In 2003, Nissan built Mississippi's first auto plant to help target the vital U.S. market. When the going got a little rough, the company mounted a grueling campaign to rescue its vision--and it may be reinventing car manufacturing in the process.
(Business 2.0) – In the dream, they're cheering for him. Hundreds of workers on the factory floor, surrounded by new cars and trucks, all with their fuel doors open. A man glides from one vehicle to the next, opening and closing the fuel doors. They snap shut with conviction. Then the chant begins: "Steve Richardson, he's the man!"
The dream ends when Richardson wakes with a sudden surge of anxiety. Richardson is an engineer at Nissan's sprawling auto plant in Canton, Miss., and he's in charge of making sure the fuel doors work flawlessly. In the waking world, the fuel door has been a nightmare. Too often, it won't sit flush against a vehicle's body. It opens at odd angles. It squeaks. Worse, the fuel door bugs consumers, who listed its flaws among a litany of complaints in the influential J.D. Power & Associates survey on customer satisfaction released last spring.
In the auto business, bad marks from Power can directly damage sales, and the report prompted a massive effort by Nissan to overhaul its Canton plant--an initiative that, against tall odds, is now paying off. That success is key, since the stakes are huge: This plant represents one of the most ambitious manufacturing experiments in memory, and it could influence how cars get made--and where--for years to come.
The plant opened in May 2003. Built at a cost of $1.4 billion, it is roughly the size of six football stadiums and bristles with robotic assemblers and other cutting-edge technology. Canton produces five distinct models, including linchpins of Nissan's lineup such as the Altima sedan and the Titan pickup. That's unprecedented in the industry; the mass manufacturing of autos is so complex that carmakers often dedicate an entire assembly line to a single new car.
Everything about the plant is ambitious, including its very location in the rolling hills north of Jackson, the state capital. It's the first auto factory ever built in Mississippi; indeed, it's by far the most sophisticated factory of any kind in a state whose economy is still dominated by king cotton and chicken farms. At Canton, Nissan has had to rely on an untested and largely inexperienced workforce--and to grapple with some of the vexing legacies of Mississippi's past, from racial tension to poverty to a dismal educational system.
In short, Nissan is attempting in Canton an approach to building cars that Ron Harbour, an auto-assembly guru, once described as "insane." Even within Nissan there is some amazement that the plant is operating at all. "We did what nobody thought possible," says Daniel Gaudette, Nissan's top North American manufacturing executive.
Yet it's vital to Nissan that the Canton plant not just run but run well. Nissan has been on a tear lately, ringing up record earnings of $4.8 billion last year at a time when other auto giants, most notably General Motors and Ford, are reeling. The Canton plant is pivotal to Nissan's strategy for capturing more of the rich North American market and ultimately overtaking U.S. automakers and vying with Toyota for global dominance. That makes the grueling work of whipping the plant into shape a critical competitive mission for Nissan--and, in another sense, for Mississippi itself. Steve Richardson has a lot riding on it too. Which is why he dreams of fuel doors, and wakes up fretting.
As a kid in the Tiny Cotton Town of Rolling Fork, Miss., Richardson could scarcely have imagined that by age 32 he'd be earning more than $75,000 a year as a senior engineer in a whiz-bang auto plant in his home state. He grew up poor. But his mom made sure he stayed on the straight and narrow--she took him to church four times a week--and he studied hard. He got his industrial engineering degree from Mississippi State and then took the path of many other young Mississippians with technical expertise: He left the state, winding up in Kentucky working for a Ford supplier.
For a long time, it seemed just as unimaginable that there would ever be a Nissan plant in Mississippi to draw Richardson home. As recently as the late 1990s, Nissan seemed more likely to be closing plants than opening them. It was saddled with massive debt when French automaker Renault bought a controlling stake in the company and dispatched a gnomic Brazilian-born manager named Carlos Ghosn to Tokyo. His turnaround of Nissan made history: Nissan now has the highest profit margins of any major automaker. In May, Ghosn took over as chief executive of Renault while retaining the same title at Nissan.
Ghosn always thought Nissan's future depended on continuously increasing its U.S. market share. To do that, the company needed to make cars Americans wanted, like full-size pickups and SUVs. Incredibly, Nissan didn't offer either back then. In 2000, Ghosn launched a catch-up program to create the vehicles. Because they would be designed for Americans and sold only in the United States, he decided against making them in Japan.
