOO)

One of the best ways to learn about how Carlos Ghosn does what he does, and how he's accomplished what he's managed, is to read the book that he wrote about himself (with the assistance of Philippe Ries, and translator John Cullen), Shift: Inside Nissan's Historic Revival (Currency/Doubleday; $29.95). While Ghosn sets the stage by providing background (born in Brazil--"I've always considered Brazil the country of the future"--to Lebanese parents; schooling in France at Ecole Polytechnique and Ecole des Mines de Paris), there isn't too much of the prefatory material before he gets to the point of why people are interested in him--his career--first the 18 years at Michelin (in France, Brazil, and the U.S.), then Renault, which he joined in 1996, before being moved to Nissan in 1999. It seems that his education in engineering and his work in production operations have contributed to a bias for action that he evinces: "execution is everything in our business," he states. It is also clear that he is a person who plans carefully and continues to work his plan: while it almost goes without saying that there are multiple models built within a given Nissan plant, with Ghosn, this goes back to an experience at Michelin, when the tire manufacturer was dealing with a financially ailing tire company it financially controlled and didn't want to abandon: Ghosn came up with a plan whereby there would be "cross-manufacturing," which he defines as "utilizing the same production line for the manufacture of products sold under two or more different brands." As in Nissan and Infiniti (and, to a lesser extent, Renault, as the two companies have cross manufacturing in some facilities, including the Cuernavaca and Aquascalientes plants in Mexico).

One of the important points that comes out of Ghosn's experience is the importance of other people to the success of an organization. While Ghosn himself may be the focal point for the transformation of Nissan, he acknowledges, "I started at Michelin as a simple engineer, a native of Brazil without French citizenship at the time. Today, I'm the chief executive officer of Nissan. I'm not in this position because I graduated from Polytechnique or because I'm a first-rate engineer. I'm here because I have the ability to gather a group of people around me and get certain things done. Whatever talent I have for managing people has been more helpful to me than my formal education." He does caution, however, that a CEO "should avoid entourages like the plague, as these have a tendency to limit his view and to offer embellished versions of any given situation." Ghosn is a realist. He states: "My notion is that you start from facts and move toward theory, not vice versa."

Ghosn makes a number of points in the book that are well worth considering. Like "A carmaker's ability to compete is founded primarily on innovation." And "The question of a carmaker's future can be posed in relatively simple terms: Does it have both a competitive product and the capacity to keep it competitive--yes or no? If the answer is yes, that carmarker is one of those that has a future. If the answer is no, whatever its size, whatever alliances it's been able to form, that carmaker is doomed." And pointedly to the case of what he and the people at Nissan have done: "there's no such thing as a hopeless case."

VERSATILE POWER

What do drivers really want from a powertrain? That was a question that Tetsuya Takahashi, director, Vehicle Engineering, Nissan Technical Center North America, says had a strong effect on the development of the new 1.8-liter, four-cylinder MR18DE engine that's being used in the '07 Versa. Simply put, he says drivers for the Versa want "smooth acceleration and good real world fuel economy."

Key to achieving these goals are low friction and high thermal efficiency, so to achieve them, Nissan pulled out all the stops. For example, to ensure circular bores are produced, the aluminum cylinder block is bored with a dummy cylinder head torqued to the proper specs in place. "This dramatically reduces ring tension, which reduces friction by 30%," says Takahashi, who explains that "bore deformation is reduced 70%" through use of this process. He adds that to reduce friction even more, the camshaft lobe and bearing surface, and crankshaft journals and pins are polished to a mirror finish through the use of "super-micro" grinding particles. "The surfaces are three times smoother than before," says Takahashi, who notes the average roughness measurement, or Ra, is now 0.02.

The cylinder head has a thin-wall combustion chamber design, and the water jacket has been expanded to reduce knock by specifying M12 long-reach spark plugs. An equal-length runner plastic intake manifold reduces the half-order sound associated with the notorious four-cylinder "boom" while emphasizing more pleasant basic order sounds. It is fitted with a DC motor-driven tumble control valve that works with the barrel-shaped piston top to induce tumble and promote faster combustion. "We worked to increase combustion velocity by improving the tumble and squishing motions," says Takahashi, which enhances the motion of the air-fuel mixture and promotes faster combustion. The result is an engine that produces an estimated 120 hp @ 6,000 rpm, more than 125 lb-ft @ 4,800 rpm, and generates 90% of its torque peak from 2,400 rpm.

