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VOLVO UDDEVALLA A DEAD HORSE OR A CAR DEALER'S DREAM? AN EVALUATION OF THE ECONOMIC PERFORMANCE OF VOLVO'S UNIQUE ASSEMBLY PLANT 1989-1992 Christian Berggren* May 1993

*

Royal Institute of Technology, Departement of Work Science, Stockholm

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SOMMAIRE

1. "YOU HAVE CREATED SOMETHING VERY SPECIAL...." 1.1. Rapid Productivityimprovement 1.2. A quality edge 1.3. Further Uddevalla advantages - tools and logistics 1.4. Stable personnel, healthy environment and low costs for repetitive injuries 1.5. Superior flexibility in changing models 1.6. A dealer's dream: Customized assembly, short delivery times

2. FURTHER CUSTOMIZATION : BUILDING COMPLETELY CUSTOMEREQUIPPED CARS

3. A DISASTROUS MARKET

4. THE POLITICS OF THECLOSURE - AN UNHOLY LABORMANAGEMENT ALLIANCE.

5. THE REAL PROBLEM : A NEW PLANT - OLD CARS RÉFÉRENCES

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1. " YOU HAVE CREATED SOMETHING VERY SPECIAL...." Four years ago, in 1989, Volvo inaugurated a radically new assembly plant in Uddevalla at the Swedish west coast. Boasted the plant manager: "This isn't just new production technology. It is the death of theassembly line" (Business Week, August 28, 1989). The plant design was conspicuously different from standard car plants. Instead of one long line, a multitude of small parallel teams built complete cars. At regular production pace, individual cycle times ranged from 1.5 to 7 hours - a stark contrast to the one-minute standards on the assembly lines. The teams were supported by a partially automatedmaterials handling process that for each car delivered an individual kit of parts and components to the assembly shops. Vocational training and technical information had been redesigned to sustain a new assembly culture, characterized by functional understanding and combined product and process knowledge. New technical aids made assembly work ergonomically vastly superior to traditional forms.This included an ambitious project to develop new hand tools adaptable to different sizes and strengths, as well as tilted assembly, enabling assemblers to work in an upright position for nearly all operations. The plant has been visited by many American academics. In October 1992, when a shutdown decision was imminent, one of them, Wayne Cascio, in the University of Colorado at Denver, wrote toUddevalla's plant manager: "You have created something very special in the Uddevalla plant. Embrace it, cherish it and by all means, find a way to make it economically viable over the long term." Other American observers were less than enthusiastic. A long report in New York Times (July 7, 1991) concluded that the plant was doomed to failure, since "assembly lines are just more efficient". In the samearticle James Womack, at the MIT, asserted that Uddevalla was "a dead horse". In November 1992, Volvo officially announced that Uddevalla would be shut down in 1993 and the Kalmar plant in 1994. (This plant builds the top-of-the-line model, Volvo 960, and represents an earlier stage in Volvo's trajectory of production innovation). As a consequence, all Swedish assembly will be concentrated in themain factory in Gothenburg, where Volvo also has its headquarters, design and engineering departments. After all, were the critics right? Was Uddevalla just a "noble experiment in humanistic manufacturing", as NYT said, an answer to the industrial labor crises of the 1980s, when Swedish manufacturers had so many difficulties in recruiting and keeping production workers, but doomed to failure inthe hard times of the 1990s? The answer is no. In terms of productive performance and commercial potential, the Uddevalla operation was a remarkable success. In October 1992, the plant was thoroughly evaluated against the line assembly plant in Gothenburg. In this comparison Uddevalla emerged as an internal bench-mark for Gothenburg. This may come as a surprise to many readers. Let me first...