Chrysler's $300 Million Overhaul: A Bid to Bridge the Quality Gap with Japanese Rivals

Strategic Insights -

As the $300 million retooling of Chrysler's Sterling Heights assembly plant comes to a close, the automaker showcases its efforts to match the quality and productivity standards of its Japanese competitors, particularly Toyota, Honda, and Nissan. The plant, which was opened to journalists and politicians for inspection, will now produce the Chrysler Cirrus and Dodge Stratus compact cars, aiming to compete in a market dominated by the Toyota Camry, Honda Accord, and Nissan Altima. With prices starting at nearly $18,000, the Cirrus is set to go on sale this month, while the Dodge Stratus will be introduced in January.

Key Takeaways:

  • Chrysler has invested $300 million in retooling its Sterling Heights assembly plant to improve quality and productivity, with a focus on adapting to future models.
  • The plant now features advanced technology, including a paint process that resists chipping, lasers to inspect welds, and an on-site test track to ensure smooth ride quality.
  • Chrysler has engaged suppliers earlier in the design process and implemented modular systems for parts assembly outside the plant, with final assembly at Sterling Heights.
  • The company has conducted extensive training for its workforce, equating to 500,000 hours, and assigned employees to design vehicles and manufacturing systems.
  • The plant's shutdown for five months has resulted in lost revenue, estimated at $1 billion, as Chinese plants operated by Japanese auto makers were able to switch to new models without production downtime.
  • Chrysler executives acknowledge the gap in quality ratings with their foreign rivals and aim to close it in the future, with Dennis Pawley stating that changeovers will be possible in weeks rather than months.

Statistics:

  • Chrysler has invested $980 million to $1 billion in the Sterling Heights plant and new models.
  • The plant can produce nearly 1,000 cars a day at full capacity.
  • The number of workers at Sterling Heights has undergone extensive training, amounting to 500,000 hours.
  • The estimated lost revenue due to the plant's shutdown for five months is $1 billion.

Sources:

  • [The New York Times]
  • [Associated Press]