News from the Firms - Jörg Hofmann

Porsche - A New Plant Arises in Old Buildings

Other car manufacturers try to realize new concepts and 'lean' structures of production in green-field plants. Porsche does it in the existing buildings.

Currently Porsche produces more than 20000 sport cars per annum with a staff of 7000, of which 3300 are employed in the production process. After several years with hefty losses, Porsche succeeded with the 'turn around' in 1995 and ends last financial year with profits of about 50 million DM.

The 'lean' age caught up with Porsche in September 1993, and this with the introduction of a classical serial flow assembly-line with short cycled work into the assembly of motor engines. Before that, stationary assembly had been the only method. With the introduction of the new assembly line the cycle periods were cut significantly and labour intensity was raised by way of commissioning all parts before delivery to the assembly line.

Since then, for Porsche 'lean production' has presented itself as the triumph of the classical serial flow assembly line. This shows up in the new concept which aims at assembling two models, the classic Porsche 'Carerra' (911) and the new 'Boxster', with a number of versions in one and the same line. Before that, different models were assembled in different lines. The second novelty is that, after consulting Japanese organization experts, the fixed 10 minute periods for the transport of the body were replaced by a serial flow, resulting in a 50 per cent cut of the cycle times. In order to facilitate assembling a moving object, the workers are 'moved along' by specific devices.

The consequence of the nex concept is a significant increase in labour intensity. No more extra time is required for moving the body. It has been cautiously estimated that this alone raised the performance of each assembly worker by about 8 per cent. In order to master the differing work contents of special models, a new type of additional 'special model' workers was introduced, to work at the line wherever they may be needed. The radical application of the principle of 'sequence stability' in the assembly and the abolition of the removal of bodies from the line sequence implies many additional restrictions in fixing the sequence of the bodies, due to the high number of versions and the product mix. In this way, flexibility in assembling was clearly reduced.

Even though some working places were ergonomically improved, the increase in labour intensity was of the greatest concern to the workers council and the trade union. Nevertheless, Porsche is bound by the extensive regulations of the regional agreement of IG Metall Nordwürttember-Nordbaden, which yields a right of participation to the work council in fixing cycle times, stuff numbers at the line, the number of stand-ins and regular breaks (5 minutes per hour).

Apart from the new assembly concept logistics were completely reorganized. This was done by constructive reforming from which the corresponding decisions on the supplier structure were derived. The idea is to reduce the number of the suppliers of system components. Thus, for instance, the whole assembly of the axis will be in the hands of one supplier in the future.

The leading principle in assembly is the stability of the sequence. That is, bodies must not be removed from the line, for instance, because of material defects. Simultaneously the principle of 'one piece flow' is to be mastered. This leads to an increase in the precommissioning of parts. The commissioned parts are assigned to the respective body. This should apply, at least, to all parts of great volume. All other parts are supplied by a logistic team equipped with kanban containers. This induces an even stronger division of labour between assembly workers and commission workers.

For work organization in the assembly line, thinking about a concept of flexible employment has just begun. The assembly line is divided in groups with interchangeable staff. There is a potential for increasing 'work content' by letting assembly staff go through all cycles of the group; but this is suppressed by the increased intensity of performance. 'Group work' is reduced to the organization of the kaizen process and to flexible employment. So far there is no concept for training and qualification of multi-skilled workers.

Even other departments (body shop, painting) undergo significant changes. Take, for example, the body shop: the degree of automation was raised by the use of robots. This meant reducing staff by 20 per cent despite an increase in output.

Apart from the technological-organizational changes Porsche has tried, for the last three years, to reorganize personnel management. First the number of levels in the hierarchy was reduced from 6 to 4. Foremen were abolished. Then the plant was divided in cost centres which have to show profits. This leads to stronger conflicts about the question 'make or by'.

Porsche and the Japanese consultants placed great emphasis on introducing kaizen teams. In the meantime, more than 300 team speakers (not leaders) have been trained. Originally the kaizen teams were meant to meet once a week during working hours. But the frequency of team meetings has clearly decreased, and with it the quality of suggestions for improvement. Nevertheless one hour per week remains to be set aside for team work in the planning process. An agreement about 2,85 per cent extra staff for these meetings was reached with the work council.

To sum up, the reorganization of Porsche is an interesting attempt to transform the technology and organization of a 'Fordistic' system, formed by the German model of participation, into a 'Toyota' system. But this new concept for production is not grafted on the old one. Instead there is a dynamic process of adapting new core ideas to existing structures and constellations of power. The process is dynamic because it creates new solutions. One example is the integration of team speakers into the existing structures of participation and training in the IG Metall. Another is the connection between collective codetermination of labour intensity and the kaizen process. At Porsche an agreement was reached that suggested improvements of performance will not shorten the predetermined cycle times for specific tasks. The power of the trade union and the work council guarantees, through negociations and agreements, that the new production concepts will not be wholly disadvantageous for the workers. Keeping the balance, however, requires the unions' active participation in the development of new concepts for production.