We've talked about reengineering for a long time, but the industry was focused on continuous improvement, and saving a percent here and a percent there. When you rethink the basic business, all of a sudden you get the 10, 20 or 40 percent improvements that we're seeing, which are really dramatic. General Motors, for example, in the last five years has trimmed the costs to make dies by two-thirds. That's a huge number of a very big-ticket number in the industry.
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| General Motors Group Vice President Advanced Vehicle Development Mark Hogan shows off the new rear wheel drive Kappa architecture. (Photo: General Motors of Canada) |
Next, we're seeing cooperation across nontraditional boundaries, like with General Motors and Ford were working on a six speed automatic transmission. They will produce it separately, but they were developing it jointly.
One of the things that I thought was spectacular here is the platform that General Motors developed called Kappa. They will be building about 20,000 Pontiac Solstice, the two-seat sports car, off of it and it will be profitable over a five-year period. Now, before you would ask, can General Motors be profitable with such a low volume product like that? And, you would say that's impossible, because they needed much higher volumes to make inexpensive vehicles. Well, the game has changed. There is new technology; there's a new way to harvest what you have that's part of your portfolio. It's really a new business model that is happening today in real time.
For us, as observers and researchers, it's exciting to watch this transformation continue to gather steam. On the other side, this doesn't mean that everyone is going to be free of pain. As you take waste out, literally one person's waste is another person's job. We're not standing on a roof throwing thousand dollar bills in the air. That would be easy to stop. So, we have changes in business processes that are resulting in a rather dramatic reduction in how we do work. Another example of that is with clay modeling, simulation and product development.
All of the manufacturers, all over the world, are dramatically reducing the number of physical prototypes that they require. They are reducing this by 50, 60 or even 70 percent. So, clearly, those who build physical prototypes are not having a good time. Those who are doing computer modeling are having a great time. We are going to continue to see this great turbulence, this ebb and flow, from one technology to other technologies. So, it's a wild and crazy period.