9/1/1998 | 11 MINUTE READ

Chrysler's Return To Brazil: It's All Relative

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While the world has focused on Chrysler's up-coming merger with Daimler, the company has also focused on its relationship with Brazil. In particular, the relationship between its newly dedicated Dodge Dakota plant and its suppliers, among others. --By Colleen Dejong, Senior Associate Editor


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The roll out of the first vehicle and dedication of the Dodge Dakota plant in Campo Largo, Brazil, marks Chrysler's return to the South American auto market after a 17-year absence. It was pretty much like any other job-one. The Dakota rolled dramatically from behind a curtain. Cameras flashed. The truck impressed. The speeches didn't. There wasn't really any difference in the drama of launching a vehicle in Brazil than there is in the U.S....other than the fact that it was all done in Portuguese.

And really, other than a reinforced chassis, the Brazilian Dakota looks pretty much like the U.S. Dakota. The most notable difference between the two is how it's made.

Now, it can be argued that the successful production of any vehicle is about relationships: supplier/OEM relationships, employer/employee relationships, government/corporate, etc. However, for Chrysler do Brasil, it's all about relationships. There's the ultra-tight relationship between Chrysler and its suppliers, and there's the ultra-tight relationship between the Dakota plant's employees and the production process.

Starting Point

To get a good look at this whole relationship, perhaps a good starting point would be at the Campo Largo facility itself. The bird's eye view shows 17 local suppliers providing components and systems while engines, transmissions, and stamped body parts are shipped in from the U.S.

The relationship Chrysler has with its suppliers in Brazil may well prove to be a look at things to come. While vehicle design and concept are the OEM's, component and system design are wholly that of the supplier. In turn, the employees own the process by which those parts and assemblies are made and put together.

Stateside, such a synergistic relationship may be hard to come by. First of all, the OEMs would have to give up what they feel is the "core" of their production responsibilities. Secondly, employee unions would have to be willing to relinquish some of its "core" duties to the suppliers. Or at least broaden their relationships with non-union supplier companies.

Lastly, there's the whole proximity issue. In Brazil, the auto industry is still transitioning from an import business to a manufacturing enterprise. As plants and factories are built, suppliers have the luxury of setting up shop within spitting distance of the OEM. Here, you'd be lucky if an OEM had all of its suppliers in the same state, much less the same industrial zone.

Right Down the Line

In order to produce trucks as quickly and efficiently as possible, the Dakota plant employs an electronic data interface system (EDI) with its key suppliers that enables Chrysler to broadcast orders for parts and assemblies within two hours of when they're needed. According to the Campo Largo logistics team, it is the first Chrysler facility to operate with a 100% supplier EDI system.

By doing so, the assembly or component system is delivered as it is needed. Delivery doors placed at key points of the factory even permit delivery to where components and modules are needed within the assembly line. This system works especially well with Dana and its "roll-in" chassis. While subassembly on the body is being undertaken, a chassis—complete with tires—is worked on. The body is then transported to where the completed chassis is waiting, and the two are mated.

Meanwhile, a similar two-hour EDI broadcast to Lear Corp. for an interior module is sent. Seats, visors, vinyl floor covering, and acoustic components are included.

There's not a whole lot of room for mistakes, here. If any supplier is unable to make its two-hour window, the whole line shuts down until a delivery can be made. There is no inventory to draw from. Because of this, everyone stays on his/her toes, and the importance of efficiency is at the front of everyone's mind, as will be discussed later.

At this point, you've probably figured out that a majority of the Dakota is supplied as modular units. This modular concept benefits Chrysler two ways. First, it keeps costs down by enabling them to push huge chunks of assembly and manufacturing costs to its Brazilian suppliers. And in-house assembly is, well, simpler.

Secondly, it takes them a long way toward meeting Brazil's local content laws. The local content edict basically states that within the first three years of start-up, 60% of a vehicle's content must be of local origin. By purchasing pre-assembled chassis and interior systems, the Dodge Dakota rolled out at a little over 50% local content.

