http://apps.detnews.com/apps/multimedia/pl...dex.php?id=1189

What do you think?

Get Smart or Get Passed Up. United Against Working needs to wake up.

Can you imagine the cost savings just in shipping from not having to ship the various vendor supplied components in for final assembly?

We began the transition to a Japanese style lean manufacturing model about two years ago. It took a radical change in how we think, but the results have been stunning - production has doubled. Labor roles changed and how we managed changed, but no one lost their jobs and we've been able to ride the current economic downturn without laying off parts of our workforce and have even picked up market share.

Maybe not as great as you think. This might be a revolutionary concept for the automotive companies but it is hardly without precedent, and not always a winner. It looks very cool and has some major advantages but the advantages are not always so clear cut, and there are distinct downsides.

By way of example, consider making sodium silicate solutions, aka "water glass", for the paper industry. The two major players are Occidental Chemical and Philadelphia Quartz (PQ). They have distinct and total opposite approaches to the manufacturing process. Oxychem places plants right next door to a paper mill and literally pipes the stuff directly into the customer. They run small footprint operations and spend a lot of money simply trucking glass-quality sand into their plants. The game for them becomes one of trying to keep their distribution costs low and trying to keep up on the maintenance and personnel costs of running lots of very small plants.

In comparison, PQ runs a small number of very large glass melting furnaces around the country. They have a comparitively small distribution problem on the front end and can take advantage of the economies of scale in terms of higher quality product and lower production and personnel costs by running a few large sites. Outages are also less of a factor. Comparatively speaking, distribution on the back end is different (tankers instead of dump trucks), and they can take advantage of rail shipping.

When you look at it from this perspective, there's no clear winner here. In reality between the two competitors, as far as I can tell (I'm not an insider in the chemical glass business), I can't distinguish one as vastly superior to the other.

The advantages of a separate larger facility are:
1. Economies of scale.
2. Potentially lower costs to import raws.
3. Larger customer base per plant. If the customer has production/sales troubles, you can spread the hit over multiple customers.
5. Lots of other logistics issues. For instance, making maintenance crews "mobile" and/or retaining/training high level skilled maintenance crews is much more problematic. Similar issues with technical (engineering) and QC arise. Management is always a headache because so much has to be done "remotely" or via road time. This all goes away with the "everyone under one roof" concept.

The disadvantages are:
1. Need for inventories, warehousing, distribution, shipping to customer.
2. Longer lines of communication/logistics.
3. Packaging costs.
4. The finished product may be larger in size or increases in mass relative to the raws such that it costs more to ship than to make on site.

That does look pretty cool. In resembles a Honda plant except for the integration of the suppliers at the same site. They did not say how many people work in that one location. There has to be a large enough work force around the plant within a decent driving distance. What may work in Brazil may not work in places like the US. I wonder if they also built a town for housing all the workers?

Also have to wonder, this is rural Brazil, do they have the OSHA, ANSI, NFPA, NEC, EPA, Homeland Security and myriad of other American Government regualtions to abide by at this plant.

Brazil is perhaps a bit more advanced than you give them credit for. If things continue to go downhill in the U.S. in the direction they are going (developing ourselves into a clone of a Western European socialist state complete with high unemployment, high taxes, nanny-state control over almost everything, and almost nonexistant economic growth), Brazil represents a far better climate for economic opportunity. Back in 2006 they were one of the 4 fastest growing economies in the world (the so called "BRIC" countries). They got themselves mostly off the oil crack pipe years ago. They keep trying to find ways to REDUCE repressive taxation. Working environments are relatively safe in spite of a lack of all the acronyms you rattled off. If anything, the Brazilian culture does take some getting used to. I've had many business interactions with Brazilians, and it was very clear that culturally the "divide" is not that large, other than learning Portugese. I've even had a job interview (and probably a job if I waited around for them) with a large Brazilian company. Overall I was very impressed. Here is the web site of their corporate history which is very interesting because they were also tightly intertwined with the government's history for many years:
http://www.votorantim.com.br/ENU/O_Grupo_V...antim/Historia/

Keep in mind that there is some dirt out there about them. They are Brazil's largest corporation. As such, they are like Exxon...they are constantly taking arrows for various perceived issues. Also, Brazil is not an anti-trust government.