The paradox of automation: Hidden costs are said to be behind GM’s scaling back plans in Kansas City

(As of January 1, 1986, there were about 15,000 autoworkers employed at three Kansas City assembly plants in the Kansas City metropolitan area. By December 1, 1988, the total fell to about half that amount. The following are excerpts of some 1986 articles I wrote about the General Motors  plants and their unions  for The Kansas City Times. Note: the GM Leeds facility closed in 1988.)

The paradox of automation: Hidden costs are said to be behind GM’s adding jobs, scaling back plans at Fairfax

The Kansas City Times

By Rod Perlmutter of the Business Staff.

Tuesday, September 2, 1986

The automation now used at the General Motors Corp.’s newly opened assembly plant in Linden, N.J., foreshadows automation to be used at the GM-10 assembly plant under construction in Kansas City, Kan.

The Linden plant, as the plant in the Fairfax Industrial District is expected to do, relies on a “robogate” automated welding system and computerized carriers to speed auto production.

“It’s state-of-the-art automation,” said Mary Elliott, publicity manager for the Chevrolet-Pontiac-GM of Canada Group, a division that oversees the Linden and Fairfax plants. “We have a lot riding on this.”

Perhaps too much, industry analysts said this week. They think that GM has tried to do too much too fast in automation.

“They’ve spent too much money, $9 billion to $10 billion per year, since the early 1980s, and it has hurt the performance of the entire company,” said Maryann Keller, an analyst for Furman, Selz, Mager, Dietz & Birney in New York.

Now the automaker is paying the cost of automation efforts like those at the Linden plant, a development that also has consequences for the Fairfax operation.

In July, GM announced that it would reduce its annual capital spending from more than $9.5 bil­lion this year to $6 billion to $7 billion by 1989.

Later that month, it surfaced that there would be less automation at Fairfax than expected. United Auto Worker officials at Fairfax said GM officials told them that the company had cut $35 million to $50 million of its planned investment there.

Less automation would mean more work for people, up to 1,000 more jobs than expected at the area plant, the union said.

These statements contrasted with GM’s 1981 announcement that it would buy 20,000 robots by 1990.

Analysts for the UAW in Detroit say no one now expects GM to buy even 14,000 robots by the end of the decade.

GM’s drive to automate was pro­pelled in part by labor costs, company officials said. GM wages rose 240 percent from 1970 to 1980, but the cost for robots rose only 40 percent.

GM predicted that the cost of robots would increase 3 percent a year in the 1980s and that labor costs would rise 9 percent a year.

However, automation has hidden costs, said Harley Shaiken, an assistant professor at the University of California at San Diego who has studied the auto industry.

“The goal of eliminating all worker input results in systems of unbelievable complexity that are prone to breakdown and thus require considerable amounts of human ingenuity to keep running,” Mr. Shaiken said. “Paradoxically, then, the drive to get rid of all worker input winds up requiring more worker participation.”

As a result, the use of robot technology has several constraint for any manufacturer, including automakers, Mr. Shaiken said. One problem is the amount of time it takes to implement a robot system.

“A firm must go through a critical learning curve to use robots effectively, particularly in a complex system,” Mr. Shaiken said.

The Fairfax plant’s robogate system, which is about 11 percent completed, is a good example. A similar system used by Chrysler since 1980 uses 68 welding robots to perform 98 percent of 3,000 body welds automatically. But it was preceded by five years of simpler prototypes in Delaware and Illinois.

Similarly, GM planners had to take time to learn how to apply computerized carriers, called “auto­mated guided vehicles,” to the assembly floor.

At the Buick City plant in Flint, Mich., -automated guided vehicles were used to haul parts about the plant, a much less complicated task, before such devices were used to carry a car through the assembly line.

“If the motor stops (on a vehicle hauling parts), I can have somebody fix it within 15 minutes. But in (actually assembling automobiles), 15 minutes would cost about 15 cars,” said Ron Scholl, planning administrator for the plant.

GM knew that the Buick City plant, which now produces about 900 LeSabres a day, would need extra time to get the automation working, so it planned for a start-up time of one year, as opposed to the normal time of three months, Mr. Scholl said.

Mr. Shaiken said the newness and the cost of automation were factors to consider.

A robot represents “a capital expenditure that is easily postponed, especially since most jobs that are done by a robot can either be accomplished by a worker or by other mechanical means,” he said.

The problems in automation are one reason that GM’s employment is higher than it has been since 1978. Some automated plants have had to retain hundreds more em­ployees than was anticipated, the UAW analysts said.

And GM made two mistakes, said Ms. Keller, the analyst with Furman, Selz.

“They stressed automation almost at the exclusion of the other ways to reduce costs. From a hard­ware standpoint, they underestimated the benefit they could get by redesigning the car or changing the work rules.

“Also, they took a lot of equip­ment that is new and untested in auto assembly plants. The automa­tion that they used has not proved to be workable.”

With GM’s consequent slowdown in automation, “labor should be happy (at the Fairfax plant), be­cause life should be a little bit saner there; there will be a more realistic learning curve,” said Mike Luckey, auto analyst at Shearson Lehman Bros, in New York.

Mr. Scholl said new plants, such as Fairfax, should not be “overly optimistic” about meeting dead­lines when dealing with new automation.

“Also, you cannot over train people to deal with automation, and that includes engineers, technicians and skilled tradesmen,” he said.

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