Local Interests

If you're still counting relationships, this actually makes a third. The government/foreign enterprise relationship in Brazil can sometimes be tenuous, especially on a local level. The country is still bouncing back from a nearly devastating economic crisis, and there have been reports of some unexpected "taxes" and other financial obligations. But things seem to be pretty cozy between Chrysler and the local and national governments in Brazil.

Much of that can be attributed to the automaker's up-front attitude in jumping into the South American auto market. From the get-go, they worked with government officials to make sure the best possible situation was secured for both sides.

The government of Parana, the state the Campo Largo plant resides in, can't be overlooked. In particular, the state's governor, Jaime Lerner, is a savvy politician who is internationally recognized as an urban development expert. Since his election in 1995, he has readjusted the state's administration to focus bringing the region into the modern world and improving the quality of life for the people who live there. Bringing companies like Chrysler and five other vehicle manufacturers to the area, according to his constituents, is an indication of his success.

Personnel Issues

While some people might think the basis of a highly efficient production process is a robot or computer chip or some other mechanical automation wonder, in this case, there is no "technological breakthrough." In fact, there's not a lot of technology in this process at all. "We're using simple, proven technology here," says Dave Elliott, Campo Largo's director of manufacturing. "There's no rocket science here."

There are only two automated processes in the entire facility. Both for safety reasons. The electrocoating and painting operations, as well as the urethane adhesive application process for the windshield and rear window. That's it.

The "breakthrough" here are the employees. They own the production process, and they also own the continuous improvement process. Each station has a team of people with a team leader. Keeping the next phase in mind, they set up their area with the production engineers merely acting as guides.

This process and its results are things the workers take obvious pride in. Every team leader discussed at great length what they had done to make their area more efficient. They also all seemed to have a few ideas about where the next improvements should come from. The best example of this is the engine assembly area. By taking a look at the process and resources at hand, the team was able to reduce the total space required from 380m² to 300m², improving the possibility of future expansion from one assembly station to four. The consideration given to continuous improvement is so detailed they can even show the reduction in the number of dollies needed in the area (11 to 8).

Don't think this is something Campo Largo employees do out of the kindness of their hearts. Sure they're glad to be a part of making the plant a success, but this isn't a Kathy Lee clothing facility where everyone gets 50 cents a day and a chicken for dinner. Including fringe benefits, the average employee clears $8.00 an hour, with team leaders earning a bit more.

So what you have at the Dodge Dakota plant in Campo Largo Brazil is a system of relationships that work. The suppliers work so closely with the OEM that, in some cases (PPG), they don't even look like separate companies. The continuous improvement program that marries the line workers to the production process is working well, and there's every indication that this will continue. And the government is happy with the automaker, a situation it doesn't always get in its own country. Heck, there aren't this many happy couples in an episode of Oprah.


Brazil '98: Six Days, Seven Suppliers

Day One: Travel Day

•Check luggage; passport misplaced, break into temporary panic; wait in line at security check; feel bruise from tetanus and cholera shots; wonder if shots worth it…but at least I didn't need all of the innoculations since we're not scheduled to visit the jungle.

Day Two: Coatings, Diesels, and Diapers (Oh my)

•Visit Chrysler do Brasil's Dodge Dakota plant in Campo Largo. See first supplier here, paint and coating developer PPG.

•PPG's entire operation is within Campo Largo facility. Nine employees (paid by PPG, not Chrysler) complete 12 jobs per hour (6 prime and 6 color). They pretreat, electrocoat, paint, and inspect Dakota bodies. PPG handles everything from purchasing supplies to waste management. Paint shop includes a mixing room and laboratory for checking paint quality and color match.

•Next up, engine maker Detroit Diesel Corp.'s (DDC) factory near the Dakota plant. Facility was diaper factory with asbestos insulation not even a year ago; hope residuals of neither diaper nor asbestos remain.

•DDC's operation consists mostly of assembly and testing of a 2.5-liter diesel engine with either four or six cylinders.

•Engine manufacturing an international affair for DDC. Crankshafts and blocks cast in Brazil, then zipped off to Italy for machining. Then back to Brazilian facility for assembly. Carousel-type assembly line maximizes flexibility of line so various versions and models can be built. Full capacity for plant is 31,000, with enough room available to double that number.