The engine mates to a six-speed manual, a four-speed automatic, or a Jatco (www.jatco.co.lp) continuously variable transmission (CVT). Nissan plans to sell one million CVT-equipped vehicles worldwide by 2007, and the Versa and its siblings are a large part of that number. Takahashi claims that "one million vehicles with CVTs have the same impact on C[O.sub.2] reduction as 200,000 hybrids." They're also much less expensive. Jatco improved the shift response of its JF009E transmission 30% by fitting a new high-pressure hydraulic pump and controls. The combination reacts more quickly, but pulls back on clamping force at full lockup to reduce pulley overshoot. "The target and actual rations are much closer than before," claims Takahashi. The result is quicker acceleration and a projected combined mileage rating of 38 mpg, some 4 mpg greater than with the electronically controlled four-speed automatic.

IT TAKES A COOL HAND

According to Robert Sump, v.p. Component Engineering, Nissan Technical Center North America, Strother Martin's famous scene from Cool Hand Luke just about sums up the problems some auto companies face: "Now what we have here is a failure to communicate. Some men you just can't reach. So you get what we had here last week." But Sump says the top-down view of the captain of the Southern road prison is not conducive to creating a successful organization.

"Nissan really expects its upper managers to take a leadership role--to lead the people, remove obstacles, and gather the resources that are necessary to do the job. I only get involved when conflicts in the system arise," he says. Other companies, he contends, take more of the chain gang boss' view and try to dictate from above without full knowledge of what's necessary, and without trusting their employees to take care of the day-to-day concerns. This frees him to take care of the larger issues, which includes clearly articulating what is needed and avoiding unnecessary communication. "Doing that makes it a lot easier to manage a project through the organization."

Suppliers new to Nissan often find themselves in stunned disbelief when Sump asks them what Nissan isn't doing that would make things more efficient, or what Nissan could, from their perspective, be doing better. "We strive for transparency," he says. "Both of us have to understand that it's best to ask, and to understand that there are times when one or the other can't do what's been asked of them. However, if you make your problems known, rectifying them may be something that can be done later, or on the next program."

Ask Sump about Nissan's breakneck product cycle--the Sentra, Altima, and Maxima will be renewed in the coming year, the Versa will join the lineup, and other new or revised models will join either the Nissan or Infiniti lineups--and you get a blank stare. "A professional race car driver doesn't think he's going all that fast when he's on the track, whereas it's pure panic for someone unfamiliar with what he does. You become accustomed to it, and we hire the people and put in place the things we need in order to not feel the panic."

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One of those things is a clear understanding of the vehicle. Sump tells newly hired engineers as they undergo training in the Nissan Way. "As a company, we focus on what we want this thing to be, then go off and chase the things necessary to support it. Don't chase the pieces to support it first for the simple reason that, when you put it together, you'll discover that it's not what you wanted." The discussion and arguments must take place first so that everyone is marching in the same direction, and the inefficiencies are driven out of the process. "Frankly, we don't start until we know what we want the product to be, and avoid the situation where you are forced to take things out because the vehicle now costs too much. At Nissan, those decisions happen up front."

Of course, no process and no organization is perfect, and Nissan is no exception. The quality concerns that arose the last time it revamped its product line are proof of that. Yet Sump is unconcerned that 2006-2007 will see a repeat of those mistakes. "There are two types of problems that can occur. One is a fundamental issue that is usually something that could have been found and corrected earlier in the program. The other is a change that took place after things were set. Getting to the solution starts with determining which of the two it is." After that determination is made, he says, the next step is to discover what went wrong, and devise a solution. Only after a robust solution is decided upon do the changes get fed back into the system globally in Nissan's case and incorporated into the next project. Says Sump: "Failure to communicate is not an option."

LOOKING @ THE 2007 NISSAN VERSA

Nissan will be entering the entry-level, sub-$14,000 segment in the U.S. with the '07 Versa (hatch and sedan configurations are available). While many vehicle manufacturers claim that they can't make money on small cars, Nissan plans to. This undoubtedly has something to do with the fact that outside the U.S. the Versa is known as either the Tiida (hatchback) or Tiida Latio (sedan), and it shares its underpinnings with the Nissan March, Cube, and Note, as well as Renault's Clio III, Modus, and the Dacia/Renault Logan. Although this is a compact car, adjustments were made to take the tastes and needs of the U.S. buyer into account: The front seats are nearly as wide as a Maxima's, soft-touch materials are used liberally for interior trim parts, and the available equipment list includes a Blue-tooth hands-free phone system, satellite radio, a Rockford Fosgate-powered subwoofer, and an Intelligent Key entry system. It features:

* 1.8-liter inline four-cylinder with estimated output of 120 hp @ 6,000 rpm, and +125 lb-ft @ 4,800 rpm.

