Answered Essay: According to the article, what is the normal industry standard for plants to be considered operating at full capacity?
The December 22, 2009, edition of the Wall Street Journal has an article by Kevin Kelliker entitled “In Risky Move, GM to Run Plants Around Clock.”,
Instructions,Read the article and answer the following questions.,
(a) According to the article, what is the normal industry standard for plants to be considered operating at full capacity?
(b) What ideal standard is the company hoping to achieve?
(c) What reasons are given in the article for why most companies do not operate a third shift? How does GM propose to overcome these issues?
(d) What are some potential drawbacks of the midnight shift? What implications does this have for variances from standards?
(e) What potential sales/marketing disadvantage does the third shift create?
Expert Answer
Ans. a). According to the article,the industry standard for plants to be considered operating at 100% capacity was two shifts working about 250 days a year.
b) The government invest about $50 billion in GM and the com
pany is hoping to achieve operating at 120% capacity by traditional standards.
c) Most companies do not operate a third shift even if they operate two shifts on overtime because two shifts give them the flexibility to perform any necessary maintainance on equipments between the shifts. A few idle hours between shifts also enables a plant to perform cleaning and restocking. A plant’s paint shop alone generally requires about four hours of cleaning a day and the efficiencies of a third shift can disappear quickly amid slowdowns for such maintenance. But GM proposes to overcome these issues stating that many auto parts makers have long operated three shifts. Among challenges, they have figured out how to clean the assembly line without halting all of it. It involves “overspeeding” some parts of the line so it can be slowed down later.
d) As per the article since the company was long bloated with unused capacity GM’s third shift strategy can be risky. The third-shift plan could make GM a model of car-industry efficiencyor end up a failure like its 1980s drive to let robots run its factories.Car-assembly lines need too much scheduled maintenance and restocking for such intensive production to make sense. A few idle hours between shifts also enables a plant to perform cleaning and restocking. A plant’s paint shop alone generally requires about four hours of cleaning a day and the efficiencies of a third shift can disappear quickly amid slowdowns for such maintenance.
e) In the auto industry, the biggest risk is a sales slowdown. A single plant can make only a very limited number of models, so adding a third shift represents a bet on hits according to the article. If the market demands doesn’t meet their forecast GM will end up placing a shift on lay off.