Day Three: The Effects of Soccer on Production


rolling chassis
Dana supplies the roll-in chassis, complete with fuel system, brake system, wheels, and tires within two-hour time frame electronically broadcast by Chrysler to Dana electronically.

Production goes as follows: VIN stamping; assembly of the front and rear suspension; fuel line assembly; brake line assembly; installation of the gas tank and heat shield; tires and wheels. Big crane lowers chassis onto truck that drives straight over to the Dakota plant. Chassis literally rolls onto the floor for engine installation. (Shown here is a completed chassis, along with the second- and third-tier suppliers responsible for various components.)

•Breakfast with Chrysler CEO Bob Eaton. He's very excited about re-entry into South American auto market.

•Dedication of Dakota plant, then off to Dana Corp. Notice that several people at dedication mention World Cup semi-final match between Brazil and Netherlands is at 4:00.

•From Dana to interior systems maker Lear Corp.

•Lear supplies seats, visors, vinyl floor coverings, and acoustic components for Dakota on just-in-time basis. As with Dana, electronic order is sent with about two hours to finish and ship interior system. Interior system delivered as one unit with the two seats already attached to the center console. Once system hits Dakota floor, it only needs to be dropped into cab and bolted into place.

•See TV in an office surrounded by several excited Brazilians. Production has stopped. Soccer.

•Head back to hotel, listening to soccer match on bus radio (in Portuguese). Nail-biting tied game ends with extra-time shootout. Brazil beats Netherlands 4-2. Whole country erupts into pandemonium.

Day Four: It's Wednesday, We Must be at Tenneco

•Fly back to Sao Paulo from Curitiba. Stewardess gives us bibs to eat breakfast with; resent implication until turbulence hits.

Tenneco Automotive-South America worked with Chrysler to develop entire exhaust system for Dakota. Gasoline systems for Dakota have been in production for quite some time. Specialized systems for the diesel engines begin this month.

•Notice that most of Dakota consists of modular systems. Scott Buehrer, Tenneco's North American director of Chrysler business agrees. "Modularity is a powerful, almost unstoppable wave. Potential savings to auto manufacturers is huge."

•A team of men in black hats seen in several places. It is explained that they are the full-time Kaizen team. They walk factory floor planning process and production improvements. Recent work with one weld/assembly cell results in production of 120 exhaust parts per day using one-piece flow production (new part not started until one in production is finished).

Day Five: Wheels and Tires Galore


steel wheel production
11-12 million steel wheels are made at Meritor's South American plant in Limeira, Brazil. The facility's continuous improvement program is so successful that the company uses it as a benchmark for the rest of its facilities.

•Next stop, wheel manufacturer Meritor, but first, yet another *&@$# bus ride.

•Using best-practice techniques, Meritor implemented "white shirt" workforce. Everyone on floor wears white shirts with philosophy that if a shirt gets dirty, a part of production is out of whack. Whole company responsible for continuous improvement. Day begins with 9 am huddle in "Quality Square." Concerns, questions, and successful process changes are discussed. Workers then shine shoes (no kidding) and get production moving. They produce 11-12 million steel wheels per year on two shifts.

•Facility is so clean, it's remarkable. Trash or recycle bins all over the place; tow motor wheels covered to prevent black marks on floor; not one hint of stamping fluid mist anywhere, despite several enormous stamping machines in use.

Day Six: Number Crunching

•Lunch with Ernst & Young gives some insight into how hot South American auto market is.

•Days of 1,315% inflation per year (Yikes!) are gone. Single digits reign in '97 and '98.

•Auto sales grew every year between '93 and '97. Truck sales growing at annual rate of 35%.

•Auto analysts expect Brazil to overtake the UK and Canada in vehicle production by end of '98.

•However . . .

•Auto sales projected to drop in '98. Automakers temporarily closed plants or cut production to control rising stocks.

•New plants coming on line before rebound expected in '99 could result in over capacity.