* A choice of six-speed manual, four-speed electronically controlled automatic, or Nissan Xtronic CVT

* The suspension is independent strut/coil springs in front, and a torsion beam in back with an anti-roll bar at each end.

* Electric power steering joins power-assisted front disc/rear drum brakes with available ABS, Electronic Brake force Distribution (EBD) and Brake Assist (BA). The tires are 185/65HR15 with six-spoke alloy wheels available as an option.

* Interior room comes courtesy of a 102.4-in. wheelbase, 66.7-in. width, and 60.4-in. height. The hatchback is 169.1-in. long, while the sedan is 175.9-in. overall.

* Headroom is 40.6-in. in front/38.3-in. (hatchback), 37.9-in. (sedan) in the rear. Legroom is 41.4-in. front/38-in. rear. Interior volume measures 94.4 f[t.sup.3] for the hatchback and 93.9 f[t.sup.3] for the sedan.

JOINT CUSTODY 

The number of common platforms shared between Renault and Nissan will increase as each renews its product lineup, and bring their respective model changeovers into phase. The short-term target is for the two companies to share a total of 10 platforms by 2010. Currently, two platforms--those in the B and C segments--are similar. The basic underbody structure is common, as are the assembly hard points. The upper body is unique in most cases, and each platform supports a number of vehicles. Safety testing is shared between Renault and Nissan facilities, and conducted to common standards and targets.

B Platform:

Nissan: March, Cube, Micra, Tiida (Versa), Tiida Latio (Versa sedan), Note

Renault: Modus, Dacia/Renault Logan, Clio III

C Platform:

Nissan: Lafesta, Serena, Sentra

Renault: Megane II

COMMON POWERTRAINS

As you might expect, common platforms breeds common powertrains, and the amount of shared underhood componentry is accelerating apace. Further cooperation is expected in the future, though it is unclear whether the two will join forces to design the next generation V6 together. One thing is almost certain, however. It is highly unlikely that Renault will ever make use of Nissan's VK V8 engine family.

Borrowed from Nissan:

VQ 35 3.5-liter V6

4wd truck rear differential

ZD30 3.0-liter diesel

Borrowed from Renault:

JH160 manual transmission

JR200 manual transmission

K9K 1.5-liter diesel

F9Q 1.9-liter diesel

Common:

HR15DE 1.5-liter

MR20DE 2.0-liter

MR18DE 1.8-liter

M9R 2.0-liter diesel

MT1 six-speed manual gearbox

PRODUCT DEVELOPMENT AGILITY

The age-old adage lives on: Fresh, exciting product leads to higher margins and better returns. Within the past five years, Nissan has taken that message to heart and transformed its product development function to become more agile and responsive to the ever-changing marketplace. Within what many would characterize as a short time horizon, the automaker has revamped its Sentra, Altima and Maxima sedans, entered into the hypercompetitive full-size truck and SUV market with Titan and Armada, introduced the Murano crossover utility vehicle (CUV), developed a completely new Quest minivan, and refreshed its Pathfinder and Xterra SUVs. And that's just at the Nissan brand. Its sister luxury marque, Infiniti, has gone through its own metamorphosis, with introduction of the highly-acclaimed G35 coupe and sedan, the Q45 and M sedans (less well received than the G35s), as well as the FX crossover and the QX56 luxo SUV.

This progress has kept Jack Collins, Nissan North America's vice president of product planning, just a little busy racking up frequent flier miles attending meetings in Japan, California and the Detroit suburb of Farmington Hills (where Nissan N.A. has its technical center). Collins and his team are currently working on plans for Nissan's model range through 2010, with the final details of the plan to be hammered out in late-December. They have a number of unexpected challenges to weigh: higher fuel prices, sagging SUV sales, increased demand for small cars, and whether these factors are momentary blips in the psyche of U.S. buyers or something more fundamental.

