Toyota's Simple Slim cuts Camry costs

[EKam]

Auto maker's innovative engine-making method puts more pressure on Ford, GM

JOHN LIPPERT

Bloomberg News, with files from Kae Inoue in Tokyo

Foundry workers at a Toyota Motor Corp. plant in Troy, Mo., laughed out loud in 2003 when an executive travelled from Japan and gave them a new assignment: Cut in half the cost of building V-6 engines for the company's Camry sedan by 2005.

"We were thinking they were either crazy or didn't really mean it," says Robert Lloyd, who, as president of Toyota's Bodine Aluminum Inc. unit, would be expected to deliver on the goal.

But back in Japan, 300 engineers were working on Toyota's secret weapon, a new technology for pouring molten aluminum into moulds to create engine parts. The new equipment, part of a larger Toyota cost-cutting program called Simple Slim, allows Toyota to use smaller and cheaper moulds.

The new engine technology is now in use not only at Bodine, but also at foundries in Japan and China. Partly as a result, the cost of building an engine for the redesigned Camry, which is scheduled to go on sale in March, will be about $1,000 (U.S.), half the cost of an engine for the previous generation of Camrys, says Gary Convis, executive vice-president for North American manufacturing.

Toyota's latest cost-cutting push is one more piece of bad news for executives at Ford Motor Co. and General Motors Corp. Around the world, Toyota is going from strength to strength, increasing sales and profit, streamlining production and ringing up healthy returns for investors. Its Tokyo-listed stock was up 51 per cent to an all-time high of ¥6,210 ($52.25) for the year ended on Feb. 3.

Together with Honda Motor Co. and Nissan Motor Co., Toyota has pushed GM and Ford to the wall. The three Japanese auto makers captured a combined 28.2 per cent of U.S. sales in 2005, an increase of two percentage points. Ford and GM captured a combined 44.8 per cent of sales, a 2.3-percentage-point decline.

Last year, the American auto giants became the biggest companies ever to have their debt downgraded to junk status by Standard & Poor's. And now they have to contend with innovations like Simple Slim.

"Toyota is already one of the most efficient producers," says Dan Luria, an analyst at the Michigan Manufacturing Technology Center in Plymouth, Mich. "If they can improve this much, that spells big trouble for everybody else."

The cost-cutting program has only increased the company's momentum. The Toyota City, Japan-based manufacturer had an operating profit of ¥482-billion in the October-December quarter on ¥5.3-trillion in sales.

Automotive profits for the American giants, meanwhile, are elusive.

Dearborn, Mich.-based Ford earned an operating profit of $84-million in the October-December quarter, or 0.2 per cent, on $41-billion in sales, while GM lost $1.6-billion, or minus 3.8 per cent, on $42.3-billion in sales, according to estimates from Merrill Lynch & Co. Inc.

Bodine Aluminum is an important part of that effort. Bodine uses dies to cast aluminum engine blocks, which make up the lower two-thirds of an engine, and cylinder heads, the top third, and then delivers them to Toyota factories for assembly into complete engines.

Every week, Mr. Lloyd receives a report that compares the quality of his work with that of Toyota foundries in Australia, China, Japan and the U.K. "We're one of the best," Mr. Lloyd says. "Not every day and not in every part, but we're right in there."

The bosses in Japan want both high quality and maximum production. Toyota plans to produce 1.83 million cars and trucks a year in North America by 2008, nearly double its production in 1998. Its assembly plants in Georgetown and elsewhere are on double shifts.

To keep up, Mr. Lloyd runs his Troy foundry on three shifts. And with Simple Slim in full force, he has to make allowances for construction workers who swarm through his facilities, ripping out old machines and installing new ones.

"It's like a war in here every day," Mr. Lloyd says of the Troy plant.

------------------------------------------------------------------------------------

I like Toyota's way of cutting cost, as suppose to Ford/GM's cutting cost a.k.a. layoffs and closing down their plants!!!

[Tideland Prius]

Yup.

Take the Sienna for example. They cut costs in the way the power sliding doors work but you as a consumer wouldn't know. Instead of using the expensive method of detecting a small hand that is accidentally placed between the closing door and the pillar that DC and Honda uses, Toyota simply runs a thin copper wire up and down the side. When it's in contact (i.e. something pushes against the pillar), the door will reverse its direction.

Unlike Honda's cost cutting method where in the Civic, tiny power window buttons prevail and the lack of a cover for the trunk lid is rather cheap looking. Add to that that the part between the seat and the door (i.e. the part of the rear seat that doesn't fold down in the 2001-2005 Civic), is HARD plastic covered in fabric. I learned it the hard way when I jabbed my elbow against it thinking it's soft like our old 97 Corolla.

