The Smart Way of Building Cars

The Smart brand means little to most people in North America unless they have a particular interest in vehicles that are rolling around in Europe but which are unavailable in the North American market.

The Smart brand means little to most people in North America unless they have a particular interest in vehicles that are rolling around in Europe but which are unavailable in the North American market. This is about to change, as Smart will come to Detroit in 2006 with the launch of an SUV that is named the “formore.” There is a whole different nomenclature in the world of Smart, one predicated on descriptive names, like the two-seaters being called “fortwo” and the four-place as the “forfour.” Smart is so young it will be celebrating only its 10th birthday in this month. Originally the brainchild of Nicolas Hayek, the creator of Swatch, the Swiss watch manufacturer, and Mercedes-Benz, the idea was to produce a small car that was as ecologically sound as possible. Designed for congested city centers, it was to be compact, lightweight and propelled by a small, low-powered engine. A joint venture company was subsequently set up between the two companies, although the-then-Daimler-Benz acquired full possession in January 1999.

The first models attracted a great deal of interest both for their unusual looks as well as for their driving dynamics. With a length and width of just 2,500 mm and 1,515 mm, respectively, the two-seater Smart city was extremely compact; its 3-cylinder 599-cc supercharged engine developing, just 45 bhp, was mated to an innovative 6-speed automated manual gearbox. However, the real interest was in the manufacturing plant and processes.

Completed in October 1997, the so-called Smartville production plant, located near the small town of Hambach on the French side of the Franco-German border, is one of the most modern car plants in the world. When under construction, the impact it might have on the environment featured so high on the list of things to do that it was considered “ungreen” to install any air conditioning systems on the site—despite it being built on former swampland. Like many modern buildings, it has a large number of windows. None of the buildings contain formaldehyde or CFCs. In keeping with the environmental theme there’s high-quality wood-based façade cladding provided by specialist company Trespa Meteon. Heat recovery systems are used throughout the factory. The heat generated by air leaving the paint department and by the injection molding section is taken through a rotating heat recovery system that also has the side benefit of eliminating the need for cooling towers.

Rainwater that runs from the roofs of the buildings is retained in reservoirs for use in tempering steel; all the other waste water that drains off the roads and car parks is fed into the oil separation plants, treated in storage basins, and is used for specific purposes. All the wastewater from the plant’s sanitary installations and industrial processes is purified in a centrally located biological clarification plant using biomembranes that clean waste through a filtration system to strict European drinking water standards. After purification, the water is used in the gardens and as a coolant during the production process.

The chassis is painted using a solvent-free powder coating technique—Smart was the first to use it—that, apart from its ecological soundness, produces a higher quality finish than conventional methods despite the thinner coat.

For all this environmental awareness, though, even this is not the most revolutionary aspect of the Smart production system—that falls to the arrangements with the suppliers. Just about everything in Smartville is outsourced, from the smallest component on the assembly line to delivering cars to dealers in Europe and Japan. Of the 2,200 people who work at the plant, only around 900 are actually employed by DaimlerChrysler; the rest work for the seven suppliers on site. However, “on site” does not mean just the adjacent supplier park, but actually integrated into the manufacturing infrastructure. These seven companies—Magna Systeme Chassis (the spaceframe), Magna Unipart (doors), Surtema Eisenmann (the paint shop), Dynamit Nobel (plastic body panels), Siemens VDO (cockpit), ThyssenKrupp Automotive (powertrain and rear axle), and Cubic Europe (surface decoration)—supply their modules, which are pre-constructed in Hambach, directly to the production line. By paying for the system or module only when the completed car comes off the assembly line having passed all the end-of-line tests is payment—“paying after consumption”—authorized to the supplier. This, of course, reduces Smart’s inventory almost to zero.

“We decided to give some of the work usually done by the OEMs to our sister partners because of their know-how as well as for cost reasons with the volume we are producing here,” says Herbert Schnepper, the Smartville’s general manager. “It’s a very successful philosophy that has been implemented here. At first we had doubts whether the system could work because we’re operating together with several partners, and that could produce some problems. However, we have monthly meetings with the heads of all the enterprises where we discuss both the operational and strategic way of doing things here and it works very well.”

One of the conditions of being one of these integrated suppliers is that they can only supply the Smart plant—they cannot supply any other plant. “That was a condition of the French government,” says Schnepper, “but the big advantage is that if we have a problem on the production line, we only have to call the chief operating officer of the supplier concerned to come over here to look at the problem, define the solution and then go and solve it, leading to a quick resolution. If it was a normal set up, it could take days rather than the minutes or hours it now takes.”

Another condition of the suppliers being awarded this model lifetime contract is that they have to comply with DaimlerChrysler’s employment terms and conditions.

“There are some differences between the systems partners and Smart in the conditions,” says Schnepper, “but we have to ensure that the main conditions are the same.” This came about from lessons learned in the early days when production was disrupted by different strikes. If the employees of a suppler went on strike, it brought the plant to a complete standstill. “By harmonizing the conditions, we avoid strikes and increase overall satisfaction.”

The factory is shaped like a plus sign. Because delivery gates are aligned along all the walls, there are no more than 15 meters between a gate and the assembly line. Since just-in-time is so important, keeping delivery distances to the minimum is essential for the smooth flow of supplies, especially as the number of parts numbers has grown exponentially. Where the Smart used to be a relatively simple product with around 200 parts numbers, it is now up to 2,000. This is due to the greater range of colors, exterior panels and interiors, plus the additional equipment such as heated seats, traction control, and power steering that are now standard in Smarts. The suppliers are given three days’ warning about the sequence, but it is the signal from the paint shop that confirms it’s leaving, for Siemens VDO, for example, 80 minutes to build the cockpit and Magna five hours to build and deliver the door assembly.

Currently around 500 Smart coupes and cabriolets a day are made to order on a two-shift system. At the end of the assembly line, they are then passed before being handed to the outsourced Smartcentre distribution. In effect, the plant could have ownership for only a matter of seconds, but in reality they take possession of each vehicle for 24 hours to allow a cushion should any rectification work need to be undertaken.

Because of its unique way of producing cars, the plant has attracted a great deal of interest from both inside DaimlerChrysler as well as from other companies.

“We receive a large number of visitors,” says Schnepper, “including Chrysler Group executives and plant managers. “Initially they were looking to build a greenfield site based on this system, even down to using the same assembly ‘plus’ concept, but it didn’t work out. Then they wanted to reduce their workload at an existing Jeep plant so that they could have the same work share as we have in Hambach. I think it’s a very good solution for a certain production volume.”

That production volume, says Schnepper, is around 250,000 to 300,000 cars a year. “If it’s more, then it’s more practical to produce cars in the conventional way because it doesn’t make sense to have only one supplier for a system. At 300,000 units it’s also much easier to find a systems supplier than it is for just 150,000 units. With our annual production of around 130,000 to 150,000 cars, our system works very well and leads to a cost position that is comparable to those with an annual output of 300,000 units.” Schnepper then adds that should demand for the Smart increase so that they had to produce 300,000 units a year, that it would be “very difficult” to change to the conventional way of producing cars.

The Smart plant, like the vehicle it produces, is surprising. It puts a great deal of onus, both financially and technically, on the suppliers and against the odds, it seems to be working. The company is now eyeing up the DaimlerChrysler plant in Brazil to see whether it can introduce the same system to produce the forfour.