Nissan has had the uncanny knack of timing product launches at ideal times. Just when the truck market was running along at a brisk clip, the Titan hit the market. Likewise, the Murano sent shockwaves through the market, with some pondering just what it was, given its unusual configuration. It has turned out to be a success for the brand, as has the new Pathfinder SUV. There have been a few duds, however, including the Nissan Armada and the previously mentioned Quest minivan. Now come the cars. Perfect timing again? The first salvo in the car strategy will be the new Versa subcompact, which goes on sale in summer 2006. Based on the B-segment vehicle platform developed jointly with French parent Renault, Collins admits the Versa (which is called the "Tiida" in other international markets) was never intended to arrive in the land of large pickups and SUVs, but the product strategy team reversed that decision 18-months ago, when they noticed small cars were gaining favor again. While Versa volumes will be relatively modest--Collins says the new car will sell at a pace below the Sentra's 100,000-unit annual rate--the decision to add the U.S. market to the plan was made easier thanks to low development costs, the majority of which had already been absorbed by other markets. "Sometimes additional incremental volume can boost the profitability of the program and that's what happened with the Versa," says Collins. Up next on the car front are vehicles developed on the joint Renault-Nissan C-segment platform, which includes the Sentra.

While vehicle platforms may be shared between the French and Japanese companies, Collins says they do not work together on vehicle planning and development. The decisions on which joint platforms and components will be shared between the siblings are made by a separate alliance board. "The decision on which platform or engine or what not to share with Renault is made through a separate process," he says. "Use and application of that is planned and managed by the respective company." This flexibility allows Collins and his team to maintain product styling differentiation from their French counterparts, while providing Nissan with the ability to tailor its development to the unique characteristics of Japanese and U.S. consumers. Collins and his team are now focused on improving their ability to respond quickly to market changes. While the Versa's development time stands out as quick, he acknowledges significant changes to vehicle plans still take years. "We are reducing our time to market within the planning cycle. The basic product plan changes--stop the big one and add the small one--those still need to be made several years in advance," he says. The challenge will be for Nissan to maintain its sales growth, while keeping its products and image fresh.

IMAGE IS EVERYTHING

While the product plan may be moving along at a rapid pace, Nissan executives have to focus on keeping the brand's image fresh and relevant. Which begs the question: Just what does Nissan stand for in the sea of auto brands that has infiltrated the auto market? Put this question to any of Nissan's top executives, from design to marketing, and you'll get the same message: "bold and thoughtful." In other words: design vehicles that break the mold, but don't go over the edge, while at the same time include features that surprise and delight buyers. What about quality? According to Mark McNabb, former vice president and general manager of the Nissan division in North America, quality has become an accepted requirement in the marketplace and may no longer be a differentiator, although you wouldn't know it by looking at Nissan's standing in the 2005 J.D. Power and Associates Initial Quality Study, where the brand fell below the industry average of 118 problems per 100 vehicles (Nissan's result was 120 problems per 100 vehicles), behind such nameplates as Jeep, Mercury, GMC and Buick. For a brand that wants to take on the likes of Toyota and Honda, both perennial quality leaders, it must gain ground on the quality front. McNabb blamed the falloff in quality as a result of Nissan's aggressive plan to launch three new products at its Canton, MS, assembly plant within 36 months. The fast ramp-up created enormous problems in terms of overall quality, forcing Nissan CEO Ghosn to transfer 200 engineers and technicians to Canton to fix the problems. "We paid a little bit of a price for that," said McNabb.

Nissan is pulling out all the stops to make sure its future products don't stumble out of the gate. Its next-generation Sentra was delayed a full year in order to improve the exterior design, which scored poorly in various consumer focus groups. According to Jed Connelly, the company's senior vice president, Sales and Marketing, Nissan could not risk introducing a vehicle that "scored like a 'B'" with customers, especially since it has to remain in the market for up to five years. "We are not a 'B' company anymore. We have to deliver to a higher standard," Connelly admits. Besides, they don't want to make the same mistake twice, like introducing a minivan (e.g., the Quest) with an interior that failed to meet even modest customer demands. Connelly claims the Quest was a grade-A design, but a grade-B execution. "I think the problem with the Quest was the interior fit-and-finish. We're going to re-do the interior and get it right," he says. The refreshed Quest is scheduled to debut at the Chicago Auto Show in February 2006. Getting the Quest, Versa, as well as the redesigned Altima, Maxima and Sentra just right will be critical if Nissan is going to shift into a higher gear.

