Nissan Accelerates Assault on U.S. Market
Steve Fisher runs his fingers along the paint jobs of the Altima sedans and Xterra sport utility vehicles that hum past him on the assembly line at the Nissan Motor Co. factory here. He spends an average of 66 seconds on each vehicle as it passes by--up to 465 times a day--checking switches, panel fits and connections under the hood.
Occasionally a screw doesn’t line up, a hose fastener is broken or there’s a chip in the paint. But Fisher, who has worked here for 11 years, rarely finds defects--perhaps no surprise, because this plant has been ranked the most efficient car factory in the U.S. seven years in a row.
Exhaustive quality exercises, scores of robots and the industry’s first fully automated paint shop are part of the arsenal behind the No. 3 Japanese auto maker’s forthcoming assault on the U.S. market.
Nissan already has announced more upcoming new models than any other auto maker except global leader General Motors Corp.: the much-anticipated Z sports car; the Murano “crossover,” a blend of car and sport utility vehicle; the Quest minivan replacement; a full-size pickup truck; and a full-size SUV.
On the luxury Infiniti side, Nissan has the G35 coupe and M45 sedan, the FX45 crossover and an upscale version of the full-size SUV.
That’s nine new vehicles that will hit the U.S. market between now and mid-2004.
With its recent new models, the company has been “hitting home runs, with the products very well received,” said Jeff Schuster, an auto industry analyst with J.D. Power & Associates in Detroit.
Analysts praise Nissan for its efficiency at Smyrna and around the world.
“When you hear platform sharing, ‘lean’ manufacturing and flexible tooling such as Nissan is doing ... it ensures things like quality,” said Catherine Madden, an auto manufacturing specialist with forecaster DRI-WEFA.
But the news on the quality front is not all rosy for Nissan. In J.D. Power’s annual Initial Quality Satisfaction survey--a ranking of problems reported during the first 90 days of ownership--released last month, Nissan fell from No. 3 to a tie for No. 6 as domestic auto makers gained ground.
“We’ve always focused on the long-term quality, durability and reliability,” Bill Kirrane, general manager for the company’s Nissan division, said in an interview.
“There are a lot of complaints such as wind noise, which are more design-related than things that might take the car out of service,” he said, referring to the J.D. Power findings. “But we’ll look at things we have to do.”
Industry experts agree that productivity and success in the market are separate issues and that the buying public pays little attention to benchmarks such as factory efficiency. Nonetheless, after years of financial decline and not getting its products right, Nissan is back in the U.S. market with a vengeance.
“They’ve brought excitement back to their product lineup, which has jump-started everything else,” Schuster of J.D. Power said. “They haven’t had a miss yet in the new products they’ve launched under the revival plan.”
Three-Year Plan Is
Realized in Two Years
To fuel this product assault on America, Nissan is adding higher-margin Maxima sedan production to Tennessee and tripling production at its engine plant about an hour from Smyrna. The company also will assemble the new minivan, large pickup and SUVs at the sprawling factory it is building in Mississippi, drawing largely on lessons learned here about quality and productivity.
“The layout of Nissan’s plant areas allows a person to do the most work in the least space,” said Ron Harbour, president of Harbour Associates, a Detroit-area research firm that publishes a closely watched report on auto factory efficiency. “They minimize excessive walking, put tools close to workers. The safety is right, the ergonomics are there, the parts are easy to put on, they minimize fasteners. The byproduct is pretty high quality and pretty high productivity.”
That’s good news for a company that was teetering on bankruptcy just a few years ago. Before French auto maker Renault bought a controlling stake in Nissan, the Japanese manufacturer lost money in seven of eight years.
Nissan President Carlos Ghosn, sent to Japan by Renault to turn around the company, devised a revival plan calling for heavy cost reductions, plant closures, an overhaul of product design and the product lineup and additional manufacturing efficiencies.
Nissan realized the main goals of the three-year plan in just two years: to get back in the black in the first year, reach 4.5% operating profit margin and halve the $13 billion in automotive debt.
Last month, less than three years after Ghosn took over, Nissan reported a record net profit in fiscal 2001, ended March 31, of $2.96 billion.
