Diamond In The Rough

Automotive Industries, June, 2000 by John McCormick

General Motors' new $590 million plant in Poland is a jewel that still needs polish.

History has not been kind to Poland. Over the years the country has been a stomping ground for warring nations from all sides. And some 40 years of communist rule since World War II has left a legacy of outdated industry, growing unemployment, widespread environmental problems and a sub-standard transportation system. Even though democracy was restored in 1989, the government remains inefficient and laden with bureaucracy.

Despite such drawbacks, Poland has become a cornerstone of General Motors' central European manufacturing strategy. Located in Gliwice, in the southern section of the country known as Silesia, is a shining new $590 million assembly plant that ranks as one of the crown jewels of GM's worldwide operations. It's also one of the biggest industrial investments ever in Poland.

Garry Wallace, CFO of GM Poland, explains why the nation holds promise. "This is a country of 39 million people whose prosperity is growing rapidly. The GNP is at 4.1 percent, a high level that's been held for four years. Inflation is 8.6 percent, which is high by U.S. standards, but well down from the 20 percent level it used to be at. We expect it to go down to seven percent and then lower as Poland aligns with the European Union, which it hopes to join in 2003."

In terms of a domestic auto market, Poland ranks sixth among European countries, with 640,000 new vehicles sold last year. "Only 50 percent of families have cars and only 500,000 have more than one car," observes Wallace. He adds that half the cars are over 10 years old and rapidly falling apart. With 22 percent annual market growth since 1995, GM sees a big opportunity for sales, especially with fleets.

Although the Gliwice plant is on a greenfield site near the grim rustbelt town of Katowice, the region is a labor goldmine for GM. That's not just because of low wage rates. An excellent education system coupled with a tradition of expertise in technical industries, including mining, steel and chemicals, meant GM could draw on a highly qualified, stable labor pool. It's not a coincidence that Delphi chose to establish a 4,500-employee technical center in Kracow, some two hours north of Gliwice. For the 3,000 positions at the GM plant, there were more than 50,000 applicants.

"An added advantage is that employees under 30 have grown up outside the communist era, so they are free thinking," says Wallace.

GM's involvement in Poland actually started in the late 1920s, when Chevrolet established a plant in Warsaw. However, GM was absent from the country from 1939 to 1991, when it set up a network of 92 dealers and became the first automaker to offer cars with catalysts and concepts such as roadside assistance and dealer test drives.

In 1994 SKD assembly of the Opel Astra began in Warsaw (capacity 24,000) and two years later construction began at Gliwice. The plant is one of four similar new facilities GM has established around the world -- the others being in China, Thailand and Argentina -- and its design allows for easy future expansion.

Adopting lean manufacturing processes based on Opel's Eisenach production system in Germany, Gliwice is fully integrated and includes on-site stamping. Annual capacity, on three shifts, is 150,000 units.

Last year the plant produced 42,000 units of the Astra Classic, a model designed for the Polish market and for export to neighboring countries such as Hungary. This year the Opel Agila, a new microvan based on the Suzuki Wagon R (which Suzuki builds in Hungary), joins the line in Gliwice. Once the plant is up to speed, the Agila will account for 75 percent of production. About 90 percent of Agila output will be exported.

The workforce has undergone extensive training at plants worldwide including Eisenach and NUMMI in California. Among the unusual features of the Gliwice plant are its `fishbone' body shop layout, which has two sub-assembly lines feeding into the main line, and the T-shaped general assembly building (see Goncalves interview). The plant is also the first in GM to have 100 percent in-line water leak testing.

A scissor conveyor system replaces the traditional power-and-free conveyor. "It is uniquely flexible, is very quiet and can easily alter the work height for different models, which is a big advantage," says Julian Blisset, the general assembly area manager who was hired from Nissan's highly efficient Sunderland plant in Britain. "Bochem has the system, but we're the only one of the greenfields to have it.

With his experience at a top ranked Nissan plant, Blisset has a good perspective on the Gliwice operation. "Lean production methods take time -- you can't just switch them on to make it pay off. But considering the experience base here, our rate of progress from a greenfield site is outstanding."

GM's Gliwice, Poland Plant

Plant completed:       1999
Floor space (sq ft):   1.1 million
Products:              Opel Astra Classic
                       Opel Agila
Total capacity:        150,000
1999 production:       42,000
Total employees:       3,000
Jobs per hour:         27
Working week:          42 hrs.
Body shop
automation rate:       16%
In-house inventory
(line side):           2 hrs.
Average monthly
gross wage:            $420