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"DESIGN," HE SAID

Perhaps the way that Nissan has distinguished itself--certainly in the U.S. market--more than any other way is through the design of its products. Bruce Campbell, vice president, Design, Nissan Design America, acknowledges that after the alliance, there was an admission that the company's identity was not well defined. People might have known of, say, the Maxima, but when asked what company produced it ... well, that wasn't entirely clear. So, Campbell explains, "There was definitely an effort to create an identity through design."

When he describes what they are trying to accomplish when they set about to design a car or truck, he is emphatic about the use of the word design as opposed to styling. Campbell says, "Styling for me has lots of baggage"; he maintains that design is fundamental to the creation of products, not simply decorative aspects thereof. He suggests that one of the problems with "stylists" versus "designers" is that there is a certain polarization that can occur vis-a-vis those who do other types of work in vehicle creation, such as the engineers. What Campbell wants is greater inclusion, greater involvement, among the functions. "A true designer will expose a lot of questions rather than make assumptions," he says, and explains that when they initiate a program, they gather people from various disciplines so as to get a better understanding of potentials and possibilities. It's not a Them-vs.-Us mindset. Rather, there is inclusion.

As for the vehicles that Nissan designers work toward creating, he uses the terms "simple, clean, clear" to describe what they're trying to achieve. This clarity, he believes, is something that will allow people to recognize a Nissan. He cites, for example, the 350Z. "You can draw it in a few lines. It's iconic. Simple. Memorable." And while, say, the Titan pickup is a vastly different vehicle, it, too, has a certain simplicity that definitely sets it apart from an F150 or a Ram.

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Nissan Design America has two sites in the U.S.: San Diego, where Campbell is based, and Farmington Hills, Michigan. Historically, the designers in San Diego, Campbell says, would do the work "from concept to design freeze," then there would be a transition to the Farmington Hills studio, which would "handle the production aspect." He says now, however, that they are mixing it up, so that both studios will have the opportunity to do complete development. If nothing else, it will keep the design teams fresh.

OPERATIONAL IMPROVEMENTS

Speaking of the 2003 launch of the Nissan Canton Plant, where the company produces the Quest, Titan, Armada, Altima, Infiniti QX56, and the subsequent quality problems, Daniel A. Gaudette, senior vp, North American Manufacturing and Quality Assurance, admits, "What we did was unparalleled in the industry. It was something not too many folks would do. I'm not sure we'd do it again." There was the deployment of 200 specialists and engineers in the plant and to some of the suppliers. Among the changes that Gaudette cites are things from painting areas of the plant floor and improving the lighting so that any visible issues can be more readily seen to changing the surfaces of the test track to catch active issues (e.g., squeaks, buzzes or rattles). They've looked at assembly processes, made modifications and are changing manual assembly tasks so that the workers can do their tasks within a "strike zone," or between the knees and the shoulders, so as to make the job easier, and consequently performed with better quality. They've enhanced training. "The whole process is much more mature than it was three years ago." Gaudette says. And the quality from the Canton plant has improved. Clearly this is a case of taking serious countermeasures and performing overall process improvement.

The Nissan approach has long been to crossload products into plants. They are improving this capability through the use of flexible tooling and equipment. Gaudette references the Smyrna, TN, plant: "We just launched the Pathfinder, Frontier and Xterra there. They're all on a common body shop line--and the size of that line is about a third of what it was for the truck that we took out." He says that as products are being developed there is a focus on having common pickup points for vehicles so that fixtures and tools are changed from vehicle-to-vehicle, not arms or equipment. Not only does this improve plant efficiency, but there is the added benefit of reduced capital expenses.

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As he looks forward to where they think they'll be able to make the biggest improvements, he says, "I think it's in logistics." He explains that different companies have different ways of handling parts inventory. For example, Gaudette says, at Toyota plants they are doing more kitting of parts such that instead of having part-runs on a regular basis, there are skids with the entire array of parts required for a shift. That is contrasted with an approach at Honda plants, where they have, he says, virtually no parts on the line but a huge warehouse where there is on-going parts picking. Gaudette is looking for a balance.

What's more, he's looking well beyond the likes of Toyota and Honda for ideas about logistics, "We've visited with Wal-Mart," he notes. "One of the things we're looking to do is controlling inventories through RFID tags," Gaudette says.

By Gary S. Vasilash, Editor-in-Chief

Christopher A. Sawyer, Executive Editor

Kevin M. Kelly, Senlor Editor