[1500wattCamry]

i just hope their method doesn't make the overall reliability of the motor decrease, but if this proves to be just as effective as it is now, then this can be spell alot more trouble for gm ford and dcx, they must adapt and change or else lose even more money.

[vasia]

Originally Posted by 1500wattCamry

i just hope their method doesn't make the overall reliability of the motor decrease, but if this proves to be just as effective as it is now, then this can be spell alot more trouble for gm ford and dcx, they must adapt and change or else lose even more money.

I read that the heads on the new GR V6 engines is a more simple design compared with the MZ V6 engines which results in increased reliability and less defects. Plus, the new method in injecting the aluminum into molds reduces defects. Hopefully quality will stay the same. Toyota demanded that quality remain high while the costs were reduced. Who knows, quality could even be higher, which would be impressive.

[1500wattCamry]

thats true, i mean if the engines they produce now are even more reliable and with less defects then this is truly something important given toyotas track record, and i correct myself, not only the domestics, but honda and nissan or any other carmaker should also pay attention to this.

[vasia]

Originally Posted by 1500wattCamry

thats true, i mean if the engines they produce now are even more reliable and with less defects then this is truly something important given toyotas track record, and i correct myself, not only the domestics, but honda and nissan or any other carmaker should also pay attention to this.

I don't want to jump to any conclusions myself, but with the new training centre up and running in Georgetown, which will serve all of Toyota's North American plants, and Toyota upgrading a lot of their plant equipment, as well as introducing new production methods and techniques, I have hope quality will remain consistent.

I know at Georgetown in preparation for the new Camry production, they replaced quite a few machines with state of the art robotic ones.

There are also whispers Toyota has something really extraordinary planned for the production of the new Lexus LS sedan. I mean it's already built at the world's highest quality plant, Tahara. But with that, in several interviews it has been mentioned that for the new LS, Toyota looked at every step of the production process for the current LS, and they tried to improve upon it. I read a while ago, and this is still clear in my mind, that Toyota had a goal of getting Lexus down to 50 problems per 100 vehicles in JD Power's initial quality survey.

I don't wish to be going off-topic, but it's just really interesting and exciting to see what Toyota has planned for the future. They are increasing production at a huge pace, trying to cope with huge amounts of new workers, and training people at record time, all while posting record profits, introducing many new innovations both in vehicles and production methods, not to mention maintaining it's reputation for quality and dependability. Sometimes, I don't know how they do it. I know they're not perfect and have problems, but it is impressive what Toyota has achieved, and what they continue to strive for in the future.

[SolaraTRD]

Never knew engines only costed $1,000 to make these days. Thats crazy cheap I think. For a new engine. Can it fit into my SOLARA??? Hehhehe. (hey, its cheaper than going to Ripmods)

[EKam]

Originally Posted by SolaraTRD

Never knew engines only costed $1,000 to make these days. Thats crazy cheap I think.

That's minus the parts, R&D, the 2 billion dollar machines that puches the parts out...

I think it's $1000 in cost of building one, not the total cost of the engine.

[vasia]

Originally Posted by 1500wattCamry

thats true, i mean if the engines they produce now are even more reliable and with less defects then this is truly something important given toyotas track record, and i correct myself, not only the domestics, but honda and nissan or any other carmaker should also pay attention to this.

Here it is: I found what I was looking for with regards to reliability:

http://quote.bloomberg.com/apps/news...fer=news_index

"Reduced Pressure

The machinery for making engine blocks is also being replaced. The old, 31-foot-tall casters used to fabricate the blocks at Troy are being shut down and replaced with new, 19-foot-tall machines at a $164 million factory that opened in November in Jackson.

The new casters use 40 percent less pressure to inject molten aluminum into molds. That gives air inside the molds a chance to escape rather than being blasted back into the aluminum in the form of bubbles that weaken the walls of the block.

The reduced injection speed means Toyota can make a V-6 engine block in a mold held together with 2,250 tons of force instead of the 3,500 tons previously needed, which saves time and money. The die now weighs 5 tons rather than 29. The new casters can build four-, six- and eight-cylinder engines using dies that can be changed in 60 minutes, one-sixth the time needed previously."

---

This is the new method Toyota developed of injecting aluminum into molds. So it looks like there will be less air bubbles in the blocks, resulting in stronger blocks.

[Geotpf]

See, it's stuff like this that allows Toyota to beat GM and Ford, not thier whining about the UAW and legacy costs.