General Motors (GM) plans to experiment with running auto factories 24-hours a day.
It’s a bold move to become the most efficient auto producer in the world.
Even Toyota (TM) doesn’t run 24-hours, despite the fact that in many other industries 24-7 factories are common.
Given GM’s current overcapacity, this means that some factories will experiment with this new 24-hour operation, while others will be shuttered.
WSJ: The move comes as GM is closing other plants around the country. That means the 23-year-old Kansas City factory, which will add more than 900 jobs, as well as two other GM plants scheduled later for a third shift will become boom towns of sorts as other plants go dark.
What’s shocking is how, traditionally, only operating 69% of the days in a year used to be considered running at 100% capacity.
That’s no accident. The Obama administration auto task force that oversaw GM’s reorganization last spring was startled to learn that the industry standard for plants to be considered at 100% capacity was two shifts working about 250 days a year. In recommending that the government invest about $50 billion in GM, the task force urged the company to strive toward operating at 120% capacity by traditional standards.
Keep in mind that was just two shifts working 250 days a year, which is 500 shifts. Three shifts working 365 days could theoretically create output could be 1,085 shifts. That means that true output potential, from the same factories simply run more intensely could be 120% more than the industry currently imagines.
Yet some in the auto industry question whether 24-hour operation would ever be possible.
But industry manufacturing experts are sceptical, noting that the federal task force had limited automotive experience. “Do those guys understand the business?” asked Ron Harbour, whose Harbour Report is a widely followed analysis of auto-plant efficiency.
But come on, 24-hour operation has to be possible, even if difficult at first. The same goes for working more the 250 days a year.
In the long-run if done well, maximum intensity just makes sense from an efficiency stand point. In the future we’ll probably laugh about two shifts x 250 days a year. If we can fit entire libraries of data inside a mobile phone, or create biologically engineered drugs, running an auto factory 24 hours a day surely must be within reach as well.
Hopefully this GM gamble works out — and hopefully the auto union doesn’t prevent it from becoming the standard.
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