While automakers had moved into the American South decades earlier, they had concentrated their efforts in Alabama and Tennessee, which not coincidentally were the most industrialized Southern states. But Ghosn was drawn by Mississippi's low wages, well below Detroit's pay and even other Southern states' wages. Moreover, the state's hunger for an auto plant drove local politicians to pony up $300 million in subsidies. There were other considerations, however. On a visit to the state in the spring of 2000, Ghosn had breakfast with Gov. Ronnie Musgrove, who enthralled him with tales of Mississippi's remarkable history, of a land that gave birth to both Faulkner and Jim Crow, the blues and bigotry of the worst kind. Musgrove told Ghosn there remained a keen desire in the state for racial healing. If Nissan opened a plant, he insisted, African Americans would have to play a major role in it; indeed, he wanted half of the employees to be black.
The demand was audacious, yet as an alien in both France and Japan, Ghosn knew something of the pain of being an outsider. He accepted the condition (today nearly 55 percent of the plant's full-time employees are black). While the men never spoke of financial terms that day, Ghosn was moved. "We aren't going to lose this plant," Musgrove vowed as they parted. "We've been second too many times."
Nissan's decision to build in Canton was heralded as a gift from God by many in the state. But even as Nissan began construction in April 2001, the company had to wrestle with the question of how it would staff the plant, which was expected to employ 5,300 people and generate thousands of other jobs for local suppliers and service providers.
To scour Mississippi, a state of 2.8 million, for potential workers, Nissan sent two ace human resources people from its Tennessee plant: a company veteran named Galen Medlin and a talented protégé, Jeff Webster. Medlin is white, Webster is black. Over the course of a year, they became the two most popular people in Mississippi, which isn't so shocking given that Nissan would be paying roughly double the average industrial wage in a state notorious for low-paying jobs. The recruiters received more than 100,000 phone calls, letters, resumes, and applications. They held job fairs in all 82 of the state's counties and sometimes encountered lines of job seekers stretching more than half a mile.
Richardson was working in Kentucky when he heard about Nissan's plans. He quickly called the company's office. After two interviews, he was hired. He was Canton plant employee No. 72. He was stoked about moving back home, and his Nissan job meant a sizable pay raise. "I felt like I'd won the lottery," he recalls. Richardson spent a few months in Japan learning from Nissan's manufacturing masters, then came back to Mississippi in early 2003, five months before the plant built its first car.
Nissan gave people like Richardson more than just jobs. It also offered expertise and training, notably in a production system that has few equals. While Toyota gets more credit for advanced factories, Nissan usually matches its larger rival. Assembly lines are powered by enormous robots; at one stop in the line, a bay of 25 robots each make 12 welds per second. Suppliers are tied into the line by computers; parts actually arrive in the order they'll be used. An ethos of intolerance for defects is combined with a maniacal drive to get things right the first time.
Perhaps most important, planning is king. The two production lines in Mississippi were built and mock-operated in Japan and then carted halfway across the world and reassembled. Because of the sophistication of Nissan's system, each line can handle four different models, in random order. The rapid-fire result is a finished vehicle in 13 hours. With a capacity of 400,000 vehicles, produced in two five-day-a-week shifts, the Mississippi factory is about twice as large as most auto plants.
Nissan's emphasis on power and styling proved popular, and sales of Mississippi-made vehicles exceeded early expectations, swelling worker pride. Preshift rituals such as stretching exercises or supervisor meetings have sometimes seemed more like scenes from a religious revival than a production line. At a graduation ceremony for new supervisors, one man declares that his "coming to Nissan was one of the best decisions I ever made." "Preach on!" colleagues shout. Another new supervisor takes the floor. "If you don't know how to build relations with people, Nissan will teach you," he says. "Amen," someone shouts.
"We spent two days studying safety," the man continues. "Where I come from, that's unthinkable."
Then a woman stands up, voice shaky, eyes welling with tears: "I can't even talk because I'm so full of joy." The room erupts in hallelujahs. Try finding that kind of enthusiasm in Detroit.
