GM\'s Current Operations Equipment Impacting

¶ … GM's current operations equipment impacting their capacity planning, capacity flexibility, capacity requirement, and capacity utilization?

In recent years, to offset increased costs due to retired employee's pensions and health care costs and to respond to reduced consumer demand, GM has sought to streamline its equipment and manufacturing operations. "GM's next step in its North American turnaround plan addresses its ongoing capacity utilization, a major component of reducing structural cost. A total of nine assembly, stamping and power-train facilities and three Service and Parts Operations facilities will cease operations" within the next year ("GM North America to Undergo Major Capacity Reduction," 2007, Buzz Trader). These facilities were no longer necessary to meet production needs, or the capacity needs that they did meet could be equally well served in other locations. By consolidating equipment facilities, it was hoped GM's future labor costs could be reduced.

In 2005, General Motors began a major restructuring effort. It announced it planned to eliminate 30,000 jobs, or 9% of GM's international workforce, and close all or part of a dozen of its factories by 2008. GM had been losing market share over the past several years and was forced to reduce capacity equipment accordingly. By "reducing the company's capacity from about 5.2 million units down to 4.2 million units by the end of 2008," this would make operations "commensurate where the sales are today, which are in the mid-4 million area" ("GM Announces Job Cuts, Plant Closures," 2005, Online News Hour).

Although capacity utilization and capacity will be reduced, the company hopes that freeing up its resources from unproductive plants and making its equipment and manufacturing capacity more in line with the capacity requirement of consumer demand, the company will become more profitable. "The additional actions will reduce GMNA assembly capacity by about 1 million units by the end of 2008" ("GM Announces Job Cuts, Plant Closures," 2005, Online News Hour). Also, with what remains of its current manufacturing operations, GM hopes that increased flexibility or "agile manufacturing" will make these operations better able to manufacture GM products with fewer labor costs, more quickly (Vasilash, 2001).

Operational efficiency and flexibility in all GM production equipment is maximized by having "everything prepared ahead of time" in a "fully capable tool room, where tools are preset and I.D. And offset information are loaded into a memory chip that accompanies the tool before, during and after its use so the part is cut right the first time" instead of a "cut-and-adjust approach that has long been common to production operations (Vasilash, 2001). Employee training is also critical in maximizing capacity of all available resources. Employees are taken "to the machine tool builder to run machines to build prototype parts," to learn "about failure mode affects, how to detect when a tool was wearing out, building control and operating plans" (Vasilash, 2001).

Finally, GM is also entering into an alliance with the more financially stable Renault-Nissan corporation to better deploy its existing idle manufacturing capacity and increase its revenue from these facilities ("