From Russia With Lean

As if Ford and GM didn't have enough problems.  The November 20th issue of Business Week has an article on GAZ, the large Russian auto maker, and specifically how it is enjoying rather spectacular success.  How?

... manufacturing techniques from Toyota Motor Corp. that have tripled assembly-line productivity.  "The factory has changed fundamentally," says depute floor manager Oleg Popov.  "I see a bright future."  At the plant in the city of Nizhny Novgorod, 280 miles east of Moscow, workers in neat blue uniforms proudly show off their Japanese-inspired production methods.  Graphs and electronic displays record the performance of each work team, while photos of the disorganization of a few years ago provide a reminder of how far the factory has come.

Photos of the past are a classic component of an effective 5S program, and tripling productivity is a real result.  Perhaps this will be a case of being lean instead of just looking lean, although the future will provide the real evidence.

GAZ, the Gorky Automotive Plant, has been around for many years.  It cranked out clones of Ford's Model T in 1932 and tanks and trucks during the cold war.  The implosion of the Soviet Union nearly dealt GAZ a death blow, but new foreign-led management brought it back to profitability.  Earnings will jump nearly 30% this year to $450 million on sales of $4.4 billion. 

They are now looking to grow outside of Russia, and are ambitiously targeting exports rising from the current 25% of sales to over 50% of sales by 2013.  To accomplish this they hired Martin Leach, who used to run Ford's European operations.

A big problem has been the design and technology of their vehicles.  If you look at the Volga to the  right, you'll realize why.  However they recently purchased an entire Sebring production line from Chrysler's Sterling Heights, Michigan plant and are in the process of relocating it to Nizhny Novgorod.  GAZ will use that model to replace the Volga and also fuel its expansion overseas.

If they continue to leverage lean better than GM and Ford, we may be witnessing the birth of another automotive powerhouse.

Comments

[Jon Miller]

I'm familiar with the ex-Toyota Japanese consultant working with GAZ. This is not show Lean. Not good news for Detroit.

[Mike Gardner]

I think we will have to consider the effect the return to state control may have on this company. Anything that looks successful is seen as a danger to the Putin-clique controlling the country and is either co-opted or destroyed.

[Mark Warren]

Interesting post, yet naïve about the hurdles that they face on their lean journey. GAZ is only one of numerous factories (trucks, busses, cars and parts) that RusPromAuto owns an interest in. While GAZ may be a showcase there is significant disparity between the levels of lean across plants despite the introduction of lean (sound like Delphi?). RusPromAuto has only been working towards lean about two years and have made significant progress, yet nothing to indicate that the consultants have taught them anything beyond what could be learned by reading a few books from Productivity Press, hardly justifying the seven figure consulting fees. What I observed was 5S, VSM, PDCA boards and a few kaizen showcase projects done around their plant. Before we get carried away with the euphoria of their improvement, a little reality check is in order - $ sales per employee vs. the US or Japanese competitors – in some of their plants the productivity gap can be lower than 10 to 1, not something easily remedied, just ask Toyota.
If you think bringing in newer technology is a solution, just look back at some the billions spent by Ford and GM on state of the art facilities that failed to bring in the promised results. Look at GM’s woes, of all of the US auto makers have had an inside lab to observer Toyota in the form of NUMMI, yet have not been able to leverage this competitive advantage. Of the old “Big Three”, Chrysler has regularly run a distant third for decades, so buying technology from them is a questionable gamble (unless you are just upgrading equipment at scrap metal prices).