It would be nice to say that everything has gone smoothly since the first car rolled off the line in May 2003. Nice, but false. In April 2004, even as sales of Nissan's Mississippi-made cars were strong, J.D. Power issued its quality survey. Nissan scored poorly, and its Mississippi vehicles fared worst. The issues weren't life-and-death: no flaming gas tanks. But their combined impact was a threat to the company. There were creaky sun visors. Passenger doors that didn't close properly. And balky fuel doors.
It wasn't altogether surprising. "Anytime you build a new product, even in an existing plant with experienced workers, you're going to have challenges," says Jed Connelly, Nissan's top U.S. executive for sales and marketing. "We had a new plant with inexperienced workers." Still, the problems had to be fixed fast, and the person most responsible for making sure that happened would be David Boyer, the 58-year-old industry veteran who runs the Canton works. Boyer is obsessed with what he calls "eliminating mutilation." Mutilation, he explains, "means chips, dents, scratches--those are the No.1 defect in any assembly plant in the world."
To help Boyer, Nissan quickly dispatched a troubleshooting team of 70 Japanese engineers to Mississippi. They discovered a series of annoying lapses that resulted from a combination of design oversights and production failures. The lighting in the final inspection area was too low, causing inspectors to miss easily corrected defects. Protective covers on vehicles awaiting shipment weren't protective enough. Assembly workers weren't strictly observing the prohibition against wearing watches and rings, which can accidentally scratch cars.
Then there were the complicated interactions among designers in Japan, outside suppliers, and the plant's workforce. The fuel door is a prime example: The door itself is made by an outside supplier. A different supplier makes the base that the fuel door attaches to. And Nissan makes the side panel and body into which both the fuel door and the base are installed. Richardson is responsible for the pieces coming together--with a margin of error measured as a fraction of a millimeter.
Richardson and the half-dozen engineers who work for him sought an explanation in their own operation, but he examined the suppliers at the same time. He went to the maker of the door and found that a crucial gauge used to measure the door was unreliable. The gauge had grown worn with use, and the door was--by a degree unrecognizable to the naked eye--the wrong size.
The gauge was fixed, the size was corrected, and still the fuel door wasn't right. Richardson next focused on the base, made by a different supplier. To his dismay, he discovered that the weld positions were slightly off; so were the surfaces of the base. The supplier was so startled by Richardson's finding that it flew an engineer from Japan to Mississippi. The engineer corrected everything in a week. But that didn't solve the problem either. In February, Richardson learned that some of the tooling in the Canton plant itself was off. The tool that attaches the fuel base to the body panel was putting it in ever so slightly the wrong position.
Richardson's investigative work leads him to conclude that a more radical fix is needed: moving to the end of the line the process of attaching the fuel door, which is now done fairly early. It would be expensive and time-consuming to reconfigure the line. But Richardson thinks it may be the only permanent solution. Fuel doors, it turns out, are surprisingly complex. Many of the doors are activated by a button near the driver's seat. The button triggers a release cable, which sets off a spring-loaded plunger that connects to a slider. The slider pops open the door. The way the Canton assembly line was originally laid out, the door is attached before the vehicle is painted, and the essential mechanics are added at several later stops. Much of the final fitting is done by hand--a wiggle here, a twist there. (In plant lingo, this is known as "finesse.") Richardson believes that moving most of the job further down the assembly process will spare the fuel door potential dings--and a lot of finessing.
The idea leads to some anguished meetings. One day Richardson and his boss, Mike Clemmer, are debating the situation with a third engineer in Clemmer's office. Reconfiguring the line, the third engineer observes, would represent "a whole paradigm shift, just for fuel doors. Does that make sense costwise?" Clemmer thinks it might, but he foresees many obstacles, including the fact that the assembly line speeds up dramatically toward the end of the process, where Richardson wants to move fuel door installation. "Can someone install a fuel door in 49 seconds?" asks the third engineer.
Just then, Tatsutoshi Inutaki drops into Clemmer's office. He is the most senior Japanese at the plant, one of the experts sent there in the wake of the J.D. Power crisis. He questions Richardson's idea. "In Japan, all vehicles attach the door at the paint facility," he says, just as they've been doing in Canton. Richardson is taken aback but eventually gets Inutaki to throw him a bone. In Japan, Inutaki explains, they don't "finesse" the fuel door. "No wiggling," he says. At least Richardson's goal of minimizing finesse isn't totally crazy. The engineers agree to keep talking, and Richardson is relieved that his proposal remains alive.
