GM says the system of sequencing parts into tidy kits for line workers is a game-changer that will boost productivity. And the workers doing the sorting are not GM employees. They're UAW workers employed by an outside supplier and paid about $20 an hour, including benefits, far less than GM's Orion workers.
Both the parts sorting and outsourcing are examples of how GM has rewritten its manufacturing playbook for Orion, a suburban Detroit plant where workers will begin assembling the only U.S.-built subcompact car next month.
Historically, small U.S.-built cars lose money. Small price tags on small cars leave little breathing room for automakers to build them profitably in the United States, where labor costs can run several times that of, say, Mexico.
But GM and the UAW say they've got the formula for making the Sonic profitably in the United States. An Automotive News analysis shows GM will cut roughly $450 in assembly plant labor cost per car -- a savings of nearly 40 percent of the roughly $1,160 in costs it would incur if GM ran it like any other plant. Sonic prices start at $14,495, including shipping.
That will make Orion a laboratory to test cost-saving tactics that could be adopted at other GM plants to drive down manufacturing costs, a key objective of CEO Dan Akerson. In particular, Orion's two-tier wage system looms large this month as GM, Ford Motor Co. and Chrysler Group start negotiations with the UAW on a new four-year contract.
"I think GM is taking a longer view and sees possibilities to set a precedent from this system at Lake Orion," said Sean McAlinden, chief economist at the Center for Automotive Research. And UAW President Bob King "knows that Orion has to pay. This is a huge experiment for the union, too."