Throughout Nissan’s ups and downs, the Smyrna plant, just outside Nashville, has been remarkably consistent in turning out cars and trucks more efficiently than any other factory in the country.
The Harbour report ranked Nissan in 2000 as the most efficient manufacturer for the seventh year in a row, reducing assembly hours per vehicle by 7.1% to 17.37. Its Japanese rivals Honda Motor Co. and Toyota Motor Corp. ranked second and third, followed by the joint-venture plant that Toyota and GM operate in Fremont, Calif., and Mitsubishi Motors Corp.
If the Detroit-area Big Three of GM, Ford Motor Co. and DaimlerChrysler’s Chrysler Group were as efficient as the Smyrna plant, they could shed 95,138 workers, the report said.
Having achieved his goals a year early, Ghosn is pushing the “Nissan 180” plan: to sell an additional 1 million or more cars and trucks each year worldwide, reach 8% operating profit margin and bring automotive debt to zero.
Nissan’s U.S. plants are a big part of the strategy. The Smyrna factory produced Frontier pickups at a rate of 120,000 a year when it opened in 1983; last year it rolled out 400,000 Altimas, Frontiers and Xterras. With the Maxima coming in January, Smyrna production will increase again, to 500,000 vehicles.
The new Canton, Miss., factory will add 250,000 trucks. Production at Nissan’s engine plant in Decherd, Tenn., will be tripled to 750,000, and the factory will become the sole engine supplier to the company’s two U.S. assembly plants.
The Altima is a key to Nissan’s growth. It used to be an underpowered and undersized mid-size sedan, available with only a four-cylinder engine. But the Smyrna-built model launched earlier this year has a sleek, high-tech look, comes with an optional six-cylinder engine rated at 240 horsepower and boasts a rear-seat area with more legroom than any other model in its class.
The Smyrna plant can be easily adapted to produce more vehicles that are in demand, a point that is crucial as Nissan aims the Altima at the segment leaders: Honda’s Accord and Toyota’s Camry.
What sets Smyrna apart, industry experts say, is the level of automation in assembly and painting and the continuous quest to make things better and quicker.
In the fully automated paint shop, some robots open and close doors while others, resembling elephant trunks, snake over the bodies, spraying primer and topcoat.
Paint areas are extremely sensitive to contamination; the slightest condensation, or even vapor from workers’ deodorant, can cause cratering. But automation and continual improvements have resulted in a consistent 98% defect-free first run in Altima painting, the company says.
Plant workers designed and built their own “line-side limos,” or platforms that move alongside cars on the assembly lines at certain locations, carrying tools and workers at adjustable heights to make access to the vehicles easier.
Nissan also follows its own version of “just-in-time” manufacturing, a hallmark of Toyota’s lean production system. Three years ago, the Smyrna plant kept a five-day inventory of Xterra parts, but “now it’s about 2.5 days, and for the Altima, we’ve gotten it down to 1.6 days,” said Randy Knight, the plant’s stamping manager.
Efficiency Adds to
the Bottom Line
John Reagan, department manager for Xterra body assembly, gives another example of how the plant’s performance is improving.
The Xterra originally was scheduled to be produced at a rate of 17 an hour. But because of the SUV’s popularity, workers made further productivity gains, such as adding conveyor belts and robots, and boosted the rate to 25 units an hour, increasing Xterra production by about 33,000 a year, Reagan said.
Workers even maintain a “Supplier Wall of Shame” on which problems with incoming parts are detailed. In one case, for instance, they determined that a worker at a supplier had used peanut oil to help insert a piece into a receptacle. It “caused a chemical reaction that made the support feet fall off,” said a note on the wall. The problem was brought up with the supplier and corrected.
Reducing the number of defects and the time workers spend on assembly may not have a direct effect on market share, but it adds slowly and surely to Nissan’s bottom line, said Michael Flynn, director of the Office for the Study of Automotive Transportation at the University of Michigan.
“People don’t buy cars because of the efficiency of a factory--people buy them because of the product,” Flynn said. “But efficiency is a very important competitive element. In good times, you make more money; in bad times, you lose less.”