Every afternoon at 4, David Boyer reviews 10 cars built that day. It is where the rubber truly meets the road--and Boyer can gauge the overall progress the plant is making at cleaning up its act.
On a recent day, he's surrounded by about 15 people, Richardson included, as he scrutinizes the gleaming cars. He first sees an Altima. There's a nick on the trim of a door, evidence that someone did a shabby job of fixing a larger tear. "Have you talked to the repairman?" Boyer asks the manager in charge. He shakes his head no.
"Obviously we've got to talk to the guy who missed it," Boyer instructs.
"The inspector missed it too," the manager says.
Boyer's eyes narrow. "So we got two guys screwing up?"
All in all, though, Boyer is pleased. This has been a low-defect day. On average, each vehicle that rolls off the Canton line has three defects, most of which the typical customer wouldn't notice. Boyer wants to get that number below 2.5. The best auto plants in the world--Toyota's Japanese plants--average two to 2.5 flaws per car. "It's going to be hard as hell for us to get from three to 2.5," Boyer says. "And then I'll drop the goal to two."
Boyer and Nissan are convinced that the Canton plant has made great strides since the jolt of the Power report a year ago. Up and down the assembly line, there have been hundreds of changes, and, as with the fuel door, scores of small dramas over parts and procedures. A sun visor on some models was reengineered because of consumer complaints that it wasn't sturdy enough. The location of a cup holder was shifted. To cut down on mutilations, robotic arms got extra padding to lessen the chance of scratches.
The ultimate mutilation reducer may be the sonic artillery that stands guard over a vast uncovered parking lot in back of the plant. There, as many as 12,000 new vehicles are parked at any given time. Mississippi gets hailstorms, which are murder on car bodies. The 12-foot cannons are part of an anti-hail system unlike anything at any other auto plant in the world. A Doppler radar system searches for incipient hail formations 50,000 feet up in the atmosphere. At the first hint of hail, the radar automatically triggers the big guns, which blast sonic waves into the sky. The sound waves break up hail formations. To date, the guns have been triggered four times, and Nissan hasn't lost a single car to hail.
The most important indicator of how Canton is doing, of course, is whether people buy its cars. There, too, the plant has been steadily gaining. Several of the vehicles it produces are hits. The Altima consistently ranks among the 10 best-selling vehicles in America; Canton produces a third of all Altimas. The Titan truck, made only in Mississippi, is a big moneymaker; in the fiscal year that ended March 31, Nissan sold 91,000 of them in the United States. In all, Nissan sold 1 million vehicles here last year, up 16 percent, and 260,000 of them were made in Canton. There's another Power report due soon, and while the consumer satisfaction trends it measures don't necessarily track with the quality metrics of engineers, many industry experts say they'd be surprised if Nissan gets hammered again. Harbour, the auto-assembly guru who'd questioned Nissan's approach early on, now says that what the company has achieved in Mississippi is "a miracle."
Still, Richardson remains nervous about the upcoming report. The fuel door problem has improved--his earlier fixes, such as correcting measurement systems at both the factory and its suppliers, have reduced defects. But Boyer has decided against moving fuel door assembly further down the line; he thinks it would be too disruptive.
That's a disappointment for Richardson, naturally. But one day on the plant floor, musing about his long struggle with the doors, he says he realizes that there may be no solution. Even if he could achieve perfection, tools wear out, skilled installers come and go, things get out of whack. Sooner or later the fuel door would have problems again. "There's no finish line in this race," he observes. Putting on a pair of goggles and a Nissan cap, Richardson hops aboard a golf cart that will ferry him to another part of the plant. He has a new problem to troubleshoot. Sunroofs on several models aren't closing correctly. Realistically, he knows the perfect solution for that will be elusive too. But a guy can dream, can't he?
MADE IN MISSISSIPPI
The Canton plant is overcoming a shaky start and pumping out models that helped Nissan sell more than a million cars in America for the first time in 2004, giving the company the fastest U.S. sales growth of any automaker.
 For 12 months ending March 31.  Altima production began in June 2004. Source: Automotive News Data Center
2004 U.S. AUTO SALES